All ‘Better‘ Now?: Wells Fargo CEO Tim Sloan Feeds Congress a Line of Carriage-Horse Manure About Bank’s ‘Improving’ Culture
ICYMI: Allied Progress’ Full-Page Ad Debuts WellsFargoFacts.com Detailing How CEO Tim Sloan’s Ever-Rising Salary Has Only Incentivized More Consumer Abuse
WASHINGTON, D.C. – Wells Fargo CEO Tim Sloan managed to keep a straight face today when he promised members of the House Financial Services Committee that “our corporate culture has substantially improved” despite reports just yesterday that the bank agreed to pay back $17.4 million after getting caught defrauding consumers, and amid complaints from his own employees that the culture of greed is as bad as ever.
“Tim Sloan’s claims that Wells Fargo has seen the error of its ways flies in the face of the over $4 billion in fines and settlements they’ve paid for consumer abuses since the ‘phantom accounts’ scandal broke out. But shareholders needn’t cry for Wells Fargo, because Sloan confirmed today that the Trump tax cuts made up for the cost of their misdeeds. It’s no wonder Wells Fargo sees no incentive in truly cleaning up its act when taxpayers are the ones picking up the tab,”said Jeremy Funk, spokesman for Allied Progress, the consumer advocacy group that launched a full-page ad in the Washington Post Express and new URL www.WellsFargoFacts.com encouraging Congress to do the job the Trump administration clearly won’t: hold big banks accountable.
Added Funk: “But it’s heartening to hear progressives on the committee ready to hold not just Wells Fargo accountable, but all the big banks accountable when they go back fleecing consumers like the bad old days leading up to the Great Recession. The Trump administration occasionally doing the bare minimum in banking enforcement is just not getting the job done. Tim Sloan’s ‘It won’t happen again, I swear’ routine rang particularly hollow as incidents of defrauding consumers continue to drip out and as Wells Fargo employees speak out about the pressure they still feel from the top to nickel and dime consumers to death.”
WELLS FARGO RHETORIC VS. REALITY
RHETORIC: Tim Sloan: “Our corporate culture has substantially approved”
REALITY: Since the ‘Phantom Accounts’ Scandal, Wells Fargo Has Illegally Repossessed Servicemembers’ Cars, Ripped Off Auto Loan And Mortgage Borrowers, Caused Hundreds Of Homeowners To Be Wrongly Foreclosed On, Agreed to Pay $17.4 Million After SEC Allegations Of Overcharging Consumers Without Adequate Disclosure
Wells Fargo Agreed To Pay $17.4 Million To Consumers They Allegedly Overcharged For High-Priced Investment Products Without Disclosing That Lower-Cost Alternatives Were Available.
In March 2019, Wells Fargo Agreed To Repay $17.4 Million To Clients They Allegedly Overcharged For High-Priced Mutual Fund Shares When Lower-Cost Alternatives Were Available.
In March 2019, Wells Fargo Agreed To Repay $17.4 Million “To Clients They Overcharged By Putting Them In High-Priced Mutual Fund Shares Without Adequate Disclosure” After The SEC Found That The Bank “Had Sold Clients High-Priced Mutual Fund Shares When Lower-Cost Alternatives Were Available.” “In a black eye on the brokerage-affiliated RIA industry, 79 firms have voluntarily agreed to repay $125 million to clients they overcharged by putting them in high-priced mutual fund shares without adequate disclosure. The investment advisory divisions of Wells Fargo, RBC, LPL Financial, Raymond James and Kestra Financial collectively will pay $51.5 million, or more than 40% of the total. Wells Fargo, which is scheduled to testify before Congress this week about a long list of admitted client abuses, leads the pack at $17.4 million, following by RBC Capital at $11.7 million. The firms voluntarily came forth after the SEC offered them the opportunity last year to self-report when the firms had sold clients high-priced mutual fund shares when lower-cost alternatives were available. The cases focus on mutual fund 12-b1 fees, known as trails. The SEC’s program resembles tax amnesties offered by the IRS to tax scofflaws. By coming forward, the firms avoided fines from the commission. […] The firms settled without admitting or denying the commission’s findings.” [Ann Marsh and Tobias Salinger, “Wells Fargo, LPL among 79 firms paying $125M total for SEC share-class cases,”Financial Planning, 03/11/19]
- The SEC Alleged That Wells Fargo Violated The Federal Advisers Act, Which Makes It Illegal For Investment Advisers To “‘Engage In Any Transaction, Practice Or Course Of Business Which Operates As A Fraud Or Deceit Upon Any Client Or Prospective Client.’” “Wells Fargo ‘violated … the Advisers Act, which makes it unlawful for any investment adviser, directly or indirectly, to ‘engage in any transaction, practice or course of business which operates as a fraud or deceit upon any client or prospective client,’ the SEC wrote in its case against Wells. The language resembles that of the other firms’ cases.” [Ann Marsh and Tobias Salinger, “Wells Fargo, LPL among 79 firms paying $125M total for SEC share-class cases,”Financial Planning, 03/11/19]
Since Its Fake Accounts Scandal Was Exposed In September 2016, Wells Fargo Has Paid More Than $4 Billion In Fines And Settlements For Consumer Abuses.
Wells Fargo “Paid Out More Than $4 Billion In Settlements And Fines” From September 2016 To The End Of 2018. “The bank has paid out more than $4 billion in settlements and fines since September 2016, much of it stemming from problems that came to light following the sales scandal. (Earlier [in 2018], the bank agreed to pay the Justice Department $2.09 billion over the sale of crisis-era mortgage-backed securities.)” [Emily Glazer, “Wells Fargo to Pay States About $575 Million to Settle Customer Harm Claims,” The Wall Street Journal, 12/28/18]
The Same Month The Fake Accounts Scandal Broke, Wells Fargo Was Fined $20 Million And Ordered To Pay Restitution Totaling At Least $10 Million For Illegally Repossessing Cars Owned By Military Servicemembers.
In September 2016, The Office Of The Comptroller Of The Currency (OCC) Fined Wells Fargo $20 Million And Ordered It To Pay Restitution To Over 400 Military Servicemembers Whose Cars Were Illegally Repossessed By The Bank.
In September 2016, The Office Of The Comptroller Of The Currency (OCC) Fined Wells Fargo For $20 Million For Violating The Servicemembers Civil Relief Act And Ordered It To Pay Restitution To Servicemembers. “The Office of the Comptroller of the Currency (OCC) today assessed a $20 million civil money penalty against Wells Fargo Bank, N.A., and ordered the bank to make restitution to servicemembers who were harmed by the bank’s violations of the Servicemembers Civil Relief Act (SCRA).” [Press Release, U.S. Comptroller of the Currency, 09/29/16]
Wells Fargo “Had Illegally Repossessed 413 Cars” Owned By Military Servicemembers. “In September 2016, the OCC found that the San Francisco bank had failed to obtain court orders before repossessing automobiles owned by members of the military.The Justice Department said in a separate statement from the same time that Wells had illegally repossessed 413 cars. The OCC also found that the bank did not accurately disclose customers’ active-duty status to judges before evictions, among other violations.” [Kevin Wack, “Wells Fargo freed from sanctions over treatment of service members,” American Banker, 07/24/18]
Wells Fargo Has Paid At Least $10.2 Million In Restitution To Harmed Servicemembers. “Wells Fargo & Co […] has repaid another $5.4 million to about 450 military service members whose vehicles it repossessed illegally, the U.S. Department of Justice said on Tuesday. The third-largest U.S. bank has now repaid about $10.2 million to roughly 860 service members and their co-borrowers for improper repossessions, under a settlement announced in September 2016.” [Jonathan Stempel, “Wells Fargo repays $5.4 million for repossessing service members’ cars,” Yahoo! Finance, 11/14/17]
Last Year, Wells Fargo Was Hit With A $1 Billion Fine By Federal Regulators For Overcharging Customers For Auto Loans And Mortgages.
In April 2018, Wells Fargo Agreed To Pay The CFPB And Comptroller Of The Currency $1 Billion In Fines For “Lending Abuses In Its Auto Insurance And Home Loan Businesses.” “Wells Fargo agreed to pay $1 billion to settle allegations from multiple regulators it engaged in lending abuses in its auto insurance and home loan businesses. The settlement, announced Friday with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, has been widely anticipated. […] Wells said Friday the settlement would cut $800 million off its first-quarter profit, taking it to $4.7 billion, or 96 cents a share. Shares of Wells closed Friday up 1.9 percent. The CFPB said Friday the violations were connected to how Wells Fargo administered a mandatory insurance program in its auto loan business and how it charged certain borrowers for mortgage interest rate lock products. Wells agreed to pay back the customers and make changes to its risk and compliance practices.” [Liz Moyer, “Wells Fargo to pay $1 billion in regulatory settlement over abuses in its auto and mortgage loan units,”CNBC, 04/20/18]
Wells Fargo Wrongly Charged “Hundreds Or Thousands Of Dollars In Premiums And Fees” In Its Auto Loan Business And Collected At Least $98 Million From 110,000 Consumers Through Improperly Administering A Mortgage Rate Policy.
In Wells Fargo’s Auto Lending Business, The Bank “Exposed People To Hundreds Or Thousands Of Dollars In Premiums And Fees,” And “Possibly Contributed To Thousands Of Cars Being Repossessed” Over The Span Of More Than A Decade. “Problems in the way the Wells Fargo auto loan unit handled consumers’ accounts exposed people to hundreds or thousands of dollars in premiums and fees. The issues were also found to have possibly contributed to thousands of cars being repossessed. The CFPB said problems with the auto loan unit persisted for more than 10 years, from October 2005 to September 2016.” [Bill Chappel, “Wells Fargo Hit With $1 Billion In Fines Over Home And Auto Loan Abuses,” NPR, 04/20/18]
In Wells Fargo’s Mortgage Business, The Bank Inconsistently Applied An Interest Rate Locking Policy For Three Years And Improperly Charged Consumers Extra Fees. “One problem was with mortgages, which is a big deal considering Wells Fargo is the nation’s largest originator of mortgage loans. In September 2013, the bank enacted a new nationwide policy on locking in interest rates for mortgages. If a rate-lock extension was made necessary by borrower-caused delays — for example, when a borrower didn’t return necessary documentation or disputed a low appraisal — then a fee would be charged. But if it was because of lender-caused delays — say, delays to receiving necessary information or internal processing — then the bank would cover the fees.” [Steve Goldstein, “Here’s what Wells Fargo did to trigger a $1 billion fine,” MarketWatch, 04/22/18]
- “During The Period In Question — Sept. 16, 2013 To Feb. 28, 2017 — Wells Fargo Assessed About $98 Million In Rate Lock Extension Fees On Approximately 110,000 Borrowers.”[Daria Mercado, “What you need to know about the Wells Fargo settlement,” CNBC, 04/20/18]
Last Year, Wells Fargo Had To Set Aside $8 Million To Compensate 870 Struggling Borrowers Who Were Wrongly Denied Federal Loan Modifications To Due To A “Software Glitch”—545 Of Whom Later Had Their Homes Foreclosed Upon.
In August 2018, Wells Fargo “Incorrectly Denied Mortgage Modifications” And Set Aside $8 Million To Compensate Consumers Affected By The Errors. In August 2018, Wells Fargo “[…] set aside $8 million to compensate borrowers who were incorrectly denied mortgage modifications under a federal assistance program, the bank said in a regulatory filing on Friday. […] The $8 million accrual is intended for roughly 625 borrowers who should have qualified for a loan modification under a program the Treasury Department set up in 2009 to help Americans who were struggling to make mortgage payments.” [“Wells Fargo faces tax credit probes, new problems with mortgage borrowers,” Reuters, 08/03/18]
- Wells Fargo Blamed A Computer Glitch That Went On From 2010 To 2015. “Wells Fargo said the computer error affected ‘certain accounts’ that were undergoing the foreclosure process between April 2010 and October 2015, when the issue was corrected.” [Jackie Wattles, “Wells Fargo says hundreds of customers lost homes after computer glitch,” CNN Business, 08/05/18]
- Wells Fargo Originally Said That 625 Consumers Were Denied Mortgage Modifications, 400 Of Whom Lost Their Homes To Foreclosure. “Initially, Wells Fargo disclosed that the software error led to approximately 625 customers being either incorrectly denied a mortgage modification or not being offered one in situations where they would have qualified for one. And of those roughly 625 customers, approximately 400 of them lost their homes via foreclosure after the loan modification was incorrectly denied or not offered as a result of the underwriting software error.” [Ben Lane, “Wells Fargo reveals software error led to hundreds of faulty foreclosures,”HousingWire, 11/06/18]
In November 2018, Wells Fargo Revised Its Estimates To Reveal That That “Its Software Error Actually Led To 870 Improperly Denied Mortgage Modifications And 545 Faulty Foreclosures, Instead Of The 625 Denials And 400 Foreclosures The Bank Initially Disclosed.” “Wells Fargo revealed Tuesday in a filing with the Securities and Exchange Commission that a further review of the situation showed that its software error actually led to 870 improperly denied mortgage modifications and 545 faulty foreclosures, instead of the 625 denials and 400 foreclosures the bank initially disclosed. So, the review found that 245 more borrowers were falsely denied a modification, while an additional 145 borrowers lost their homes when they shouldn’t have.” [Ben Lane, “Wells Fargo reveals software error led to hundreds of faulty foreclosures,”HousingWire, 11/06/18]
Wells Fargo’s Employees Still Complain About Intense Pressure Flout Ethics And Customers’ Best Interests In Order To Drive Sales.
In The Time Since The Fake Account Scandal, Wells Fargo Has Claimed That It Has Removed Its Aggressive Sales Targets, And That Its Employees’ Priority Should Be To “Serve Customers, Not Sell Them Things.”
Wells Fargo Has Claimed That It Has Removed Sales Targets For Employees, And That Their “Primary Job Is To Serve Customers, Not Sell Them Things…” “‘At the heart of its rehabilitation efforts, Wells Fargo said, it has changed how it motivates employees. No longer will they be individually rewarded for reaching sales targets, or punished for falling short. Branch workers were told that their primary job is to serve customers, not sell them things.”[Emily Flitter and Stacy Cowley, “Wells Fargo Says Its Culture Has Changed. Some Employees Disagree.,” The New York Times, 03/09/19]
…Yet Employees Have Argued That Wells Fargo’s Aggressive Sales Culture Has Merely Taken A Different Form.
…But Employees Argue That The Targets And Incentives Have Merely Changed, “Not Disappeared.” “But the sales incentives have changed, not disappeared, according to the current and former employees, who work in branches, loan-processing centers and other parts of the bank.” [Emily Flitter and Stacy Cowley, “Wells Fargo Says Its Culture Has Changed. Some Employees Disagree.,” The New York Times, 03/09/19]
Just This Month, The New York TimesReported That Wells Fargo’s Aggressive Sales Culture Persists, With Many Employees Still “Bending Or Breaking Internal Rules” To “Squeeze Extra Money Out Of Customers.”
Wells Fargo’s Employees Say They Are Still Pressured To “Squeeze Extra Money Out Of Customers,” With Some Workers “Bending Or Breaking Internal Rules To Meet Ambitious Performance Goals.” “[…] Wells Fargo workers say they remain under heavy pressure to squeeze extra money out of customers. Some have witnessed colleagues bending or breaking internal rules to meet ambitious performance goals, according to interviews with 17 current and former employees and internal documents reviewed by The New York Times” [Emily Flitter and Stacy Cowley, “Wells Fargo Says Its Culture Has Changed. Some Employees Disagree.,” The New York Times, 03/09/19]
In March 2019, The New York Times Reported That Wells Fargo’s Mortgage Processors Were Pressured “To Send Documents They Knew Contained Incorrect Information To Borrowers To Meet Internal Deadlines.” “Two mortgage-processing employees in Minneapolis said managers pressured their team to send documents that they knew contained incorrect information to borrowers to meet internal deadlines.” [Emily Flitter and Stacy Cowley, “Wells Fargo Says Its Culture Has Changed. Some Employees Disagree.,” The New York Times, 03/09/19]
Although Wells Fargo Branch Employees Are No Longer Directly Incentivized To Sell Products, They Are Now Urged To Refer Customers To Salespeople Who Often Do Not Serve The Customers’ Best Interests.
Wells Fargo Employees Are Still Incentivized By Bonuses For Any Referrals They Make That Turn Into Sales.“In the past, branch workers were eligible for bonuses if they persuaded customers to apply for a credit card or to take out a loan. Now, employees are urged to refer prospects to salespeople in the bank’s mortgage or wealth management division, and some branch workers are eligible for bonuses if those referrals turn into sales, multiple employees said.” [Emily Flitter and Stacy Cowley, “Wells Fargo Says Its Culture Has Changed. Some Employees Disagree.,” The New York Times, 03/09/19]
One Wells Fargo Employee Recently Said The Pressure He Felt To Refer Customers To Wells Fargo Advisors Gave Him “Ethical Qualms About Trying To Sell More Products To His Customers, Who Are Mostly College Students And Retirees With Limited Money.” “A personal banker who works in a North Carolina branch said his manager had told him to increase his referrals to the bank’s mortgage team and financial advisers. He said he had ethical qualms about trying to sell more products to his customers, who are mostly college students and retirees with limited money.” [Emily Flitter and Stacy Cowley, “Wells Fargo Says Its Culture Has Changed. Some Employees Disagree.,” The New York Times, 03/09/19]
One Wells Fargo Financial Advisor Said She Was Pressured To Push Investments On Consumers That Were “‘Not In The Client’s Best Interest’” Because They Generated Fees For The Bank. One employee, “who worked in Minneapolis as a financial adviser, said the company had sometimes pushed her and other brokers to steer clients toward investments that would generate recurring fees for the bank, including in a case where ‘it was not in the client’s best interest.’ Frustrated by what she saw as the bank’s culture, [the employee] quit in January.” [Emily Flitter and Stacy Cowley, “Wells Fargo Says Its Culture Has Changed. Some Employees Disagree.,” The New York Times, 03/09/19]
From December 2018 To January 2019, Wells Fargo Ratcheted Up Its Quotas For Debt Collection Workers From $34,000 To $40,000—One Worker Said It Created “‘An Overwhelming Sense Of Frustration.’”
Wells Fargo Increased Demands On Its Debt Collection Workers By Increasing Their Quotas From $34,000 in December 2018 To $40,000 In January 2019. “In Des Moines, where the bank — the nation’s fourth biggest — has a large debt-collecting operation, workers in December were expected to handle at least 30 calls an hour and recoup $34,000 in unpaid credit-card and other debts for the month. In January, the targets rose to 33 calls an hour and $40,000, goals that many employees there failed to attain, according to internal records.” [Emily Flitter and Stacy Cowley, “Wells Fargo Says Its Culture Has Changed. Some Employees Disagree.,” The New York Times, 03/09/19]
One Employee Said The Increased Pressure Created “‘An Overwhelming Sense Of Frustration.’” “’For us front-line workers, there’s an overwhelming sense of frustration,’ said Mark Willie, who works in the Des Moines office and is part of a group, the Committee for Better Banks, trying to unionize Wells Fargo employees. ‘There is a general fear of retaliation for speaking out.’” [Emily Flitter and Stacy Cowley, “Wells Fargo Says Its Culture Has Changed. Some Employees Disagree.,” The New York Times, 03/09/19]
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