Seven years ago, Wells Fargo & Co.’s security chief opened a few “undercover” bank accounts to aid law enforcement. Within 24 hours, two employees tacked on debit cards, claiming they each personally spoke to the new -- fictional -- customers.
“All I could do was shake my head,” the security chief told a senior executive in an email.
The exchange was among dozens of behind-the-scenes moments of frustration and fear cited by U.S. regulators Thursday seeking to impose a record $59 million in fines on the bank’s former leaders for allowing sales abuses to pervade its nationwide branch network. Three executives settled, including ex-CEO John Stumpf, who agreed to be banned from the banking industry and pay a $17.5 million penalty -- an unprecedented sanction of a former U.S. bank leader. Five others are fighting the case.
The bank, a major auto lender, has admitted its employees opened millions of fake bank and credit card accounts to meet wildly unrealistic sales goals. Wells Fargo has acknowledged that it forced borrowers to pay for auto insurance they didn’t need. Some of those auto borrowers ultimately had their vehicles repossessed. Wells Fargo has admitted to illegally repossessing the vehicles of hundreds of service members.
The bank’s aggressive targets for opening new accounts “caused hundreds of thousands of employees to engage in numerous types of sales practices misconduct,” the Office of the Comptroller of the Currency wrote in its complaint against them.
The bank’s staff confronted a stark dilemma every day for 14 years, according to the regulator: “They could engage in sales practices misconduct -- much of which was illegal -- to meet their goals, or they could struggle to meet their goals and face adverse consequences, including losing their jobs.”
The OCC faulted Stumpf for failing “to respond to numerous warning signs.” Former chief administrative officer Hope Hardison and onetime risk chief Michael Loughlin also resolved its claims.