|
It's a win for Wells Fargo, which has spent nearly a decade
trying to convince the public and policymakers that it had
changed its ways.
"We are a different and far stronger company today because of
the work we’ve done,” said Wells Fargo CEO Charlie Scharf in a
statement. Scharf also announced that each of the 215,000
employees at Wells Fargo would receive a $2,000 award for
turning the bank around.
Wells Fargo used to have a corporate culture where it placed
unreasonable sales goals on its branch employees, which resulted
in employees opening up millions of fake accounts in order to
meet those goals. Wells' top executives called its branches
“stores” and employees were expected to cross-sell customers
into as many banking products as possible, even if the customer
did not want or need them.
After an investigation by The Los Angeles Times in 2016, Wells
Fargo shut down its sales culture and fired much of its
leadership and board of directors. The fake accounts scandal
cost Wells Fargo billions of dollars in fines and lost business,
and permanently tarnished its reputation, particularly because
the scandal broke only a few years after the Great Recession and
financial crisis. It was later revealed that Wells Fargo opened
up roughly 3.5 million accounts that were not wanted or needed
by customers.
Wells Fargo, once thought to be the best run bank in the
country, was now the poster child of the worst practices of
banking in decades.
In order to push Wells to fix itself, the Federal Reserve took
the unusual step of placing Wells Fargo in a program where the
bank could grow no larger than it was in 2018. No bank had
previously been placed into such a program, known as an asset
cap. The Fed required Wells to fix it culture and redo its
entire risk and compliance departments in order to address its
problems.
Since taking over in 2019, Scharf's goal has been to convince
the Federal Reserve that Wells Fargo had fixed its toxic banking
practices. With the asset cap removed, the bank can now pursue
more deposits, new accounts and take on additional investment
banking businesses by holding additional securities on its
balance shet.
All contents © copyright 2025 Associated Press. All rights reserved
|
|
