Former Wells Fargo CEO faces fines

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Mike Mozart | Flickr

Farah Javed

Former Wells Fargo & Co. CEO John Stumpf was fined $17.5 million on Jan. 23 for a fake-account scandal, along with being banned from participating in any aspect of the banking industry.

“Hundreds of thousands of employees in the Bank’s largest line of business engaged in systemic illegal activity for 14 years,” stated one excerpt of the 100 legal documents from the Office of the Comptroller of the Currency, incriminating Wells Fargo and former CEO John G. Stumpf, who helmed the operations.

Thousands of complaints from Wells Fargo employees stated that they “opened unneeded accounts for customers, ordered credit cards without customers’ permission and forged client signatures on paperwork,” according to The Los Angeles Times. 

It revealed that if they did not meet the cemented unrealistic sales goal,  they would be fired. 

After the articles were published, an analysis of the company’s accounts from 2012 to 2015 was conducted.

In 2016, once the analysis uncovered thousands of fake accounts, Stumpf was outed from his position as CEO of the company. For his role in the illegal actions, he was called before a congressional committee, yet adamantly claimed his innocence. 

The matter only got worse when it was revealed that Wells Fargo opened up over 3.1 million fake accounts, according to CNN.

 The damages of this scandal are still prevalent today, as “Wells Fargo admitted to forcing up to 570,000 borrowers into unneeded auto insurance. About 20,000 of those customers may have had their cars repossessed due to these unnecessary insurance costs” CNN reported.

Essentially, Stumpf’s scandal not only hurt the bank’s employees and Wells Fargo’s reputation, but also hurt the customers who trusted the bank to take care of their finances.

Though Stumpf has been punished for his crime, several issues still remain. 

Though the response to this verdict has been mostly favorable, some are calling for a harsher punishment. Sen. Elizabeth Warren has voiced her opinion on Twitter that Wells Fargo should fire every member of the company that was complacent in orchestrating the scandal. 

However, the bank has not focused on doing so and is instead focused on damage control. The company released a statement that those victimized by the company should call to cancel accounts. This raises the second issue, as to whether or not clients who put their faith in the company will be forced to pay the debts for the accounts they did not consent to. 

Additionally, it also raises the question for clients who enrolled in direct billing and whether they will be reimbursed for years of payments or not. 

Lastly, under Stumpf’s management, Wells Fargo developed an intense, pressured culture. Employees worked long, grueling hours and weekends. 

Employees said that a slowdown in sales led to threats from management, even as far as saying that they would be shot for slacking, according to The New York Times. Over 8,000 employees were fired for not keeping up with sales demands. 

With the former CEO and bank being held accountable, only time will tell whether the bank will be able to bring the “real change” that it now promises.