Check Yourself: Congress Jumps On The Bad Wagon
O-ho the Wells Fargo Wagon is a-comin' down!
The Short of It:
Wells Fargo proved yesterday that we can't all come up with genius ideas, and some of us come up with truly witless ones. The company's Chief Executive John Stumpf headed to Capitol Hill Tuesday to explain why his bank's sales tactics lead to the creation of millions of fake accounts attached to credit cards that the company's employees had opened for unknowing customers' names. Yesterday, he hauled in a carriage full of apologies.
The Longer Version of It:
This week Congress investigated Wells Fargo in what had essentially been a "Russian nesting doll" scandal. You know the dolls your grandma collects where there's a doll inside of a doll inside of a doll on repeat? Think of that. Only, the last doll greeted customers with an angry face for being late on payments that they didn't even know existed. That's because instead of dolls, the company used hidden feeds, hidden inside hidden accounts, with hidden PIN numbers made with hidden email addresses.
The investigation has revealed that Wells Fargo employees had opened as many as two million accounts without the knowledge or permission of customers and created fake email addresses that required PIN numbers that their customers were unaware of. Since the discovery, the company has been issued a combined total of $185 million in fines for creating over what was discovered to a number upwards of 1.5 million checking and savings accounts and 500,000 credit cards for customers not in-the-loop. The Consumer Financial Protection Bureau issued Wells Fargo $100 million in fines.
How did this happen?
You know those ridiculous candy sales goals you were supposed to raise for your Yearbook Club in high school that caused you great panic? Employees have complained that the scandal was caused by an incentive-compensation program that forced employees to create new accounts with the looming threat of being fired if they didn't. What's more, the investigation has revealed that students --er-- employees who blew a whistle on the methods and practices of creating these accounts were fired.
Here's the latest:
Earlier this week, Wells Fargo's board members told CEO John Stumpf he can kiss tens of millions of dollars in compensation goodbye. Congress isn't entirely satisfied with this though, during his second testimony this month, Congress told Stumpf that if they were the board he'd be so Trumped, (as in "you're fired") and thrown in jail.
There can't be anything else, can there?
Oh, yes. During hearings yesterday, Wells Fargo agreed to pay millions to settle allegations that it had illegally repossessed cars from hundreds of military members who could not meet payments.
Not a good look for Wells Fargo. The bank has taken a huge financial hit since news of the scandal broke out and we're not expecting to see more people flee their banks to sign up for their awesome payment plans.