Wells Fargo stock falls 2% as it tries to regain customers’ trust
Quick breakdown of the Wells Fargo scandal.
Wells Fargo & Co. has launched a campaign to regain customers’ trust after revelations that, in order to meet aggressive sales quotas, bank employees created as many as 2 million accounts in customers’ names without their knowledge or consent.
The San Francisco bank’s chief executive resigned Wednesday, and the bank sent out letters and took out full-page newspaper ads about its values and culture. But investors, at least, are not yet convinced: Wells Fargo’s shares were down more than 2% around 9 a.m. Pacific Time on Thursday.
On Wednesday, customers received a letter from the bank saying that its actions “did not live up to our commitment.”
“Over the last several weeks, you may have heard about the settlements we’ve made involving some of our customers receiving products or services that they did not want or request,” the letter says. “This is inconsistent with our values and with the culture we work hard to maintain. It’s not who we are as a company.”
That same day, John Stumpf resigned as the company’s CEO and chairman. Timothy Sloan, the company’s president and a longtime Wells Fargo executive, was named as Stumpf’s replacement.
Wells Fargo employees’ creation of bogus accounts — and the pressure they experienced to meet sales goals — were exposed in a 2013 Los Angeles Times investigation and led to a $185-million settlement with regulators last month.
A flurry of lawmakers quickly applauded Stumpf’s resignation.
Rep. Mark DeSaulnier (D-Concord) called it “welcome news,” but he said in a statement Wednesday that more needed to be done “for this once-great California institution to find its moral compass.”
California Treasurer John Chiang was even more critical, saying that the “wheels have fallen off the bank’s trademark stagecoach” on Stumpf’s watch.
Wells Fargo “must relearn that integrity and honesty matter,” Chiang said in a statement.
The Committee for Better Banks — a group of bank workers, labor groups and community and consumer advocates — said Stumpf’s resignation should be only the first step. It said industry workers need a “collective voice” to address concerns, “otherwise another scandal is just waiting to happen.”
The coalition, an offshoot of the Communication Workers of America labor union, is organizing bank workers to push for better pay and has called for banks to end all sales goals.
In its letter to customers, Wells Fargo said it has eliminated “product sales goals” for retail banking employees who work in branches and call centers and now sends a message to customers after any new account is opened “so that you know what is happening.” Those measures were first announced last month.
The bank also said it has already provided full refunds to some customers and is “broadening our scope of work” to include any customers it might have missed.
Last month, the bank said it had already made refunds to 100,000 customers averaging $25 to compensate for unauthorized fees and has set aside a total of $5 million for payouts. But some customers have complained that unauthorized credit card accounts could lower their credit scores and therefore raise their borrowing costs.
Wells Fargo followed its letter with a full-page newspaper ad titled “Moving forward to make things right.”
“We’re even more dedicated to serving you and making sure you know where you stand,” the ad states. “There is nothing more important than for you to experience the very best from us.”
Shares of Wells Fargo were down 93 cents, or 2.1%, at $44.39 at 9 a.m.
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UPDATES:
9:15 a.m.: This article was updated with lawmakers’ reactions to Stumpf’s resignation and additional background information.
This article was originally published at 7:10 a.m.
