Banking, finance, and taxes
Wells Fargo Settles Legal Case but Says It Is Doing a Great Job
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Wells Fargo & Co. (NYSE: WFC) has repented and turned away from a series of dubious business practices, it says. This did not stop the New York State Attorney General from savaging the bank as the state announced the settlement of a case that accused it of bad business actions. In the meantime, Wells Fargo is marketing to the public regarding its new and improved approach to customers.
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The $65 million fine was due to a settlement over misleading investors about dubious operations. The announcement by the AG read:
Attorney General Barbara D. Underwood announced today that Wells Fargo & Company will pay a $65 million penalty following the Attorney General’s investigation into the bank’s fraudulent statements to investors in connection with its “cross-sell” business model, related sales practices, and the bank’s publicly reported cross-sell metrics.
The New York AG’s office also said other investigations of the bank will continue.
These sales practices were critical to charges by investors and government authorities that could keep Wells Fargo in court for years. The scandal cost Wells Fargo’s longtime CEO John Stumpf his job in 2016. He was replaced by Chief Operating Officer Timothy Sloan. Critics argue that Sloan should go as well since he held senior management jobs over much of the period during which the bank’s practices caused the investigations and the charges.
Wells Fargo’s campaign to improve its image has been backed by millions of dollars in advertising and promotions. In these, it has disclosed it past flaws and a portion of what it has paid in reparations. But at the core of the message is that it will “make things right, build a better bank, and earn back the trust of our customers, team members, and the American public.”
Recently the accusations against Wells Fargo have grown. It allegedly charges mortgage customers penalties they did not deserve. It improperly reposed cars from customers who had loans from the bank. It settled a securities fraud class action case for $480 million.
The bad news will continue to shower down on Wells Fargo. Its pitch to the public about its new practices rings hollow.
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