Latest news with #fakeaccounts
Reuters
6 days ago
- Business
- Reuters
Wells Fargo CEO goes from fixer to builder as regulators lift punishments
NEW YORK, June 4 (Reuters) - Wells Fargo (WFC.N), opens new tab CEO Charlie Scharf knows he has a reputation for sternness, but he said that when the bank was finally freed of a $1.95 trillion asset cap by regulators on Tuesday, he became emotional. "Everyone thinks that I'm this tough, tough person ... but it's been so long in the making, it's impacted so many people so negatively," Scharf said. "All of a sudden, it's like it's all been worth it and everyone's feeling it." Scharf, 60, took the helm at Wells Fargo in 2019, vowing to repair its deeply entrenched problems from a fake-accounts scandal that erupted in 2016. The bank faced a public outcry, was blasted by lawmakers and slapped with billions of dollars in fines. The Federal Reserve's decision to lift one of Wells Fargo's last major punishments this week has largely closed that chapter in its history. It also cements Scharf's legacy after a grueling turnaround in which he overhauled management, slashed headcount and shed businesses. "I feel great," Scharf told Reuters in a wide-ranging interview on Wednesday after being inundated by congratulatory messages from employees and counterparts at other banks. He is turning his focus to growth after serving almost six years as Wells Fargo's fixer-in-chief. He plans to expand further in credit cards and investment banking, while also investing in wealth and commercial banking. It will not expand in mortgages, he said. The bank exited many of those operations after they were beset by scandal. As Wells Fargo aims to increase earnings, it plans to raise its dividend to keep payouts consistent for investors, Scharf said. Share buybacks will continue, but their pace will probably slow as the bank invests in growth, he said. Scharf, who previously ran BNY and Visa (V.N), opens new tab, took over scandal-plagued Wells Fargo after his two predecessors were ousted. He installed new leadership, slashed more than 55,000 jobs, exited unprofitable businesses and reworked the bank's risk management and controls. In an effort to transform its culture, he also reworked the company's performance review process to boost accountability. Wells Fargo shares were up almost 1% on Wednesday afternoon, having climbed nearly 9% so far this year as investors became more optimistic about the bank shedding its regulatory baggage. "The pressure, by the way, for me - it doesn't go away, it just changes" from focusing on historical problems to future growth, Scharf said. "I'm not going to work any less hard, I'm not going to feel any less pressure, I'll probably have more fun."
The Independent
7 days ago
- Business
- The Independent
Fed lifts restrictions placed on Wells Fargo in 2018 because of its fake-accounts scandal
The Federal Reserve said Tuesday that Wells Fargo is no longer subject to the restraints the Fed placed on the bank in 2018 for having a toxic sales and banking culture. 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, 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. 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. Since taking over in 2019, Scharf's goal has been to convince the Federal Reserve that Wells Fargo had fixed its toxic banking practices.
Associated Press
7 days ago
- Business
- Associated Press
Fed lifts restrictions placed on Wells Fargo in 2018 because of its fake-accounts scandal
NEW YORK (AP) — The Federal Reserve said Tuesday that Wells Fargo is no longer subject to the restraints the Fed placed on the bank in 2018 for having a toxic sales and banking culture. 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, 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. 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. Since taking over in 2019, Scharf's goal has been to convince the Federal Reserve that Wells Fargo had fixed its toxic banking practices.
