Pressure builds on Wells Fargo
CEO Sloane to face shareholders’ ire over unauthorized checking, credit accounts
Activist Wells Fargo shareholders Monday demanded the besieged bank fully investigate the “systemic failures” that nurtured a culture of high-pressure sales tactics and unleashed a scandal over bogus bank accounts.
The demands came a day before Wells Fargo’s annual shareholders meeting, during which shareholders are expected to pepper Chief Executive Officer Timothy Sloan with questions and comments about the debacle over unauthorized
checking and credit accounts.
Members of Interfaith Center on Corporate Responsibility said Monday that they were unhappy with the Wells Fargo board’s supervision of the bank, dissatisfaction that prompted them to offer a resolution seeking a comprehensive report.
“Board members are elected by shareholders to be our watchdogs and our eyes and ears inside the company to ensure our capital is being managed in a responsible manner,” said Seth Magaziner, general treasurer for Rhode Island and a co-filer of the resolution from the activist shareholders. “Clearly the board was not being responsible at the time the scandal was unfolding.”
Wells Fargo has been fined $185 million because employees opened up to 2.1 million accounts without the permission of customers. Since the scandal surfaced in September, the bank has endured harsh criticism, pressure or punishment by regulators, shareholders, customers, politicians and prosecutors.
“Shareholders believe a full accounting of the systemic failures allowing these unethical practices to flourish are critical to rebuilding credibility with all stakeholders and will strengthen risk management systems going forward,” the activist shareholders said in a statement supporting the resolution.
Separately Monday, Wells Fargo received a favorable ruling from the Federal Reserve Bank and the Federal Deposit Insurance Corp. that they were satisfied with the bank’s plan if another financial crisis was to happen.
“Resolution plans, required by the Dodd-Frank Act and commonly known as living wills, must describe the company’s strategy for rapid and orderly resolution under bankruptcy in the event of material financial distress or failure of the company,” the FDIC said Monday. Wells must submit a new version of the living will by July 1.
“Earlier today, the Federal Reserve and the FDIC announced that Wells Fargo’s revised submission adequately remedied the remaining deficiencies,” Wells Fargo said Monday. “We are pleased with the agencies’ findings and remain committed to sound resolution planning and preparedness as we finalize our July 2017 submission.”
The announcement by the FDIC provided some welcome news for the bank ahead of the shareholders meeting.
The activist shareholders’ resolution demands that the Wells Fargo board order a comprehensive report about the root causes of the bank’s fraudulent activity and the steps taken to improve risk management and control processes.
“Shareholders remain concerned about the longterm viability of the company and look beyond the annual meeting for urgent remediation for customers and a full commitment to ethics, values, principles and risk management structures,” said Sister Nora Nash, a Roman Catholic sister and director of corporate responsibility for the Sisters of St. Francis of Philadelphia.