USA TODAY International Edition
Four things to watch as Wells Fargo CEO testifies
Wells Fargo CEO John Stumpf will seek to contain the damage to his bank’s reputation Tuesday when he testifies before Congress on a scandal that has raised serious ethical questions about the company’s business practices.
Members of the Senate Banking Committee are expected to grill Stumpf over the revelation the company secretly opened more than 2 million accounts without customers’ permission, prompting a $ 185 million penalty as part of a civil settlement announced on Sept. 8.
The company acknowledged “potentially unauthorized” bank accounts and credit card accounts were opened from 2011 through 2015, racking up $ 2.6 million in fees that have since been refunded to affected customers. A Wells Fargo spokesperson was not available for comment.
Wells Fargo agreed to pay $ 100 million in restitution to victims to a Consumer Financial Protection Bureau fund, $ 35 million to the Office of the Comptroller of the Currency and $ 50 million to the county and city of Los Angeles, which had initiated legal action.
Wells Fargo fired some 5,300 employees over the fake accounts and has eliminated quotas for bankers, branch managers and district managers starting Jan. 1. Four story lines to track:
uHow much did top executives know, and when?
uWere executives rewarded financially for the accounts?
uWill the scandal halt antiregulation proponents?
uWill customers revolt? So far it appears the answer is no. But as Christopher Wolfe, managing director of financial institutions at Fitch Ratings, points out, “To the extent they’re having to change their incentive structures, it could affect their financial performance going forward.”