On the last day of her term as the chair of the Federal Reserve, Janet Yellen made sure that banking giant Wells Fargo gets punished, in a big way, for cheating customers. The Fed said it will not allow the bank to expand until it improves its management, the way it takes risks and the oversight by managers and its board of directors.
Wells Fargo employees cheated 3.5 million customers from January 2009 to September 2016. They signed existing Wells Fargo customers up for credit cards and new accounts without asking permission or telling them they would have to pay additional fees. While the customers paid extra, employees got bonuses for their work.
In its zeal to expand, Wells Fargo’s management apparently encouraged competition to expand accounts and ignored cheating and fraud.
Yellen said, “We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,”
The Consumer Financial Protection Bureau (CFPB), which the Trump administration wants to do away with, in 2016 uncovered the fraud and ordered the bank to pay more than $185 million in fines and penalties. $142 million went to pay restitution to Wells Fargo customers who were cheated.
The Comptroller of the Currency fined Wells Fargo $35 million and the settlement with the CFPB required the bank to pay the city of Los Angeles $50 million.
No one was charged with a crime, and the former C.E.O. of Wells Fargo, John Stumpf, blamed the cheating on 5,300 employees who were fired. But Wells Fargo employees said they felt pressured to open accounts to keep their jobs.
Does Wells Fargo owe you money?
If Wells Fargo owes you money under the settlement, it is required to reach out to you. It needs to do the work.