CFPB still too powerful? Blame Wells Fargo

by Ben Pena September 17, 2016, 0:43

The bank agreed to pay $185 million in fines over claims that it opened more than 2 million unauthorized accounts.

Reuters reported citing investors, analysts and legal experts that, Wells Fargo's silence did not mean it had broken the law.

Carrie Tolstedt - the 56-year-old former head of Wells Fargo's community-banking arm whose retirement was announced two months before the government settlement - has drawn a spotlight because of the millions she still stands to receive.

In July, the bank announced the departure of Carrie Tolstedt, the former head of community banking, after she chose to "retire at year's end after a long and successful career".

The investigation is being conducted by the U.S. Attorney's Offices for the Southern District of NY and the Northern District of California, these people said.

Wells Fargo & Co (NYSE:WFC) is now under the investigation of the US Justice Department over the creation of millions of fake accounts.

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Federal prosecutors have launched an inquiry into aggressive sales tactics at Wells Fargo after revelations that thousands of its employees secretly created accounts customers didn't ask for in order to meet sales goals, according to people familiar with the matter. Debit cards were issued and activated, as well as PINs created, without telling customers.

Wells Fargo's internal controls and monitoring identified the behaviour in the division, which led to the termination of around 5,300 staff over the practice.

Although the CFPB doesn't comment on why it conducts investigations or what brought Wells Fargo to its attention, Los Angeles City Attorney Mike Feuer filed a lawsuit against Wells Fargo in 2015 after hearing reports of unauthorized accounts through a December 2013 report in the Los Angeles Times. She and her four Democratic colleagues in the Senate who co-signed her letter to Stumpf weren't shy about its implications for his own bank account.

"Rather than acknowledging a management break-down, CEO John Stumpf blamed a minority of bad employees", the proposed resolution said, noting that Stumpf has publicly said bank employees had no incentive to commit wrongdoing. She received $5 million in bonuses 2011-15, the period when regulators say the fraud occurred. Because if they didn't, then this is a bank that's just too big to manage. Money in customers' accounts was said to have been transferred to these new accounts without their authorization.

In a statement, Chief Executive Officer John Stumpf said, "We want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers".

Wells Fargo can also lose allies in the Congress as it won't be an easy argument for them to defend the bank.

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