Chairman and CEO of Wells Fargo & Company WFC, John Stumpf, is set to apologize today as the bank runs deep into troubles following the exposure of the fake account scandal. The banking giant was slapped with charges of opening around 1.5 millions of unauthorized accounts.
In his prepared testimony to be delivered before the U.S. Senate Banking Committee, Stumpf said, “I am deeply sorry that we failed to fulfill our responsibility to our customers, to our team members, and to the American public.” He added, “And I want to apologize for not doing more sooner to address the causes of this unacceptable activity.” He also noted, “I accept full responsibility for all unethical sales practices in our retail banking business, and I am fully committed to doing everything possible to fix this issue, strengthen our culture, and take the necessary actions to restore our customers’ trust.”
The prepared remarks reflect the penitent tone of Stumpf, who has been facing huge criticisms post the $190-million settlement with regulators on Sep 8.
Stumpf specified that there was no “no orchestrated effort or scheme” by the bank to promote the wrongful sales practices.
In his testimony, Stumpf outlined how the company has been making progress in its several measures to “detect and deter” unethical behavior of employees, improve sale practice oversight in its retail banking. He further added that the bank is working to win back customers’ confidence.
Regarding the termination of the bank’s 5,300 employees, Stumpf stated that the termination did not occur following the Consumer Financial Protection Bureau’s enforcement investigation. According to Stumpf, the employees were dismissed gradually for misconduct related to sales activities as a result of investigations from Jan 1, 2011 through Mar 7, 2016.
In order to prevent the creation of unauthorized accounts, Stumpf highlighted several measures undertaken by the banking giant, including working with The Office of the Comptroller of the Currency (OCC) to boost enterprise oversight of sales conduct risk, establishing new improved branch compliance program to monitor violations of sales practice and revising credit card procedures as well.
Stumpf is also expected to testify at a hearing, later this month, before the U.S. House Financial Services Committee, which has also commenced an investigation into the bank.
Currently, Wells Fargo carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the finance space include Meta Financial Group, Inc. CASH, Flagstar Bancorp Inc. FBC and LPL Financial Holdings Inc. LPLA, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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