Wells Fargo CEO says bank culture not to blame

Wells Fargo also said that it had fired 5,300 employees over the sales conduct. The regulators alleged that Wells Fargo engaged in “widespread illegal” activity and said that employees had opened as many as two million accounts without customers’ knowledge.

The investigation comes a week after Wells Fargo (WFC), one of the nation’s largest banks, was hit with $185 million in civil penalties for secretly opening millions of unauthorized deposit and credit card accounts that harmed thousands of customers.

“The people who we’re talking about here weren’t the high performers”, Chief Financial Officer John Shrewsberry said at the Barclays Global Financial Services Conference in New York City.

Stumpf said the bank is taking steps to make things right, including reimbursing affected customers.

Critics have been weighing in to signal disapproval of the malpractice from Wells, with Treasury secretary Jack Lew the latest to condemn the bank. “This ought to be a moment where people stop and remember how unsafe the system can be if you don’t have protections in place”.

“Other firms are going to rethink this whole policy”, he said.

The consumer bureau and the Office of the Comptroller of the Currency also opened investigations and found that bank employees illegally transferred money from legitimate accounts into unauthorized ones opened for customers without their approval. She has typically awarded millions a year in bonuses and Wells Fargo stock.

Richard Cordray, director of the CFPB, told CNBC earlier this week that he does not believe Wall Street has a systemic problem with regard to retail staffers committing fraud to meet performance objectives, adding that he and other regulations will remain vigilant investigating banks. The move marks a major switch in practice by the bank, which is known in the industry for its ability to sell multiple products to the same customer.

But the bank is not halting the practice, said spokeswoman Jennifer Langan.

Prosecutors are also focusing on whether there was willful blindness to sales practices on the part of executives at the bank, these people said.

Wells Fargo executives were scheduled to brief Senate Banking Committee staff on Tuesday, with regulators making presentations later in the week in preparation for the hearing, according to a committee aide.

Wells Fargo has refused to say if it is considering implementing its executive compensation clawback provisions regarding Tolstedt. Mr. Stumpf said that those fired included bankers, managers and managers of managers, but declined to name the most senior executive let go. On Tuesday, it was down 3 percent.