Wells Fargo To End Product Sales Goals

A customer who opened a checking account would be encouraged to consider a debit card or savings account.

Wells Fargo, based in San Francisco, said it fired 5,300 workers as a result of the conduct.

The allegations have been a black eye for San Francisco-based Wells Fargo, the biggest USA home lender and a marquee investment for billionaire Warren Buffett, whose Berkshire Hathaway Inc.is the bank’s largest shareholder.

Just last month, the big bank needed to pay out $3.4 million to customers for a mailing error. Despite running this troubled division, the 56-year-old is expected to walk away with roughly $125 million in compensation in a mix of stock, salary and stock options. “And it should not have occurred at Wells Fargo”.

In fact, that same year, in a presentation to investors, Tolstedt and other executives touted the bank’s “expertise” in selling multiple products, which was immensely profitable for the bank. He reminds the bank employs more than 250K. The phrase “cross-sell” came up in the presentation 19 times. Cook predicts that many Wells Fargo customers may now take their business to other banks or credit unions. Wells Fargo also had a program called go for “Gr-Eight”, a company-wide push to get more than eight products per household – a metric that the program never reached.

(FILES) This file photo taken on May 22, 2009 shows the sign for a Wells Fargo bank in Woodbury, Minnesota.

“Unfortunately, it’s not surprising that numerous employees took advantage of an incentive system created to spur cross-selling”, Morningstar said.

The bank, which has fired more than 5,3000 employees who were involved in the fraud scheme over the past five years, has said it deeply regrets what happened and is seeking to fix damaged relationships and regain trust. Some even created fake personal identification numbers.

The scandal “probably should lead to a pay claw-back” from Tolstedt, CSLA analyst Mike Mayo wrote in a report on Monday.

The Wells Fargo case could be used to further galvanize criticism that the Obama administration has not done enough to banking industry executives responsible for bad behavior, consumer advocates say.

The incident has also brought attention to the compensation of Carrie Tolstedt, who stepped down as head of the bank’s Community Banking unit in July.

“Somebody has to be punished for this kind of behavior”, said Representative Al Green of Texas. Several Wells executives are scheduled to brief panel members Tuesday prior to the hearing, which is scheduled for September 20.