Facing outrage, Wells Fargo CEO steps down from Fed advisory council
Facing bipartisan condemnation over the creation of millions of false accounts allegedly opened by his bank without customers' knowledge, Wells Fargo CEO John Stumpf has agreed to resign his position on the advisory council for the Federal Reserve's San Francisco region.
Despite the stark divisions in the US political landscape, one issue recent has garnered remarkable bipartisan consensus: the scandal at Wells Fargo.
The embattled chief executive officer, John Stumpf, resigned Thursday from the Federal Reserve's advisory council, two days after suffering the ire of both Republicans and Democrats on a Senate panel, venting their outrage at the alleged sales abuses undertaken by thousands of Wells Fargo employees.
"John made a personal decision to resign as the Twelfth District's representative to the Federal Advisory Council. His top priority is leading Wells Fargo," Wells Fargo spokesman Mark Folk told Reuters.
During Mr. Stumpf's hearing before the Senate Banking Committee, saying that he was "deeply sorry" wasn't enough to deflect a verbal assault by members of both parties on the panel. They accused the bank of fraud and told Stumpf he was scapegoating lower-level employees – 5,300 of whom have been fired over the activity – while leaving senior executives unscathed.
Analysts say the illegal activity, which included opening unauthorized accounts and signing people up for online banking without consent, was driven by punishing sales targets. A typical employee, according to the Associated Press, was required to sell between 13 and 15 banking products each day, with high targets stretching even to small towns.
There is also concern over the apparent connection between some of Stumpf's bonuses and the drive to increase the number of customer accounts, whereby the CEO was rewarded for higher figures, leading to what CNN's Matt Egan and Chris Isidore described as "a pressure-cooker atmosphere."
Meanwhile, as senators call for Stumpf's resignation and the initiation of criminal investigations, former Wells Fargo employees are suing the bank for $2.6 billion, under claims of unfair dismissal. Yet these employees are not the ones relieved of their employment because they engaged in fraudulent activities; rather, they are those who lost their jobs after failing to meet quotas because they refused to break the law.
"The biggest victims of this scheme are a class of people that nobody else has talked about," reads the lawsuit. "The biggest victims of Wells Fargo's scam [are] the class of victims that were fired because they did not meet these cross sell quotas by engaging in the fraudulent scam that would line the CEO's pockets."
Material from the Associated Press and Reuters was used in this report.