WS Chronicle

BY CASH MICHAELS 

FOR THE CHRONICLE

It is a scandal that takes the veil off of greedy banking practices that set unsuspecting customers up for the fleecing, and now many are suing.

However, at least one branch manager assures that the problem is not in Winston-Salem, while another says she works hard with her team to deliver straightforward services to help their customers.

The Wells Fargo banking scandal is far from over, even though 5,300 employees – including bank managers and supervisors – in the community banking division of one of the nation’s major financial institutions have been fired for reportedly setting up unauthorized sham bank and credit card accounts in the name of customers who had no idea what was happening.

Many of those customers were subsequently hit with unexplained insufficient funds fees. A federal class action lawsuit against Wells Fargo, accusing it of fraud and reckless behavior, was filed last week in Utah, and hundreds of thousands of customers are expected to join it. It could be the first of many lawsuits to come.

The incentive? Earning sales bonuses and incentives. According to a consent order between the U.S. Consumer Financial Protection Bureau and Wells Fargo Bank, N. A., “[Wells Fargo] employees opened 1,534,280 deposit accounts that may not have been authorized.” Of those, 565,000 were credit card accounts. All were done just to meet sales quotas. The practice, which yielded only a reported $2.4 million in fees, allegedly happened over a five-year period.

North Carolina State Sen. Paul Lowe (D-Forsyth-District 32) said, “The Wells Fargo bank scammed many of its customers with new accounts and hidden fees.  The bank was only fined a little less than $200 million. Further, the bank also had the privilege of not admitting they were at fault. Poor people, working people and honest citizens were hurt by this egregious action.  It would be interesting to know how much the bank really made off of this scam.”

Moody’s Investors Service determined that Wells Fargo encouraged, “…pervasive inappropriate practices” and its managers didn’t provide oversight of employees.

The Chronicle called five local Wells Fargo branches Tuesday for comment from their head managers, in an effort to clear up any questions our readers might have.

Out of the five, which included the main branch at North Main Street in downtown (a spokesperson there said the branch didn’t have a manager and they wouldn’t be commenting), two were available to speak on the record.

One branch manager, Tamelia Keaton of the 701 N. Martin Luther King Drive Wells Fargo branch, was available to speak, and she assured that despite the headlines, none of those 5,300 fired Wells Fargo employees worked at her branch, or even in Winston-Salem.

“Our customers shouldn’t be concerned,” Keaton told The Chronicle. Here at Wells Fargo, we strive to make sure that all of our customers are taken care of financially, and the situation that happened, happened in [other areas]. Those employees that were there have already lost their jobs within the past five years this has been going on. So all of those are out of the company now, so there shouldn’t be a concern because we’re going to make sure that we take care of you guys financially.”

Keaton reiterated that none of her branch’s customers were affected by the scandal because the phony practice did not take place in the Winston-Salem market. Nor should there be any concern about their local Wells Fargo bankers  “… because they have relationships with [them], and they are still here.”

Keaton added that she has been with the company for seven years.

Paula Williams is manager at two Winston-Salem Wells Fargo branches, one at 300 S. Hawthorne Road. She told The Chronicle that she’s not aware of any local customers having any of the problems that have been reported in the press, but she’s glad to meet with any who come in and want to review all of their accounts “on at case-by-case basis” to ensure that everything is in order.

“That’s our commitment to our customers all of the time,” Williams, who says she’s been with the company for 10 years, told The Chronicle.

Some critics are saying given the large number of Wells Fargo employees terminated, there is little question the problem was systematic, proving that this is what happens when banks become “too big” to manage and regulate. Customers eventually find themselves paying large fees for services they literally have no control over in many cases.

Wells Fargo, which is headquartered in San Francisco, reportedly earned over $86 billion in total revenues in 2015. In terms of total assets, Wells Fargo is the nation’s third largest bank.

Because of the scandal, the company has been fined $185 million in penalties by the Consumer Financial Protection Bureau and two other banking regulators, and will pay $5 million to affected customers.  It reportedly has been subpoenaed by U.S. Attorney’s offices in North Carolina, New York and San Francisco, indicating that criminal prosecution could be forthcoming, if not civil fraud charges.

Several Democratic U.S. senators, led by Sen. Elizabeth Warren [D-Massachusetts] and Sen. Sherrod Brown [D-Ohio], have demanded an investigation.

Brown has called this “a massive fraud.”

Warren says, “Wells Fargo proved that giant banks still think the rules don’t apply to them. They think they can cheat their customers, stuff their pockets with money, and still walk away.”

At press time Tuesday, the Senate Banking Committee was conducting a hearing , where Wells Fargo CEO/Board Chairman John Stumpf apologized. The House Financial Services Committee is also looking into the matter.

While Stumpf says while he’s sorry for what happened, he will not resign because of it, and will lead any corrective action. According to published reports, the Wells Fargo senior vice president in charge of the unit that allegedly committed the fraud, will be retiring at the end of the year, taking with her a whopping $125 million in stock options and retirement funds.

Published reports indicate the Wells Fargo board of directors could “claw back” at least $17 million of that compensation from unvested stocks.

Richelle Messick, a spokes person for Wells Fargo, called The Chronicle to assure that any customer impacted by the scandal has already been contacted, and refunded any fees they were erroneously charged, generally an average of $25.00

Messick could not say whether the scandal involved any North Carolina customers or employees, but asked any customers who have questions about their accounts to come into their local branch for a full review.