NEW YORK (CBS SF/AP) — Some former Wells Fargo employees are suing, while others may be getting their jobs back.
Wells Fargo tells KPIX 5 it created a special rehire-resource team to work with eligible former employees who want to return to the bank. But it may be too little, too late.
Wells Fargo has confirmed that the Securities and Exchange Commission is investigating its sales practices, and revealed that it has almost doubled to $1.7 billion the amount set aside to deal with its legal problems.
The San Francisco-based bank said in a regulatory filing Thursday that a myriad of local, state and federal government agencies are investigating Wells Fargo for its sales practices scandal. That’s on top of class-action lawsuits filed against the bank by investors, its former employees and customers.
On a call with investors, CEO and President Tim Sloan, said, “We’re also assisting former team members who left Retail Banking because they did not meet performance goals and who remain eligible for rehire.”
Consumer psychologist Kit Yarrow talked about the offer from Wells Fargo’s new CEO.
The 5,300 employees terminated for their involvement in creating fake accounts will not be eligible, rather the offer goes to those who were fired for not meeting the aggressive sales goals that led to the fake accounts.
Former employees have filed a class-action lawsuit claiming they were fired or demoted after reporting fraud or refusing to open fake accounts.
Something Yarrow says does not bode well for the bank’s gesture to hire them back.
“It vindicates those that were fired. It doesn’t necessarily say that there is an improvement in a corporate culture if it’s in response to a lawsuit,” according to Yarrow.
Wells Fargo did not say how many employees were inappropriately fired, but says it is instituting new rules to prevent the culture that lead to the scandal.
“I think for those people who thought about leaving but haven’t gotten around to it, maybe this will be justification to hang in there,” Yarrow said.
Wells Fargo said recruiters will help with their resumes, help them navigate the interview process and provide interview coaching and tips.
Due to its mounting legal woes, Wells Fargo is also boosting the amount of money it has set aside for legal expenses from the $1 billion it had set aside as of June 30.
The bank has been under fire since it was discovered that in order to meet extremely lofty sales goals, employees opened as many as 2 million bank and credit card accounts without customer authorization. The company has fired more than 5,000 employees, the vast majority of them lower-level workers.
The biggest scandal in the bank’s 164-year history forced the abrupt retirement last month of its CEO, John Stumpf, after the board reclaimed $41 million in compensation. The company named as its new CEO Tim Sloan, who has made fixing the bank’s reputation his top priority.
Sloan held an “all-hands” meeting with employees last month where he apologized directly to the bank’s front-line workers. Wells has also launched an advertising campaign to apologize to customers. The bank is also fighting off angry politicians, both Republican and Democrat, who in a tense election year have make an example of Wells Fargo.
“I know there is a lot we need to get right and team members throughout the company are focused on doing the hard work that is necessary to restore trust in Wells Fargo,” Sloan said in prepared remarks at an investor conference in Boston on Thursday.
Sloan said Wells will also now provide updates on the activity inside its branches on a monthly basis. When Wells reported its third-quarter results last month, there were some early signs that customers were pulling back their business with the bank. Wells reported double-digit percentage drops in bank account openings, as well as declines in bank branch traffic. Wells employees have said, since the scandal, that they are sometimes spending their entire work days closing customer accounts.
While acknowledging the decline in branch traffic, Mary Mack, the new head of consumer banking at Wells, told investors Thursday that “It is still too early to gauge the longer term impact on these business trends.”
But the bank’s legal woes clearly are nowhere close to being over. Along with the disclosure about the legal issues regarding its sales practices, Wells also disclosed it is in talks with state and federal regulators over its practices tied to the housing bubble and subsequent financial crisis. Known as the Working Group of the Financial Fraud Enforcement Task Force, it is the group of regulators that have been reaching multibillion settlements with major financial companies like Bank of America, JPMorgan Chase and Goldman Sachs.
Wells Fargo shares rose 19 cents, or 0.4 percent, to $45.43 in midday trading Thursday.
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