BANKING
Wells Fargo changes its pay structure

Wells Fargo announced on Tuesday a full restructuring of how it pays its bank branch employees, with incentives now tied to how often customers use their accounts, as the bank tries to recover from a scandal over aggressive sales practices.

The plan has been considered a high priority for chief executive Tim Sloan and Mary Mack, the head of Wells Fargo’s community bank division — both of whom took those jobs after the scandal emerged. Wells Fargo announced in September that it was eliminating the sales goals that led employees to open up to 2 million unauthorized accounts.

Wells Fargo’s 70,000-plus front-line bank employees will no longer be given incentives for how many new accounts they open or for meeting sales goals. Instead, they will receive part of their overall salary based on how the products they sell are used, with one component also based on independently measured customer-service scores for their branch locations.

Employees will also receive more of their overall wages as a base salary rather than in one-time incentives and bonuses. Wells Fargo said earlier it was boosting its minimum wage to a range of $13.50 to $17 an hour.

The bank was fined $185 million in September in an agreement with regulators who said bank employees opened millions of customer accounts — without customers’ permission — to meet targets that called for every customer to have eight products with the bank.

— Associated Press

FEDERAL RESERVE
Richmond Fed’s Lacker to retire

Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, plans to retire Oct. 1, marking the exit of one of the central bank’s most steadfast inflation fighters as the Fed weighs how quickly to raise interest rates.

The Richmond Fed said Tuesday that a committee had been formed to find a successor for Lacker, who has led the regional bank since 2004.

The head of the Richmond Fed will be a voting member of the policy-setting Federal Open Market Committee in 2018.

Lacker, 61, was a voice of restraint in the use of monetary policy and the Fed’s balance sheet as the central bank used extraordinary powers to combat the financial crisis and the sluggish recovery.

“He was consistent in terms of wanting a narrow Fed that stuck to the business of insuring price stability because that would be the Fed’s best contribution to society,” said Vincent Reinhart, chief economist at Standish Mellon Asset Management. Lacker dissented frequently while a voter on the FOMC in favor of tighter policy. During the financial crisis, he warned about channeling credit to specific sectors of the economy, inflation risks and government rescues of troubled banks.

Lacker hasn’t lined up another job, according to Richmond Fed spokeswoman Laura Fortunato. “He does want to get back to writing and research,” she said.

— Bloomberg

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