“It’s disheartening to see our hometown bank was engaged in this sort of reckless behavior,” said John Avalos, a member of the city’s Board of Supervisors.
And San Francisco is not alone. California, Illinois and Massachusetts have all taken steps to suspend ties with the bank, one of the largest in the world. Ohio Gov. John Kasich said “Wells Fargo’s culture was compromised by greed” when he announced the state would stop doing business with the bank for a year. “This company has lost the right to do business with the State of Ohio because its actions have cost it the public’s confidence,” Kasich said.
The bank also lost its Better Business Bureau accreditation. The 100-year old organization cited the sales scandal among the reasons for pulling its seal of approval from Wells Fargo after more than 35 years. But the bureau has also has received more than 4,000 complaints about the bank over the last three years and of 107 customer reviews it has received, all but four were negative.
“It means they no longer meet the standards of trust,” said Jarrod Wise, a spokesman for the Better Business Bureau in the San Francisco Bay area. “They no longer qualify for accreditation.”
It is just the last embarrassing episode for Wells Fargo. More than a month after it agreed to an $185 million fine and acknowledged that for at least five years thousands of employees set up sham accounts customers didn’t want, sometimes by moving money from an authorized account, Wells Fargo is still struggling to contain the damage.
Its’ long-time CEO, John G. Stumpf, has retired and the company says it is spending millions to improve its internal compliance process. A slump in its stock price has pushed Wells Fargo from its perch as the world’s largest bank by market value. (Earlier this week, Stumpf also resigned from the boards of Target and Chevron. He had already resigned from an advisory role with the Federal Reserve.)
“Our No. 1 priority is making things right with our customers and restoring public trust, and we are dedicated to ensuring that all aspects of the company’s business are conducted with integrity, transparency, and oversight,” the bank said in a statement.
“We have already taken important steps, and will continue to do so, to ensure that the sales culture in our retail banking business is 100 percent aligned with our customers’ interests, including ending product sales goals for everyone in the retail banking business to make certain nothing gets in the way of doing what’s right for customers.”
But that process is being hamstrung by the nature of the scheme, a scandal that touched customers directly, industry officials say. “The relatability of this scandal will extend” its life, said Isaac Boltansky of Compass Point Research & Trading. “Ultimately, the public will move on … but Wells Fargo will be in the public relations penalty box for the foreseeable future.”
And it likely to get worse as lawmakers and regulators continue to investigate the case. “The byzantine regulatory infrastructure we have has allowed this death by a thousand cuts to occur,” said Edward Mills, financial policy analyst with FBR Capital Markets. “If this was pre-financial crisis, it would have received little attention.”
The House Financial Services Committee is conducting its own inquiry into the case and federal prosecutors are considering potential civil or criminal charges. On Thursday, Sens. Elizabeth Warren (D-Mass.) and Bob Menendez (D-N.J.) sent a letter to the bank questioning whether its former CEO, Stumpf, will be forced to give up more of his compensation.
“If Mr. Stumpf is allowed to walk away with tens of millions of dollars in compensation that he received while bank employees were engaging in widespread fraudulent activity, then he has profited from the bank’s fraud,” the letter said.