SAN FRANCISCO–The City and County of San Francisco are being urged to cut business ties with hometown Wells Fargo Bank in the wake of its bogus account-opening scandal.
San Francisco Supervisor John Avalos announced a resolution that directs the City and County to move their business to other banks.
“It’s disheartening to see our hometown bank was engaged in this sort of reckless behavior, and that its initial response was to scapegoat lower-level employees while senior executives walked with millions,” said Avalos. “Today’s resolution makes it clear that we expect that companies who do business with San Francisco to act ethically and to follow the law.”
In addition to barring future business with banks who engage in creating fraudulent accounts, the resolution also directs government staff to research any existing business relationships with Wells Fargo and the feasibility of ending them. It also directs the City Attorney to investigate if other banks are also engaged in creating fraudulent accounts.
Meanwhile, Wells Fargo reported that the negative publicity surrounding the bank’s account-opening scandal and other ethical and legal issues are hitting where it counts. Wells Fargo reported that new account openings have plunged since news was first reported that the bank had opened more than two-million bogus accounts for customers and that it had let go more than 5,000 employees as part of the widespread problem.
Analysts, meanwhile, have asked the bank whether it plans to bring in new management.
Wells Fargo reported that customers opened 25% fewer checking accounts and applied for 20% fewer credit cards in September 2016 compared with the same period one year earlier.
The bank’s CEO, John Stumpf, resigned last week after a month of scrutiny that followed $185 million in fines by several regulators as the result of opening accounts that customers never requested. Former employees across the country have stepped forward with stories of being pressured to open the accounts in order to meet aggressive sales goals.
Timothy J. Sloan, who was named the chief executive last week during the company’s third-quarter earnings call, said that he understood the gravity of the situation, according to the New York Times.
“As a new CEO, my immediate and highest priority is to restore trust in Wells Fargo,” Sloan said during the call.
The New York Times also reported that a gauge of customer loyalty — which asks customers whether they would recommend Wells Fargo to family and friends — was also down in September.
The bank said traffic at its roughly 6,000 branches remained consistent in September with levels of a year ago, while credit card and debit card use increased.
Meanwhile, the Times reported that during the earnings call Wall Street analysts had “pointed questions” for Sloan, a 29-year veteran of Wells Fargo, over whether some new faces would be brought aboard.
“Has there been any thought about bringing somebody from the outside?” one analyst asked, “because a lot of you guys have been with the bank for multiple, multiple years.”
According to the Times, Sloan responded that it was a “fair question, and one that we have been getting asked.” But in the end, he said, the board was “very supportive of the management team,” the Times said.