At the close of summer 2016, Wells Fargo sat comfortably atop the international banking and financial services industry. Widely-viewed as a beacon of stability, Wells Fargo had weathered the recent financial crisis better than most and was now enjoying a run of particularly strong growth, especially in its sprawling retail division.
But in early September came the bombshell. The U.S. Consumer Financial Protection Bureau (CFPB,) a legacy of postcrisis financial regulation, was levying Wells Fargo with the largest fine in the CFPB’s short existence. Wells Fargo would agree to pay a landmark $185 million penalty to regulators and the city and county of Los Angeles as well as refund five million dollars to customers. Less than a week after these penalties went public, the FBI and federal prosecutors in New York and California launched their own investigations into misconduct at the bank, opening the possibility of criminal charges.
What was going on here? Well, over the last half decade, Wells Fargo employees had been fraudulently opening accounts without customer authorization in an effort to meet aggressive sales quotas and receive bonuses, sometimes up to 20 percent of their salaries.
Download the guide to continue reading >>