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Wells Fargo Still Hasn’t Gotten Ahead of Its Problems - http://earlyretireonline.com | how to earn money fast

May 17, 2018 6:23 pm
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Patience with CEO Tim Sloan will eventually run out.

Wells Fargo & Co. has recently launched a series of advertisements meant to rebuild trust with customers. But the ads, to pull an image from Wells Fargo’s long-ago campaigns, are putting the wagon before the horse.

Evidence of that is pilling up. On Thursday, the Wall Street Journal reported that Wells Fargo recently discovered that employees were improperly altering the documents of business borrowers, adding information to the accounts without the consent or notifying the clients. It’s not clear that altering the documents cost clients any money — a Wells Fargo spokesperson says it didn’t — but the problem is it has that familiar whiff of going behind customers’ backs, even though this is apparently on a smaller scale than Wells’s earlier scandal of phony accounts. Wells says that the activity continued to occur as recently as this year, and that it has reported the infractions to regulators.

The latest issue comes only a week after news came out that Wells Fargo admitted it had improperly collected fees on a Tennessee public pension fund. The fund says nearly $50,000. Wells Fargo claims less, but the bank also disclosed in a regulatory filing that it is discovering that improper fees could be a widespread problem in its pension fund business. The bank’s wealth management unit is also under investigation for pressuring clients into rolling over their low-cost 401(k) accounts into more expensive alternatives.

For Wells Fargo to spend money on an advertising campaign that says “trust us” seems like a giant waste of money, when evidence rolls out seemingly weekly that clients still shouldn’t.

Salary Slump

Wells Fargo does not appear to have significantly upped what it spends on compliance

Source: Corporate filings

But it also highlights a persistent and repeated problem that the bank and its CEO, Tim Sloan, have made throughout its recent scandal-plagued era. Wells Fargo has regularly said its problems are in the past, without spending the money it should to actually put those problems in the past. Wells Fargo, like other banks, doesn’t break out what it spends on compliance, and says it’s generally spending more, but in its most recent quarter it’s hard to see where. Salaries across the bank were up just 2 percent from a year ago, and down from the last three months of 2017. Overall expenses were up, but predominantly because of one-time costs, such as the $800 million it realized for paying its latest regulatory fine, which mostly had to do with auto lending. In February, the Federal Reserve sanctioned Wells Fargo for not having proper risk controls in place. The bank has since told shareholders it plans to cut costs, not raise them in order to improve compliance.

 
 

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