Wells Fargo

Wells Fargo & Company
Public company
Traded as NYSE: WFC
S&P 100 Component
S&P 500 Component
Industry Banking, Financial services
Predecessors Crocker National Bank
First Interstate Bancorp
Bank of North America
First Security Corporation
Norwest Corporation
Wachovia
Founded March 18, 1852 (1852-03-18)
New York City, New York, United States[1]
Founder Henry Wells
William Fargo
Headquarters San Francisco, California, United States
Area served
 Worldwide
Key people
 Stephen Sanger
(Chairman)
Elizabeth Duke
(Vice Chair)
Timothy J. Sloan
(President and CEO)
Products Asset management, brokerage services, commercial banking, commodities, consumer banking, corporate banking, credit cards, consumer finance, equities trading, finance and insurance, foreign currency exchange, foreign exchange trading, futures and options trading, insurance, investment banking, investment management, money market trading, mortgage loans, prime brokerage, private banking, retail banking, retail brokerage, risk management, treasury and security services, underwriting, wealth management
Revenue Increase US$88.26 billion (2016)[1]
Decrease US$32.12 billion (2016)[1]
Profit Decrease US$21.93 billion (2016)[1]
Total assets Increase US$1.930 trillion (2016)[1]
Total equity Increase US$199.5 billion (2016)[1]
Number of employees
 268,800 (2016)[1]
Divisions Wells Fargo Rail
Website wellsfargo.com
An older Wells Fargo branch, located in Berkeley, California

Wells Fargo & Company is an American international banking and financial services holding company headquartered in San Francisco, California, with "hubquarters" throughout the country.[2] It is the world's second-largest bank by market capitalization[3] and the third largest bank in the U.S. by assets.[4] In July 2015, Wells Fargo became the world's largest bank by market capitalization, edging past ICBC,[4] before slipping behind JP Morgan Chase in September 2016, in the wake of a scandal involving the creation of over 2 million fake bank accounts by thousands of Wells Fargo employees.[3] Wells Fargo surpassed Citigroup Inc. to become the third-largest U.S. bank by assets at the end of 2015. Wells Fargo is the second-largest bank in deposits, home mortgage servicing, and debit cards. The firm's primary U.S. operating subsidiary is national bank Wells Fargo Bank, N.A., which designates its main office as Sioux Falls, South Dakota.

In 2016, Wells Fargo ranked 7th on the Forbes Magazine Global 2000 list of largest public companies in the world[5] and ranked 27th on the Fortune 500 list of largest companies in the United States.[6] In 2015, the company was ranked the 22nd most admired company in the world, and the 7th most respected company in the world.[5] As of October 2015, the company had a credit rating of AA−.[7] However, for a brief period in 2007, the company was the only AAA-rated bank, reflecting the highest credit rating from two firms.[8]

Wells Fargo in its present form is a result of a merger between San Francisco–based Wells Fargo & Company and Minneapolis-based Norwest Corporation in 1998 and the subsequent 2008 acquisition of Charlotte-based Wachovia. Following the mergers, the company transferred its headquarters to Wells Fargo's headquarters in San Francisco and merged its operating subsidiary with Wells Fargo's operating subsidiary in Sioux Falls. Along with JPMorgan Chase, Bank of America, and Citigroup, Wells Fargo is one of the "Big Four Banks" of the United States.[9] As of December 31, 2015, it had 8,700 retail branches and 13,000 automated teller machines.[5] The company operates across 35 countries and has over 70 million customers globally.[5]

In February 2014, Wells Fargo was named the world's most valuable bank brand for the second year running[10] in The Banker and Brand Finance study of the top 500 banking brands.[11] Following the emergence in September 2016 of the scandals involving unauthorized cross-selling and the creation of fake accounts, Wells Fargo in October 2016 became the largest bank ever to lose its accreditation with the Better Business Bureau[12] and was also placed under investigation by the California attorney general for alleged criminal identity theft during the creation of millions of accounts without customer consent.[13] Separately in October 2016, Wells Fargo settled upon a payout for a racketeering lawsuit alleging the overcharging of hundreds of thousands of homeowners by the bank for appraisals ordered after defaults on the customers' mortgage loans.[14] In December 2016, following the scandal, the company amended its by-laws to separate the roles of chairman and CEO.[15] A regulatory filing by Wells Fargo revealed in November 2016 that it was under investigation by the U.S. Securities and Exchange Commission in relation to its accounts sales practices.[16] Also in November 2016, three U.S. senators alleged that Wells Fargo's sales scandal had extended from retail bankers to its brokerage employees,[17] and the U.S. Office of the Comptroller of the Currency placed new monitoring restrictions upon Wells Fargo's hiring of new executives, payments of "golden parachutes" to exiting managers, and branch openings and closures.[18]

In December 2016, Bloomberg News reported that regulators in California and New Jersey announced that Wells Fargo was under investigation to determine whether the bank signed up customers for Prudential Financial life insurance policies without their permission, and that Prudential announced it was suspending distribution of such policies through Wells Fargo.[19] In January 2017, it emerged that Wells Fargo had kept its talks with the U.S. Consumer Financial Protection Bureau about the fake account investigation silent from shareholders for up to six months beginning as early as March 2016.[20] In June 2017, it was revealed that a new class action lawsuit stated that Wells Fargo made unauthorized alterations in the home loans of borrowers in bankruptcy that would ultimately charge these customers more in mortgage payments over the long term.[21] In July 2017, Wells Fargo apologized for charging as many as 570,000 customers with unnecessary automobile insurance costs, which may have caused about 20,000 of them to default on their car loans.[22] In August 2017, a federal judge refused to dismiss a lawsuit accusing Wells Fargo of denying loans to immigrants who came to the United States as children and have been allowed to remain in the country.[23] Also in August 2017, a lawsuit was filed against Wells Fargo in federal court for overcharging small mom-and-pop businesses for processing credit-card transactions and then charging them massive fees for early termination of the relationship.[24]

Current operations

Map of Wells Fargo branches.

Wells Fargo delineates three different business segments when reporting results: Community Banking, Wholesale Banking, and Wealth, Brokerage and Retirement.

Community banking

The Community Banking segment includes Regional Banking, Diversified Products, and the Consumer Deposits groups, as well as Wells Fargo Customer Connection (formerly Wells Fargo Phone Bank, Wachovia Direct Access, the National Business Banking Center, and Credit Card Customer Service). Wells Fargo also has around 2,000 stand-alone mortgage branches throughout the country.[25] There are many mini-branches located inside of other buildings, which are almost exclusively grocery stores, that usually contain ATMs, basic teller services, and, space permitting, an office for private meetings with customers.[26] In March 2017, Wells Fargo announced a plan to offer smartphone-based transactions with mobile wallets including Wells Fargo Wallet, Android Pay and Samsung Pay.[27]

Consumer lending

Wells Fargo Home Mortgage is the largest retail mortgage lender in the United States, as of Q3 2011, originating one out of every four home loans.[28] Wells Fargo services $1.8 trillion in home mortgages, the second largest servicing portfolio in the U.S.[29] It was reported in 2012 Wells Fargo reached 30% market share for US mortgages, however, the then-CEO John Stumpf had said the numbers were misleading because about half of that share represented the aggregation of smaller loans that were then sold on in the secondary market. In 2013, its share was closer to 22%; of which eight percentage points was aggregation.[30]

Wells Fargo private student loans

Wells Fargo private student loans are available to students to pay for eligible college expenses, such as tuition, books, computers, or housing.[31] Loans are available for undergraduate, career and community colleges, graduate school, law school and medical school. Wells Fargo also provides private student loan consolidation and student loans for parents.

Wholesale banking

Its wholesale banking segment contains products sold to large and middle market commercial companies, as well as to consumers on a wholesale basis. This includes lending, treasury management, mutual funds, asset-based lending, commercial real estate, corporate and institutional trust services, and capital markets and investment banking services through Wells Fargo Securities. One area that is very profitable to Wells Fargo, however, is asset-based lending: lending to large companies using accounts receivable and inventory as collateral, though less traditional assets are often included in the collateral package. Historically, this type of lending has been done when normal routes of raising funds, such as the Capital Markets or unsecured bank loans, have been exhausted. The main business unit associated with this activity is Wells Fargo Capital Finance. Wells Fargo also owns Eastdil Secured, which is described as a "real estate investment bank", but is essentially one of the largest commercial real estate brokers for very large transactions (such as the purchase and sale of large Class-A office buildings in central business districts throughout the United States).

Equipment lending

Wells Fargo has various divisions that finance and lease equipment to all manner of companies. One venture is Wells Fargo Rail, which in 2015 completed the purchase of GE Capital Rail Services and merged in with First Union Rail. Wells Fargo Equipment Finance is the country's largest equipment financer and nearly doubled in size after it purchased GE Capital's equipment finance division effective March 1, 2016.

Wealth and Investment Management

Wells Fargo Advisors headquarters in St. Louis

Wells Fargo offers investment products through its subsidiaries, Wells Fargo Investments, LLC and Wells Fargo Advisors, LLC, as well as through national broker/dealer firms. Mutual funds are offered under the Wells Fargo Advantage Funds brand name. The company also serves high-net-worth individuals through its private bank and family wealth group.

Wells Fargo Advisors is the brokerage subsidiary of Wells Fargo, located in St. Louis. It is the third largest brokerage firm in the United States as of the third quarter of 2010 with $1.1 trillion retail client assets under management.[5]

Wells Fargo Advisors was known as Wachovia Securities until May 1, 2009, when it legally changed names following the Wells Fargo's acquisition of Wachovia Corporation.

Wells Fargo Securities

Wells Fargo Securities, LLC
Subsidiary
Industry Investment Banking
Headquarters Charlotte, North Carolina
Area served
 Worldwide
Website www.wellsfargo.com/com/securities/
The Seagram Building: Home of Wells Fargo Securities' New York offices and trading floors

Wells Fargo Securities ("WFS") is the investment banking division of Wells Fargo & Co. The size and financial performance of the group is not disclosed publicly, but analysts believe the investment banking group houses approximately 4,500 employees and generates between $3 and $4 billion per year in investment banking revenue. By comparison, two of Wells Fargo’s largest competitors, Bank of America and J.P. Morgan Chase generated approximately $5.5 billion and $6 billion respectively in 2011 (not including sales and trading revenue).[32] WFS headquarters is in Charlotte, North Carolina, with other U.S. offices in New York, Minneapolis, Boston, Houston, San Francisco, and Los Angeles, and international offices in London and Hong Kong.

Cross-selling

A key part of Wells Fargo's business strategy is cross-selling, the practice of encouraging existing customers to buy additional banking products.[33] Customers inquiring about their checking account balance may be pitched mortgage deals and mortgage holders may be pitched credit card offers in an attempt to increase the customer's profitability to the bank, and to make it more difficult for the customer to switch to a different bank.[34][35] Other banks have attempted to emulate Wells Fargo's cross-selling practices (described by The Wall Street Journal as a hard sell technique);[34] Forbes magazine describes Wells Fargo as "better than anyone" at the practice.[35]

International operations

Wells Fargo provides banking services throughout the world, with offices in Hong Kong, London, Dubai, Singapore, Tokyo, Toronto.[36][37]

Charter

Wells Fargo operates under Charter #1, the first national bank charter issued in the United States. This charter was issued to First National Bank of Philadelphia on June 20, 1863, by the Office of the Comptroller of the Currency.[38] Traditionally, acquiring banks assume the earliest issued charter number. Thus, the first charter passed from First National Bank of Philadelphia to Wells Fargo through its 2008 acquisition of Wachovia, which had inherited it through one of its many acquisitions.

History

Wells Fargo History Museums

The company operates 11 museums, most known as a Wells Fargo History Museum,[39] in its corporate buildings in Charlotte, North Carolina, Denver, Colorado, Los Angeles, California, Minneapolis, Minnesota, Philadelphia, Pennsylvania, Phoenix, Arizona, Portland, Oregon, Sacramento, California and San Francisco, California. Displays include original stagecoaches, photographs, gold nuggets and mining artifacts, the Pony Express, telegraph equipment and historic bank artifacts. The company also operates a museum about company history in the Pony Express Terminal in Old Sacramento State Historic Park in Sacramento, California, which was the company's second office,[40] and the Wells Fargo History Museum in Old Town San Diego State Historic Park in San Diego, California.[41]

Wells Fargo operates the Alaska Heritage Museum in Anchorage, Alaska, which features a large collection of Alaskan Native artifacts, ivory carvings and baskets, fine art by Alaskan artists, and displays about Wells Fargo history in the Alaskan Gold Rush era.[42]

Key dates

A late 19th Century Wells Fargo Bank in Apache Junction, Arizona
Wells Fargo bank in Chinatown, Houston
A recently remodeled Wells Fargo bank in Fort Worth, Texas. (2014)
Wells Fargo in Laredo, Texas

Wachovia acquisition

A former Wachovia branch converted to Wells Fargo in the fall of 2011 in Durham, North Carolina.

On October 3, 2008, Wachovia agreed to be bought by Wells Fargo for about $14.8 billion in an all-stock transaction. This news came four days after the Federal Deposit Insurance Corporation (FDIC) made moves to have Citigroup buy Wachovia for $2.1 billion. Citigroup protested Wachovia's agreement to sell itself to Wells Fargo and threatened legal action over the matter. However, the deal with Wells Fargo overwhelmingly won shareholder approval since it valued Wachovia at about seven times what Citigroup offered. To further ensure shareholder approval, Wachovia issued Wells Fargo preferred stock that holds 39.9% of the voting power in the company.[58]

On October 4, 2008, a New York state judge issued a temporary injunction blocking the transaction from going forward while the situation was sorted out.[59] Citigroup alleged that they had an exclusivity agreement with Wachovia that barred Wachovia from negotiating with other potential buyers. The injunction was overturned late in the evening on October 5, 2008, by New York state appeals court.[60] Citigroup and Wells Fargo then entered into negotiations brokered by the FDIC to reach an amicable solution to the impasse. Those negotiations failed. Sources say that Citigroup was unwilling to take on more risk than the $42 billion that would have been the cap under the previous FDIC-backed deal (with the FDIC incurring all losses over $42 billion). Citigroup did not block the merger, but indicated they would seek damages of $60 billion for breach of an alleged exclusivity agreement with Wachovia.[61]

Investment by U.S. Treasury during 2008 financial crisis

On October 28, 2008, Wells Fargo was the recipient of $25 billion of Emergency Economic Stabilization Act funds in the form of a preferred stock purchase by the US Treasury.[62][63] Tests by the Federal government revealed that Wells Fargo needed an additional $13.7 billion in order to remain well capitalized if the economy were to deteriorate further under stress test scenarios. On May 11, 2009 Wells Fargo announced an additional stock offering which was completed on May 13, 2009 raising $8.6 billion in capital. The remaining $4.9 billion in capital was planned to be raised through earnings. On Dec. 23, 2009, Wells Fargo redeemed the $25 billion of preferred stock issued to the US Treasury. As part of the redemption of the preferred stock, Wells Fargo also paid accrued dividends of $131.9 million, bringing the total dividends paid to $1.441 billion since the preferred stock was issued in October 2008.[64]

History of Wells Fargo Securities

Wells Fargo Securities was established in 2009 to house Wells Fargo's capital markets group which it obtained during the Wachovia acquisition. Prior to that point, Wells Fargo had little to no participation in investment banking activities, though Wachovia had a well established investment banking practice which it operated under the Wachovia Securities banner.

Wachovia's institutional capital markets and investment banking business arose from the merger of Wachovia and First Union. First Union had bought Bowles Hollowell Connor & Co. on April 30, 1998 adding to its merger and acquisition, high yield, leveraged finance, equity underwriting, private placement, loan syndication, risk management, and public finance capabilities.[65]

Legacy components of Wells Fargo Securities include Wachovia Securities, Bowles Hollowell Connor & Co., Barrington Associates, Halsey, Stuart & Co., Leopold Cahn & Co., Bache & Co.. Prudential Securities, A.G. Edwards, Inc. and the investment banking arm of Citadel LLC.[66]

Duke Energy Center in Charlotte, home of WFS [67]

Environmental record

In 2009, Wells Fargo ranked #1 among banks and insurance companies, and #13 overall, in Newsweek Magazine’s inaugural "Green Rankings" of the country’s 500 largest companies.[68]

So far, Wells Fargo has provided more than $6 billion in financing for environmentally beneficial business opportunities, including supporting 185 commercial-scale solar photovoltaic projects and 27 utility-scale wind projects nationwide.[69]

As a member of the U.S. Environmental Protection Agency's Climate Leaders program, Wells Fargo aims to reduce its absolute greenhouse gas emissions from its U.S. operations by 20% below 2008 levels by 2018.

Wells Fargo has launched what it believes to be the first blog among its industry peers to report on its environmental stewardship and to solicit feedback and ideas from its stakeholders.[70]

"We want to be as open and clear as possible about our environmental efforts – both our accomplishments and challenges – and share our experiences, ideas and thoughts as we work to integrate environmental responsibility into everything we do," said Mary Wenzel, director of Environmental Affairs. "We also want to hear and learn from our customers. By working together, we can do even more to protect and preserve natural resources for future generations."

Controversies

A Wells Fargo branch in Logan, Utah

Higher costs charged to African-American and Hispanic borrowers

Illinois Attorney General Lisa Madigan filed suit against Wells Fargo on July 31, 2009, alleging that the bank steers African Americans and Hispanics into high-cost subprime loans. A Wells Fargo spokesman responded that "The policies, systems, and controls we have in place – including in Illinois – ensure race is not a factor..."[71] According to Beth Jacobson, a loan officer at Wells Fargo interviewed for a report in The New York Times, "We just went right after them. Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans." The report goes on to present data from the city of Baltimore, where "more than half the properties subject to foreclosure on a Wells Fargo loan from 2005 to 2008 now stand vacant. And 71 percent of those are in predominantly black neighborhoods."[72]

Failure to monitor suspected money laundering

In a March 2010 agreement with federal prosecutors, Wells Fargo acknowledged that between 2004 and 2007 Wachovia had failed to monitor and report suspected money laundering by narcotics traffickers, including the cash used to buy four planes that shipped a total of 22 tons of cocaine into Mexico.[73]

Overdraft fees

In August 2010, Wells Fargo was fined by U.S. District Judge William Alsup for overdraft practices designed to "gouge" consumers and "profiteer" at their expense, and for misleading consumers about how the bank processed transactions and assessed overdraft fees.[74][75][76]

Settlement and fines regarding mortgage servicing practices

On February 9, 2012, it was announced that the five largest mortgage servicers (Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo) agreed to a settlement with the federal government and 49 states.[77] The settlement, known as the National Mortgage Settlement (NMS), required the servicers to provide about $26 billion in relief to distressed homeowners and in direct payments to the states and federal government. This settlement amount makes the NMS the second largest civil settlement in U.S. history, only trailing the Tobacco Master Settlement Agreement.[78] The five banks were also required to comply with 305 new mortgage servicing standards. Oklahoma held out and agreed to settle with the banks separately.

On April 5, 2012, a federal judge ordered Wells Fargo to pay $3.1 million in punitive damages over a single loan, one of the largest fines for a bank ever for mortgaging service misconduct.[79] Elizabeth Magner, a federal bankruptcy judge in the Eastern District of Louisiana, cited the bank's behavior as "highly reprehensible",[80] stating that Wells Fargo has taken advantage of borrowers who rely on the bank's accurate calculations. She went on to add, "perhaps more disturbing is Wells Fargo's refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods."[81]

Alleged racial discrimination during foreclosures

In 2011, the Department of Housing and Urban Development (HUD) launched an investigation of Wells Fargo for racial discrimination practices, the second federal probe in 2012 of alleged violations of misconduct with regard to race. The other, began in 2011 by the National Fair Housing Alliance has found "overwhelming" and "troubling" evidence that six of the nation's major banks handle foreclosures in neighborhoods populated primarily by minorities differently than in white communities.[82]

On July 13, 2012, Wells Fargo entered a settlement agreement with the U.S. Department of Justice for allegedly discriminating against African-American and Hispanic borrowers from 2004 to 2009. Wells Fargo agreed to pay $125 million to subprime borrowers and $50 million in direct down payment assistance in certain areas, for a total of $175 million.[83][84] Wells Fargo spokespersons denied all claims and are settling only to avoid contested litigation.[84][85]

SEC fine due to inadequate risk disclosures

On August 14, 2012, Wells Fargo agreed to pay around $6.5 million to settle SEC charges that in 2007 it sold risky mortgage-backed securities without fully realizing their dangers.[86][87]

Lawsuit by FHA over loan underwriting

On October 9, 2012, the U.S. federal government sued the bank under the False Claims Act at the federal court in Manhattan, New York. The suit alleges that Wells Fargo defrauded the Federal Housing Administration (FHA) over the past ten years, underwriting over 100,000 FHA backed loans when over half did not qualify for the program. This suit is the third allegation levied against Wells Fargo in 2012.[88]

In October 2012, Wells Fargo was sued by U.S. federal attorney Preet Bharara over questionable mortgage deals.[89]

Lawsuit due to premium inflation on forced place insurance

In April 2013, Wells Fargo settled a suit with 24,000 Florida homeowners alongside insurer QBE, in which Wells Fargo was accused of inflating premiums on forced-place insurance.[90]

Lawsuit regarding excessive overdraft fees

In May 2013, Wells Fargo paid $203 million to settle class-action litigation accusing the bank of imposing excessive overdraft fees on checking-account customers. Also in May, the New York attorney-general, Eric Schneiderman, announced a lawsuit against Wells Fargo over alleged violations of the national mortgage settlement, a $25 billion deal struck between 49 state attorneys and the five-largest mortgage servicers in the US. Schneidermann claimed Wells Fargo had violated rules over giving fair and timely serving.[30]

2015 Violation of New York credit card laws

In February 2015, Wells Fargo agreed to pay $4 million for violations where an affiliate took interest in the homes of borrowers in exchange for opening credit card accounts for the homeowners. This is illegal according to New York credit card laws. There was a $2 million penalty with the other $2 million going towards restitution to customers.[91]

Executive compensation

With CEO John Stumpf being paid 473 times more than the median employee, Wells Fargo ranks number 33 among the S&P 500 companies for CEO–employee pay inequality. In October 2014, a Wells Fargo employee earning $15 per hour emailed the CEO – copying 200,000 other employees – asking that all employees be given a $10,000 per year raise taken from a portion of annual corporate profits to address wage stagnation and income inequality. After being contacted by the media, Wells Fargo responded that all employees receive "market competitive" pay and benefits significantly above federal minimums.[92][93]

Tax avoidance and lobbying

In December 2011, the non-partisan organization Public Campaign criticized Wells Fargo for spending $11 million on lobbying and not paying any taxes during 2008–2010, instead getting $681 million in tax rebates, despite making a profit of $49 billion, laying off 6,385 workers since 2008, and increasing executive pay by 180% to $49.8 million in 2010 for its top five executives.[94] As of 2014 however, at an effective tax rate of 31.2% of its income, Wells Fargo is the fourth-largest payer of corporation tax in the U.S.[95]

Prison industry investment

The GEO Group, Inc., a multi-national provider of for-profit private prisons, received investments made by Wells Fargo mutual funds on behalf of clients, not investments made by Wells Fargo and Company, according to company statements.[96] By March 2012, its stake had grown to more than 4.4 million shares worth $86.7 million.[97] As of November, 2012, the latest SEC filings reveal that Wells Fargo has divested 33% of its dispositive holdings of GEO's stock, which reduces Wells Fargo's holdings to 4.98% of Geo Group's common stock. By reducing its holdings to less than 5%, Wells Fargo will no longer be required to disclose some financial dealings with GEO.[98]

While a coalition of organizations, National People's Action Campaign, have seen some success in pressuring Wells Fargo to divest from private prison companies like GEO Group, the company continues to make such investments.[99]

SEC settlement for insider trading case

In 2015, an analyst at Wells Fargo settled an insider trading case with the SEC. The former employee was charged with insider trading alongside an ex-Wells Fargo trader.[100] Sadis & Goldberg obtained a settlement that permitted the client to continue in securities industry, while neither admitting nor denying one charge of negligence-based § 17(a)(3) claim, and paying a $75,000 civil penalty[101]

Consumer Financial Protection Bureau fines

In September 2016, Wells Fargo was issued a combined total of $185 million in fines for creating over 1.5 million checking and savings accounts and 500,000 credit cards that its customers never authorized. The Consumer Financial Protection Bureau issued $100 million in fines, the largest in the agency's five-year history, along with $50 million in fines from the City and County of Los Angeles, and $35 million in fines from the Office of Comptroller of the Currency.[102] The scandal was caused by an incentive-compensation program for employees to create new accounts. It led to the firing of nearly 5,300 employees and $5 million being set aside for customer refunds on fees for accounts the customers never wanted.[103] Carrie Tolstedt, who headed the department, retired in July 2016 and received $124.6 million in stock, options, and restricted Wells Fargo shares as a retirement package.[104][105] On October 12, 2016, John Stumpf, the then Chairman and CEO, announced that he would be retiring amidst the controversies involving his company. It was announced by Wells Fargo that President and Chief Operating Officer Timothy J. Sloan would succeed, effective immediately. Following the scandal, applications for credit cards and checking accounts at the bank plummeted dramatically.[106] In response to the event, the Better Business Bureau dropped accreditation of the bank,[107] S&P Global Ratings lowered its outlook for Wells Fargo to negative from stable,[108] and several states and cities across the US ended business relations with the company.[109] An investigation by the Wells Fargo board of directors, the report of which was released in April 2017, primarily blamed Stumpf, whom it said had not responded to evidence of wrongdoing in the consumer services division, and Tolstedt, who was said to have knowingly set impossible sales goals and refused to respond when subordinates disagreed with them.[110] The board chose to use a clawback clause in the retirement contracts of Stumpf and Tolstedt to recover $75 million worth of cash and stock from the former executives.[110]

Racketeering lawsuit for mortgage appraisal overcharges

In November 2016, Wells Fargo agreed to pay $50 million to settle a racketeering lawsuit in which the bank was accused of overcharging hundreds of thousands of homeowners for appraisals ordered after they defaulted on their mortgage loans. While banks are allowed to charge homeowners for such appraisals, Wells Fargo frequently charged homeowners $95 to $125 on appraisals for which the bank had been charged $50 or less. The plaintiffs had sought triple damages under the U.S. Racketeer Influenced and Corrupt Organizations Act on grounds that sending invoices and statements with fraudulently concealed fees constituted mail and wire fraud sufficient to allege racketeering.[111]

Dakota Access Pipeline investment

Wells Fargo is a top investor in the Dakota Access Pipeline project in North Dakota, a 1,172-mile-long (1,886 km) underground oil pipeline project in the United States. The pipeline has been controversial regarding its necessity, and potential impact on the environment.[112]

In February 2017, Seattle, Washington's city council unanimously voted to not renew its contract with Wells Fargo "in a move that cites the bank's role as a lender to the Dakota Access Pipeline project as well as its "creation of millions of bogus accounts." and saying the bidding process for its next banking partner will involve "social responsibility." The City Council in Davis, California, took a similar action voting unanimously to find a new bank to handle its accounts by the end of 2017.[113]

Failure to comply with document security requirements

In December 2016, the Financial Industry Regulatory Authority fined Wells Fargo $5.5 million for failing to store electronic documents in a "write once, read many" format, which makes it impossible to alter or destroy records after they are written.[114]

Notable buildings

See also

Notes

  1. 1 2 3 4 5 6 7 Wells Fargo & Company 2015 Form 10-K Annual Report
  2. ↑ "Wells Fargo Annual Report 2008" (PDF). Wellsfargo.com. Retrieved 28 December 2014.
  3. 1 2 Laura J. Keller and Katherine Chiglinsky (September 13, 2016). "Wells Fargo Eclipsed by JPMorgan as World’s Most Valuable Bank". Bloomberg L.P. Retrieved September 16, 2016.
  4. 1 2 "This is the most valuable bank in the world". Fortune. Retrieved 24 July 2015.
  5. 1 2 3 4 5 "Forbes-Worlds Largest Companies in 2016". Forbes.
  6. ↑ "Fortune 500 #30: Wells Fargo". Fortune Magazine. Retrieved July 24, 2015.
  7. ↑ "Fitch Affirms Wells Fargo & Company's LT IDR at 'AA-' Following Large Regional Bank Review" (Press release). Fitch. October 5, 2015.
  8. ↑ "Wells Fargo Bank Becomes S&P's Only "AAA" Credit-rated U.S. Bank" (Press release). PRNewswire. February 14, 2007.
  9. ↑ "FRB: Large Commercial Banks-- March 31, 2016".
  10. ↑ "Wells Fargo Tops List of World's Most Valuable Bank Brands, Leads Strong US Growth". Brand Finance. February 3, 2014.
  11. ↑ "The Top 500 Banking Brands, 2014". The Banker. February 3, 2014.
  12. ↑ Jeff Cox (October 20, 2016). "Wells Fargo just lost its accreditation with the Better Business Bureau". CNBC. Retrieved October 20, 2016.
  13. ↑ Richard Gonzales (October 19, 2016). "California Investigates Whether Wells Fargo Committed Criminal Identity Theft". NPR. Retrieved October 20, 2016.
  14. ↑ Dena Aubin (October 31, 2016). "Wells Fargo agrees to $50 million settlement over homeowner fees". Thomson Reuters. Retrieved October 31, 2016.
  15. ↑ "Wells Fargo splits chairman, CEO roles in wake of fake accounts scandal - Philadelphia Business Journal". Philadelphia Business Journal. Retrieved 2016-12-02.
  16. ↑ Accessed November 3, 2016.
  17. ↑ Accessed November 3, 2016.
  18. ↑ Matt Egan (November 21, 2016). "Feds 'tightening the straitjacket' around Wells Fargo". CNN Money. Retrieved November 21, 2016.
  19. ↑ David Voreacos and Katherine Chiglinsky (December 12, 2016). "Wells Fargo Faces California, New Jersey Probes Over Sales". Bloomberg L.P. Retrieved December 12, 2016.
  20. ↑ Matt Egan (January 12, 2017). "Wells Fargo was silent about fake account probe for at least 6 months". CNN Money. Retrieved January 12, 2017.
  21. ↑ Gretchen Morgenson (June 14, 2017). "Wells Fargo Is Accused of Making Improper Changes to Mortgages". The New York Times. Retrieved June 14, 2017.
  22. ↑ Matt Egan (July 28, 2017). "Wells Fargo may have forced 570,000 customers into unneeded auto insurance". CNN. Retrieved July 28, 2017.
  23. ↑ Bob Egelko (August 7, 2017). "Wells Fargo accused of denying loans to immigrants in DACA program". SFChronicle.com. Retrieved August 8, 2017.
  24. ↑ Matt Egan (August 11, 2017). "Wells Fargo accused of ripping off mom-and-pop shops". CNN. Retrieved August 11, 2017.
  25. ↑ "A Review of Wells Fargo’s Subprime Lending" (PDF).
  26. ↑ "Click "Wells Fargo In-Store Branches" for a pop-up with this information". Wellsfargo.com. Retrieved 28 December 2014.
  27. ↑ Romain Dillet (27 March 2017). "Wells Fargo will let you use Apple Pay and Android Pay to withdraw money". TechCrunch. Retrieved 29 March 2017.
  28. ↑ Q3 2011, Inside Mortgage Finance, Sept. 2011
  29. ↑ "Browser Warning". Wellsfargo.com. Retrieved 2012-03-13.
  30. 1 2 "Bank of the Year: How Wells Fargo conquered America". Euromoney. July 2013.
  31. ↑ "Wells Fargo Private Student Loan Review — NerdWallet". 2016-06-09. Retrieved 2016-08-25.
  32. ↑ "Warren Buffett Seal of Approval Goes To... Wells Fargo Bankers? Date 11 Apr 2011". Blogs.wsj.com. 2011-04-11. Retrieved 2012-03-13.
  33. ↑ "Our strategy: How we’re going to get there". Wellsfargo.com. Retrieved 2012-10-07.
  34. 1 2 Smith, Randall (February 28, 2011). "In Tribute to Wells, Banks Try the Hard Sell". The Wall Street Journal. Retrieved April 4, 2012.
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References

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