The fallout from Wells Fargo’s sham account scandal escalated on Thursday when its chief executive resigned from an advisory position at the Federal Reserve and the Department of Labor said it was taking “very seriously” complaints about how the bank treated its staff.
Lawmakers are stepping up pressure on the California-based bank after regulators found its workers opened as many as 2m fee-generating accounts without customers’ knowledge. Senators rounded on John Stumpf, the bank’s chairman and chief executive, at a hearing this week.
Senators led by Elizabeth Warren on Thursday called on the labor department to investigate whether Wells failed to properly pay employees who worked overtime to meet aggressive sales targets.
Meanwhile, Mr Stumpf stood aside with immediate effect as one of 12 banking industry representatives on the Federal Advisory Council just hours after a group of senators — again including Ms Warren — said he should not be reappointed.
The body, whose other members include Citigroup chief Michael Corbat, provides insight to the Fed’s board of governors on economic, monetary, and financial issues.
Mr Stumpf was the industry’s representative for the Fed’s Twelfth district, which is the largest both by geography and the size of its economy and includes the nine western states of the US.
Five senators wrote to Roy Vallee, chairman of the San Francisco Board, calling on the board not to reappoint the Wells chief for a third one-year term.
They argued: “It would be ironic if the Federal Reserve, a key federal banking regulator tasked in part with ensuring the fair and equitable treatment of consumers in financial transactions, continued to receive special insights and recommendations from senior management of a financial institution that just paid a record-breaking fine to the Consumer Financial Protection Bureau for ‘unfair’ and ‘abusive’ practices.”
Wells Fargo said Mr Stumpf’s resignation from the council was his “personal decision … His top priority is leading Wells Fargo”.
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Senators have also written to Tom Perez, Secretary of Labor, raising concerns about the bank’s employment practices. Signatories to that letter include Bernie Sanders, who ran unsuccessfully against Hillary Clinton for the Democratic presidential nomination, and Sherrod Warren, the top Democrat on the Senate banking committee, as well as Ms Warren.
Wells declined to comment directly on the call for the labor department to launch a probe.
In a statement it said: “At Wells Fargo, our team members are our greatest asset. We strive to make every one of them feel valued, rewarded and recognised and we pride ourselves on creating a positive environment for our team members, including market-competitive compensation, career-development opportunities, a broad array of benefits, and a strong offering of work-life programs.”
The Department of Labor said: While we cannot discuss details of potential law enforcement decision-making, we do take the concerns raised in the letter very seriously … Many investigations are initiated by complaints.”
Additional reporting Barney Jopson and Sam Fleming in Washington