Wells Fargo woes continue with loss of state business, massive job cuts

by Ryan Smith18 Oct 2017
Troubles continued this week for Wells Fargo, with both California and Ohio deciding to extend sanctions against the embattled bank even as it slashes nearly 500 jobs at a high-performing Pennsylvania call center.

Since Wells Fargo’s scandals broke – and have continued to break with depressing regularity – several states and cities have suspended their governments’ business with the banking giant. But now both Californian and Ohio have extended their bans on the bank, Ohio for six months and California – Wells Fargo’s home state – for a year.

California Treasurer John Chiang imposed his state’s ban in October of last year after Wells Fargo’s fake-accounts scandal initially came to light, according to a report by Corporate Council. In that scandal, it was revealed that the bank’s sales staff had opened millions of customer accounts without those customers’ knowledge or consent. But it was the constant revelations of other scandals that convinced the treasurer’s office to extend the ban.

A statement from Chiang’s office Monday said “that there has been an alarming drum beat of new reports of egregious, unethical or illegal actions by the bank over the past year.”

Meanwhile – in a move that apparently shocked the affected employees – the bank announced Tuesday that it would close a Bethlehem, Pa., call center, eliminating 460 jobs and nearly halving its workforce in the area. Wells Fargo employee Nancy Jennings told local paper The Morning Call that call-center employees were called into the center’s cafeteria at about 11 a.m. and informed that the center would close. Jennings told The Morning Call that some employees walked out of the meeting early, in tears, while others demanded to know why the bank was eliminating a high-achieving call center in the midst of a scandal based in Wells Fargo’s branch offices.

“So this was a big shock,” Jennings said.

A Wells Fargo spokesman told the paper that call-center workers will be paid for the next 60 days but will only work for the next 15. The spokesman said the bank’s scandals didn’t play any role in the decision to close the center.

But the scandals may have driven a sharp drop in profit for the bank. Wells Fargo’s third-quarter profit saw a steep year-over-year drop this year, falling nearly 19% from Q3 of 2016, The Morning Call reported. And the bank announced earlier this year that it would cut $2 billion in annual expenses – most of the savings coming from the planned closure of 450 branches.


Related stories:
Billion-dollar settlement takes a bite out of Wells Fargo’s Q3 earnings
Wells Fargo leadership can’t duck shareholder lawsuit – judge
 

Poll

Should CFPB have more supervision over credit agencies?