The latest development in the Wells Fargo saga has good news for some of its customers: The bank will pay $110 million to settle a class-action lawsuit for around 2 million accounts opened without customer permission.
The settlement, which is awaiting court approval in California, comes amid six months of continual fallout for Wells Fargo, the second-largest commercial bank in the United States. To recap: Amid intense pressure to meet impossible cross-sales targets from branch managers, employees opened some 1.5 million fake bank accounts and issued over half a million credit cards without customer approval. In September, the Consumer Financial Protection Bureau issued the bank a $100 million penalty, the largest on record, for the illegal practice. The bank also paid an additional $85 million in fines and agreed to refund $2.5 million to its customers for fees associated with the phony accounts.
Compounding the scandal were stories of about the way the bank treated its employees, from impossible sales quotas to reports of the harsh way the bank retaliated against whistleblowers. Amid these reports, John Stumpf, now the former CEO of Wells Fargo, stepped down without severance, in October of last year, forfeiting $41 million in equity. The bank is also facing a probe by the Justice Department, which could mean criminal charges for the executives whose policies led to the pressure to create fake accounts.