Billionaire investor Warren E. Buffett rebuked Wells Fargo’s handling of widespread illegal sales practices that spanned at least 15 years and included targeting undocumented immigrants to open new bank accounts.
Buffett said the San Francisco banking giant’s executives failed to act immediately after finding out that employees were creating countless fake and fraudulent bank accounts to meet the company’s unrealistic sales goals. Wells Fargo “incentivized the wrong type of behavior,” Buffett said Saturday during Berkshire Hathaway’s annual meeting in Omaha. The 86-year-old tycoon is Berkshire’s chairman.
“If there’s a major problem, the CEO will get wind of it. At that moment, that’s the key to everything. The CEO has to act,” Buffett said, according to Reuters. “The main problem was they didn’t act when they learned about it.”
Berkshire is Wells Fargo’s largest shareholder.
Buffett’s comments come shortly after former Wells Fargo employees revealed that they were forced to resort to unethical and illegal sales tactics to meet daily sales quotes. Last month, a law firm handling a shareholder lawsuit against Wells Fargo obtained sworn statements from former bank managers, personal bankers and tellers who talked about questionable practices they either engaged in or witnessed.
Some involved creating fake bank accounts with fictitious names, calling current and potential clients well after business hours, and opening multiple accounts for customers, including undocumented immigrants, without their authorization, according to court records.
Employees at Wells Fargo locations at several states scouted the streets, Social Security offices, construction sites and factories to find undocumented immigrants, take them to a local branch and persuade them to sign up for new accounts, court records say. Knowing that they needed a place to cash their checks, Wells Fargo employees urged them to open new accounts while promising to waive check-cashing fees that the immigrants would otherwise have to pay.
The more people signed up, whether it was for checking and savings accounts, credit and debit cards, online banking or overdraft protection, the better. If they signed up for all of the features, even better, the employees said. Each new account was considered a sale, and the more sales employees racked up, the better their future was with the company.
Source: The Washington Post