Angry shareholders and protesters are ready to unload on Wells Fargo
Wells Fargo is still under fire from shareholders, angry activists and assertive regulators, a year and a half after the fake-accounts scandal erupted.
The embattled bank is bracing for another hostile crowd on Tuesday, when it holds its annual shareholder meeting in Des Moines, Iowa, for the first time. At last year’s, an activist shareholder was kicked out after an outburst that halted the meeting.
This year, investors are pushing proposals to rein in Wells Fargo (WFC), and activists are organizing protests slamming the bank for countless consumer abuses.
“It’s time to clean house at the bank,” said Maurice BP-Weeks, co-executive director of the Action Center on Race and Economy, a racial justice group that seeks to hold Wall Street accountable.
“The fake account scandal was a major moment for Wells Fargo, but by absolutely no means is it the totality of their terrible business practices,” BP-Weeks said.
Protesters are pointing to the string of scandals — millions of fake accounts, unwanted auto insurance and needless mortgage fees — as proof that Wells Fargo needs to be broken up and CEO Tim Sloan should be ousted.
“It’s way too big and bloated,” BP-Weeks said. “That’s part of the reason some of these things have happened.”
Federal regulators fined Wells Fargo $ 1 billion last week for the car insurance and mortgage abuses, the toughest action taken by the Trump administration against a big bank.
And in February, the Federal Reserve handed down an unprecedented punishment against Wells Fargo for “widespread consumer abuses.” The Fed sanctions prevent Wells Fargo from growing until it cleans up its act.
Related: Wells Fargo fined $ 1 billion for consumer abuses
Wells Fargo has already taken steps aimed at preventing future scandals, including installing new management, revamping its board of directors, reforming its notorious sales goals and clawing back executive pay.
The new board, led by former Fed official Elizabeth Duke, has also attempted to improve its risk management — a major lapse that contributed to the fake account scandal.
“We continue to make the changes necessary for Wells Fargo to become better, stronger and more customer-focused than ever before,” Duke and Sloan said in a letter to shareholders.
Shareholders will deliver a verdict on those efforts on Tuesday, when they vote on whether to re-elect the board. Several longtime Wells Fargo directors, including former chairman Stephen Sanger, stepped down after receiving only tepid support at last year’s annual meeting.
Wells Fargo’s stock has gone nowhere over the past year, down roughly 1%, while other big banks have been on fire. Citigroup (C), Bank of America (BAC) and JPMorgan Chase (JPM) have surged 20% to 30%.
Still, shareholder advisory firm Institutional Shareholder Services is urging Wells Fargo investors to re-elect all directors.
ISS commended the board for strengthening oversight and said the incumbent directors deserve “cautionary support.” The firm noted that the Wells Fargo board has a “track record for insufficient risk oversight” and it’s “too early to tell” whether existing fixes will work in the long run.
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Wells Fargo is recommending that investors reject three shareholder proposals aimed at holding the bank accountable and preventing more scandals.
One proposal, pushed by New York State Comptroller Thomas DiNapoli, calls on Wells Fargo to “pull back the curtain” on its incentive pay program.
DiNapoli wants Wells Fargo to provide a report detailing its sales tactics, including what positions are eligible for incentive pay that could motivate employees to take “excessive risks.” The fake-accounts scandal was driven by unrealistic sales goals.
“If investors don’t hear from Wells Fargo, we will be left to wonder when the next headline will inform us of a new scandal or more enforcement penalties,” DiNapoli said in a statement. He controls retirement funds that own more than $ 700 million of Wells Fargo stock.
ISS advised Wells Fargo shareholders to support the incentive pay proposal.
Beyond the recent scandals, protesters plan to voice opposition to Wells Fargo’s support for the controversial Dakota Access Pipeline and for gun makers. While Bank of America and Citigroup have stepped away from the gun manufacturers, Wells Fargo recently said the bank will keep lending to the industry.
Wells Fargo may have faced even bigger protests if it had held the meeting in its hometown of San Francisco. The bank has 14,500 employees in the Des Moines area, and said it often holds meetings in “cities where we enjoy a significance presence in of customers, team members and operations.”
