Why the Better Business Bureau dropped Wells Fargo

The Better Business Bureau stripped Wells Fargo Bank of its recommendation, joining the pile-on gang tackle of the nation's largest branch banking system, by other U.S. institutions, after its corrupt sales practices were exposed.

The bureau, a Virginia-based organization with branches across the U.S., was downgraded due to "government action" censuring the bank's consumer ripoffs, BBB says in its Wells Fargo report here. 

BBB cited not only Wells Fargo's $100 million Consumer Financial Protection Bureau fine for years of fraudulent account formation, but also illegal Wells Fargo student lending, mortgage settlement and "predatory and discriminatory lending practices" findings by government agencies over the previous year. 

BBB "stripped the accreditation following Wells' settlement last month with regulators who accused the bank of opening millions of accounts that customers may not have authorized," writes the Charlotte Observer's Deon Roberts here. "The government action pushed Wells Fargo below the "B" rating required for businesses to maintain accreditation."

The bank told the newspaper it wants to "restore our customers' trust," and a local BBB official added that Wells Fargo might have now become one of the safer places a consumer can now bank, since its problems have been so widely exposed and condemned.

Wells Fargo said as of Oct. 1 it has cancelled its longtime perverse incentives, daily and quarterly quotas under which branch staffers set up phony and unauthorized accounts to qualify for big bonuses.

In hearings in Washington last month, Republican Congress members accused then-Wells Fargo CEO and Chairman John Stumpf of betraying their anti-regulatory, pro-capitalist agenda by ripping off customers and firing thousands of lower-paid workers for sales violations -- even as the bank paid tens of millions in sales-target bonuses to Stumpf and other high-ranking executives.

California, Ohio, Illinois and several large cities vowed to stop doing business with Wells Fargo, and Philadelphia City Council is also considering action.

Humiliated, Stumpf retired early and was succeeded by his longtime lieutenant Tim Sloan, whose critics have accused him of being part of the problem.

More on BBB's downgrade from Consumerist here.