JPMorgan Conducts ‘Deep Dive’ Review After Wells Fargo Lapseby and
CFO Lake says JPMorgan found some lapses, no systemic problem
Incentive compensation designed for right behavior, she says
While JPMorgan found some lapses, the problem wasn’t “systemic,” Chief Financial Officer Marianne Lake said Friday in a conference call with journalists, adding that the review is ongoing.
“We will occasionally find issues,” she said. “The important thing is we are focused on finding them. We’re not seeing anything rising to the level where we would be concerned.”
Banks are under increased pressure from lawmakers and customers to avoid abuses after Wells Fargo agreed to pay $185 million to resolve investigations into bogus accounts. Chief Executive Officer John Stumpf, who stepped down this week, had promoted the cross-selling of products, such as pitching credit cards to deposit account customers. Wells Fargo said it fired 5,300 employees over fake accounts, and Lake said that JPMorgan has already taken action in instances of staff misbehavior.
“We can’t have zero defects,” Lake said. “Our incentive compensation is designed for the right behaviors.”
Wells Fargo is eliminating products sales goals for members of the retail banking team, and new CEO Tim Sloan said that he is “deeply committed” to restoring trust in the San Francisco-based company. Customer visits to branches declined about 4 percent in September, the month that the settlement was announced, compared with August, the lender said Friday in a presentation. There was a 30 percent reduction in the number of consumer checking accounts opened, and a decline in credit-card applications.
Wells Fargo shares have lost 18 percent this year through Thursday. Paul Miller, an analyst at FBR Capital Markets, said rivals need to be sensitive to risk of employee abuses in an era of increased scrutiny.
“When regulators start digging deep, they like to find things," Miller said in a Bloomberg Television interview Friday. “We’re very concerned that regulators really dig, coming after these banks too aggressively."