Wells Fargo reported two months ago that Tolstedt had made a decision to retire at the end of this year, though she stepped down from her role overseeing the bank’s branch network on July 31.
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If it is found that Tolstedt had knowledge or involvement in the fraud, she could be forced to forfeit up to $45 million of her retirement package or even more because of Wells Fargo’s clawback policies, which were created to help defray the cost of huge fines.
While the agreements reached were more significant than we had expected, we note that the affected accounts were a fraction of 1% of the accounts reviewed. Furthermore, it does not appear that the agencies imposed any formal sanctions on the company.
Getting customers into extra products is enough of a priority at BofA that Thomas Montag, the bank’s second-in-command, appeared at a company function a year ago wearing a matching hat-and-T-shirt combination with the phrase “Cross Sell” emblazoned across them, as the Wall Street Journal noted around that time.
Wells Fargo has said it regrets “any instances where customers may have received a product that they did not request” and that it’s refunded $2.6 million in fees associated with products that were opened without authorization.
Last year, in response to an advertisement featuring a lesbian couple, noteworthy evangelicals like the Rev. Franklin Graham said they’d had enough and closed out their accounts.
Chief Financial Officer John Shrewsberry said the bank will be able to adjust to changes needed to deal with the scandal. Some of the fraudulent activity was traced to previous years, which suggests that these fees have most likely been ignored for quite a while.
We take this issue very seriously.
Get ready for fireworks next week when Elizabeth Warren grills Wells Fargo’s CEO over the bank’s mind-boggling creation of millions of fake accounts.
“On average 1 percent [of employees] have not done the right thing and we terminated them”. The findings stem in part from an L.A. County Superior Court lawsuit filed past year.
“Tolstedt’s team is a leader in building and deepening customer loyalty and team member engagement across the business, which today serves more than 20 million retail checking households and 3 million small business owners, and employs 94,000 team members”, the company said in a statement last July announcing her retirement.
The answer is the culture of performance incentives for bank employees was such that it fostered such repugnant and dishonest practices.
Apparently it is ok for the banks to sign your name to open an account for you, but try cashing a false check and see what happens.
Lew, speaking Tuesday at an investor conference in Manhattan, blasted the bank for the “unacceptable” scandal in which employees opened phony bank and credit card accounts to meet sales targets.
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“There are two possibilities: Customer abuse was part of business model, in which case lots of high ranking people need to go to prison”, said Bart Naylor, a financial policy advocate for Public Citizen. I know this is an important topic and something you may want to talk something more about, but I also want to share some other areas of interest, and then I’ll be able to take questions, including questions on this matter, at the end of my remarks.
