When Wells Fargo executive Carrie Tolstedt retires at the end of this year, she will get a payout of $124.6 million in stock options and bonuses even though employees in the unit she headed opened nearly 2 million fraudulent checking and credit card accounts since 2011. “When we fall short of that goal, I feel accountable and our leadership team feels accountable-and we want all our stakeholders to know that”.
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Forget about the $185 million fine Here’s something that really stings: Wells Fargo just lost the title as the most valuable US bank for the first time in three years. Going forward, Brown suggests further action based on the regulators’ findings, while Cook expects many Wells Fargo customers to switch loyalties to credit unions or other banks they feel more secure with.
In the wake of a settlement reached with regulators over the opening of accounts without the consent of customers, Wells Fargo announced on Tuesday that it would end all product sales goals in retail banking beginning January 1, 2017.
Chief executive officer John Stumpf has been asked to testify in Washington about the alleged misconduct.
“Stumpf has clearly forgotten Harry Truman’s maxim that ‘the buck stops here.’ He’s responsible for how the org runs”, said Helaine Olen, a financial columnist at Slate and the author of the personal finance industry exposé Pound Foolish.
“We have made changes to our performance expectations at all levels of the organization”, he said.
The disturbing practices took place under the leadership of Tolstedt, who headed the community banking division of Wells Fargo for at least nine years. The controversy has led to calls for the bank to claw back bonuses paid to her. Despite running this troubled division of Wells, Tolstedt, 56, will walk away with roughly $125 million in compensation in a mix of stock, salary and stock options. She left with more than 2.5 million in Wells Fargo shares, now worth around $120 million.
“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. Tolstedt could not be reached. In some cases, employees even created fake email addresses to sign up customers for online banking services, regulators said. He also notes that the number of sacked employees – 5,300 – accounts for less than 2% of the bank’s total employee strength of 268,000.
Lew said the crackdown vindicated the creation of the CFPB under the 2010 Dodd-Frank financial reform law, which was enacted in response to the 2008 financial crisis.
Wells Fargo has said it refunded customers $2.6 million with an average refund of $25.
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Five Democrats on the committee, including Senator Bob Menendez of New Jersey and Senator Elizabeth Warren of MA, have pressed for an investigation.
