Wells Fargo’s practices of putting customers into fake accounts, which last week led the US government to fine the bank $190 million, took center stage in Congress on Tuesday with staff members for the Senate Banking Committee set to meet with representatives of the bank.
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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.
On Tuesday, the bank said beginning next year it would eliminate all product sales goals in retail banking.
It is also less than the more than $200 million that the stock in the company held by company’s chief executive, John G. Stumpf is worth. 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. Fortune reported that Tolstedt recently retired from the bank with a 4.6 million payday. Weeks after that announcement, Tolstedt handed off her duties to another executive.
Given that 5,300 employees, not just a handful of bad actors, were fired for what boils down to identity theft for profit, Wells Fargo would be better served serving its goal, rather than investing time and energy bartering in social and political activism.
The Senate Banking Committee plans to hold a hearing September 20 on San Francisco-based Wells Fargo, following last week’s enforcement case in which regulators accused bank employees of opening deposit and credit-card accounts without approval to meet sales goals. They transferred money from customers’ preexisting accounts to these new ones, and issued and activated debit cards, and created PIN numbers, all without customers’ permission. Then they use those funds to lend to other customers.
Wells Fargo (WFC) will eliminate the sales goals by January 1, according to a statement. In fact, a lawsuit filed by Los Angeles against Wells Fargo in May 2015 says that the bank was consumed by this goal. The ratio hovers around six, which means every customer of Wells Fargo has on average six different types of products with the bank. Wells Fargo reviewed 82 million checking accounts and 11 million credit cards as part of its inquiry into the matter, which covered activity dating to 2011.
The pursuit of cross-selling was at the heart of the pressure cooker environment described by Wells Fargo employees to CNNMoney.
The US Senate Banking Committee has scheduled a hearing on Well Fargo for next week at which Stumpf is expected to testify.
Wells Fargo declined to comment on whether it was considering implementing its executive compensation clawback provisions regarding Tolstedt.
“Our objective has always been and continues to be to meet our customers’ financial needs and drive customer satisfaction”, said CEO John Stumpf.
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Elizabeth Warren will get her chance to rip into Wells Fargo one week from today when the Senate banking committee holds a hearing on what the senator has called “a staggering fraud”.
