“When Carrie Tolstedt’s retirement was announced in July, Wells Fargo CEO John Stumpf called her a ‘dear friend, ‘ ‘role model, ‘ and ‘standard-bearer for our culture'”.
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Wells Fargo has always been known for its aggressive sales goals, but in an industry plagued with questionable action during the mortgage bubble and financial crisis, it was also regarded as a well-run, tightly managed firm that did not get into the poisonous behavior of its Wall Street counterparts.
It was the Wells Fargo boss’s first television appearance since last week’s bombshell settlement in which regulators accused the bank of creating more than 2 million fake bank and credit card accounts.
Not only did the bank get slapped with $185 million in fines last week, but Wells Fargo admitted to firing 5,300 employees over the past few years for improper sales tactics and now faces a grilling next week from Senator Elizabeth Warren and other members of the Senate Banking committee.
Customers began to take notice when they began receiving letters in the mail congratulating them on opening a new account.
Nonetheless, the bank said it will eliminate product sales goals in its retail banking division, according to the Journal.
Order of posting: Wells Fargo in August 2010 was ordered to pay remediation of $203 million connected to the way the bank processed debit card payments for customers. In some cases, employees created fake email addresses to sign up customers for online banking services, regulators said. But as one of the nation’s biggest financial institutions, Wells Fargo executives also highlight every quarter the so-called cross-sale ratio, a metric only Wells Fargo used that reflects the number of products the bank sells to each customer. Wells Fargo also had a program called “Gr-Eight” for households to purchase eight products. “Wells Fargo Securities will continue to provide financial solutions to our alternative asset manager clients in core areas such as Prime Services, Futures and OTC Clearing and Futures Execution”. Many employees had to cheat to meet those goals, to the point where it became widespread. Of that population, 5,300 employees were fired in connection to the issue.
Uncovered by the Los Angeles Times in 2013, the newspapers’ investigations first led the Los Angeles city attorney to sue Wells Fargo.
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Tolstedt received a pay raise in March, after getting more than $9 million in cash and stock past year. Despite running this troubled division, the 56-year-old is expected to walk away with roughly $125 million in compensation in a mix of stock, salary and stock options. The compensation clawback provision of the Sarbanes-Oxley Act of 2002 and a proposed clawback rule under Dodd-Frank would not be applicable to the Wells Fargo situation. It also affects some employees who work in the bank’s roughly 6,000 US branches in 39 states and Washington, D.C. The announcements come as the Consumer Financial Protection Bureau (CFPB), formed in the wake of the subprime mortgage crisis, said it wants the rest of the banking industry to take heed, as CFPB Director Richard Cordray said this past Thursday, when the agency announced it will fine Wells Fargo $100 million.
