Wells Fargo, bad bank

This is an update to my September 8th post on this scandal.
A US government agency has fined Wells Fargo $185m for illegal practices. Wells, in turn, has fired more than 5,300 employees for malpractice. Top executives, meanwhile, keep their hefty bonuses, and in most cases their jobs.

Wells Fargo is facing calls to claw back bonuses paid to senior executives … as the fallout over its sham account scandal intensifies.

Two top institutional shareholders … have demanded answers over payments to Carrie Tolstedt, who headed the division where the episode took place. ….

Wells said in July that Ms Tolstedt, 56, was retiring …. She was paid $9.05m last year [including $6.5m in bonuses] ….

One large investor told the Financial Times that Wells should reclaim bonuses from the Wells executive, who has received at least $45m in total pay since 2011. ….

Bernie Sanders, the US senator who ran unsuccessfully for president this year, also weighed in, calling the pay for Ms Tolstedt a “disgrace”. ….

John Stumpf, chairman and chief executive, said when Ms Tolstedt’s departure was announced that she had been a “standard-bearer of our culture, a champion for our customers, and a role model for responsible, principled and inclusive leadership”.

Wells would not comment on the terms of Ms Tolstedt’s departure nor the investor complaints.

Alistair Gray and Stephen Foley, “Wells Fargo urged to clawback bonuses over fake accounts“, Financial Times, 12 September 2016 (metered paywall).

Breaking news on the subject:

US bank Wells Fargo is to scrap sales targets for staff in its branches, in an attempt to restore the faith of customers and investors in the wake of a “phantom account” scandal. ….

John Shrewsberry, the bank’s chief financial officer, pledged to “take a big, wide fresh look at who knew what and when” about the accounts and said a postmortem would take in employees at “all levels of the organisation”.

A tenth of the 5,300 workers that Wells had fired since the start of 2011 over the malpractice were “managers”, Mr Shrewsberry said. But, as he set out plans to change Wells’ business practices, he appeared to suggest the blame lay mainly with low-ranking, underperforming sales staff.

Alistair Gray, “Wells Fargo to scrap sales targets“, FT.com, 13 September 2016.

According to Fortune, Carrie Tolstedt, the Wells Fargo executive in charge of the unit where employees opened more than 2 million largely unauthorized customer accounts, retired over the summer with an exit package worth $124.6 million. [Emphasis added.]

Matthew J. Belvedere, “If ever there’s a case for clawbacks, Wells Fargo is it: Ex-FDIC chair“, CNBC News, 13 September 2016.


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