‘Outrageous’ Wells Fargo bonuses clawed back, but Feuer still frets

Two former Wells Fargo executives have to forfeit a total of $75 million for their roles in the fake accounts scandal. Stumpf already had agreed to give up $41 million in compensation, and Tolstedt had agreed to give up $19 million.

A NOTEWORTHY RISK Sales practices were identified as a “noteworthy risk” to the board and its risk committee, of which Sanger was a member, in 2014 after a series of stories in the Los Angeles Times detailed some of the practices.

Many banks “encourage the wrong sales behaviour”, she wrote.

An attorney for Stumpf declined to comment on the report. Tolstedt’s attorney was defiant. “A full and fair examination of the facts will produce a different conclusion”.

The report placed much of the blame at the door of Wells’ former managers, including Mr Stumpf, finding they set branches “untenable” targets and ignored problems that appeared at least 15 years ago.

The internal bank investigation was released just days after an influential shareholder advisory firm said that board members failed to properly oversee the bank. The investigators said Stumpf protected Tolstedt.

“We still have a few loose ends, but we don’t think it’s likely to change any findings”, he said.

Wells Fargo’s CEO, Tim Sloan, said in a conference call with reporters it was “frustrating” to hear that the bank may have had sales problems dating back so long ago.

“They are blaming the scandal on a rogue person and a rogue division”, said Ken Thomas, an independent banking analyst based in Miami.

However, it wasn’t until December 2004 that Tolstedt was provided a memorandum on the task force’s work and even then a detailed content of the report was not “conveyed” in the memo.

The report described a pressure cooker sales operation in which reaching aggressive new account goals often overshadowed repeated complaints about employees’ risky behavior. Stumpf also specifically knew about the sales problems dating back to 2002, the report said.

As the problems with Wells’ sales culture ballooned, management still remained callous to the problems or even actively worked to hide it.

In his grilling before Congress previous year before he stepped down in disgrace, Stumpf said he was “deeply sorry” the bank didn’t act sooner to stem the misconduct.

Tolstedt was “scared to death” that changes would hamper sales growth, the report found. “He was too late and too slow to call for inspection of or critical challenge to the basic business model”.

In the aftermath of the scandal surfacing, the bank has: promoted Tim Sloan as chief executive; named Mary Mack as head of community banking; split the positions of chairman and chief executive; added two board members; eliminated retail product sales goals in community banking; and also terminating for cause on February 21 four senior managers in the community bank. It also said she sought to block efforts to escalate investigations into sales practices and kept from the board information about the number of employees terminated. The root cause was nothing but a distortion of the sales culture of the group.

Certain members of the Trump administration think the nation would be better off if the biggest banks were broken up. “They will not happen on my watch”, he said. She would earn numerous awards, draw praise for blazing a path for other women and take home millions a year before a sales scandal at the bank threw those accomplishments into damaging light. “Rather, the department’s focus was on advising on discrete legal problems as they arose and on managing Wells Fargo’s exposure to specific litigation risks”.

The team of Shearman lawyers interviewed 100 people, mostly in senior management, and reviewed 35 million documents, collected from 300 custodians with FTI Consulting providing data analytics assistance, according to a note within the 113-page report.

Since at least 2011, according to authorities, Wells Fargo employees opened as many as 2 million unauthorized checking and credit card accounts in almost every state it does business. “We need to make things right with our customers and that is going to cost whatever it’s going to cost”.