Wells Fargo’s dirty scheming has seemingly caught up with the company.
But don’t expect the bank’s executives to pay.
California and federal regulators fined Wells Fargo a combined $185 million last week, alleging the bank’s employees illegally opened millions of unauthorized accounts for their customers in order to meet aggressive sales goals and get bonuses.
Justice? Not quite.
According to MSN Money, the executive in charge of the whole thing – who they referred to as the “sandbagger”-in-chief — walked away a very rich person.
In fact, Carrie Tolstedt left the company with high praise from the bank’s CEO and an insane $124.6 million payday, paid in part from things like mortgage payments and credit card fees from hard-working Americans.
The $185 million fine is the largest the Consumer Financial Protection Bureau has ever levied against a financial institution.
Roughly 5,300 employees at Wells Fargo were fired in connection with creating the fake accounts, according to the Los Angeles city attorney’s office.
“Tolstedt, however, is walking away from Wells Fargo with a very full bank account — and praise. In the July announcement of her exit, which made no mention of the soon-to-be-settled case, Well Fargo’s CEO John Stumpf said Tolstedt had been one of the bank’s most important leaders and ‘a standard-bearer of our culture’ and ‘a champion for our customers,’” MSN Money reported in a scathing article on Monday.
Under Tolstedt’s leadership, the CFPB said Wells Fargo sales staff opened more than 2 million bank and credit card accounts that may have not been authorized by customers. Money in customers’ accounts was transferred to these new accounts without authorization. Debit cards were issued and activated, as well as PINs created, without telling customers.
In some cases, Wells Fargo employees even created fake email addresses to sign up customers for online banking services.
“Wells Fargo built an incentive-compensation program that made it possible for its employees to pursue underhanded sales practices, and it appears that the bank did not monitor the program carefully,” said CFPB Director Richard Cordray.
The practice was widespread, and referred to internally as sandbagging.
“The idea here was to show steady quarterly growth to investors. The daily sales quotas weren’t plucked from the sky, but designed to maintain industry leadership in cross-selling. Wells constantly brags in its earnings statements about this,” according to a Fiscal Times report released Tuesday.
Under Tolstedt, the behavior was widespread, the CFPB and other regulators said, involving thousands of Wells Fargo employees.
Los Angeles City Attorney Mike Feuer called Wells Fargo’s behavior “outrageous” and a “major breach of trust.”
“Consumers must be able to trust their banks,” Feuer said.
Wells Fargo’s aggressive sales tactics were first disclosed by The Los Angeles Times in an investigation in 2013 . The story series prompted the Los Angeles City Attorney office to sue Wells Fargo over its tactics.
In a statement, Wells Fargo said: “We regret and take responsibility for any instances where customers may have received a product that they did not request.” Wells Fargo said they’ve refunded $2.6 million in fees associated with products that were opened without authorization.
Despite The Times investigation, Wells Fargo is still known for having aggressive sales goals for its employees. Wells Fargo’s executives highlight every quarter the bank’s so-called “cross sale ratio,” which continues to hover around six, which means every customer of Wells Fargo has on average six different types of products with the bank.
Should this executive have to pay back consumers from her own pocket? Comment below with your thoughts.
The Associated Press contributed to this article.
Main Street says
Greed!!
OracleGuy says
Perhaps this is why Wells Fargo management refer to their branches as ‘stores’. To my knowledge, no other bank does that.
Al says
All banks now call their branches stores! Stupid, huh?
Main Street says
Another politically correct joker. When the good ole girl network out does the good ole boy network. When the only glass ceiling is injustice towards consumers.
Ginger says
I agree. Women can be just as “deplorable” as men. Much like Hillary Clinton claiming it’s time for a woman president. Not a corrupt woman president. There are plenty of women out there who operate no differently than the men. So, I’m not interested in just putting women in high level positions. We need to be judging them on their behaviors. And, this is another example of abuse by executives at a bank where they get all of the money, including their golden parachutes on the way out the door, while the customers and taxpayers get screwed. This needs to come to an end, and obviously under the Obama Administration nothing has changed since the banks were bailed out in 2008. Disgraceful.
DandyLion says
Yes, Ginger, so very, very true!
Sin says
And we want LESS regulation on corporate America? Seriously people…wake up. Corporations are inherently evil and they could care less about people. Corporate greed is what gives capitalism a bad name.
rancher says
All the fine did was cost the consumer more money. Go after the people in charge of the criminal conduct, lock them up and take their money and you will be amazed how quick corporations, banks,etc. will straighten their act up.
John G . says
Screw the public and receive huge rewards both monetary and verbal.
OracleGuy says
Did Trump say that or are those your own words?
rancher says
All the fine did was cost the consumer more money. Go after the people in charge of the criminal conduct, lock them up and take their money and you will be amazed how quick corporations, banks,etc. will straighten their act up. If the news people will allow those that are posting this to keep it constantly before the people they will wake up and demand it from their law makers,congress etc.
Gus Garcia says
Not only did the consumers get a hit but all the stockholders who hold shares of the company. The stockholders are harm the most. The executives who creat these problem give themselves outrageous bonuses. This happens all the time and nobody seems to do anything about it. The CEO should resign.
Richard B says
If you bank with Wells Fargo, close your account pronto.
Arthur Hartsock says
The best answer American people can give Wells Fargo. Consider a credit union.
Marianne Lampe says
Another example of why this nation is doomed unless we make a
complete turn-around. We need God. Without Him we’re setting
ducks, without hope.
virginia says
This women should have been fired since the scandal happened under her watch,and no payoff. Any time a crime is committed the person responsible, along with others that knew the situation and did nothing should be punished. If she was not aware,(that is highly unlikely) she was not qualified for her position. If that type of fraud happened under her watch her over sight,judgement,etc was lacking.
jay brody says
This is the reason People hate what is being allowed in our country!
archipapi says
Guilty people should be stripped of all their belongings and left naked in the middle of the desert.
RAYMOND SAXE says
THAT IS NOT THE LIBERAL WAY!!!!!!!
Jc says
So what, nothing will be done about this and the next guy in charge will think of the next new scam to cheat customers out of hundreds of millions of hard earned dollars before they too, walk away with an equally hefty paycheck.
Richard Haller says
I guarantee everyone who got fired were escape goats.
Bill K says
My guess is that the Clinton’s will hire her immediately to run their Foundation.
Phil Trimmer says
Not only should the money be paid back to the government but this is a crime and there should be charges filed and jail time associated with this huge scandalous act.
Claudia Wolter says
All these people shouild have to give the money back. Stealing from people who put their hard earned money in the bank.
We don’t even get interest, that would help if they had to pay it back, then give it back to us in interest. Every little bit helps put food on the table or helps buy school supplies for the kids.
Put all these people in jail, and Bill Clinton created a bill to make bank excutives rich. Our government is not for the people anymore, it’s built on cheating and taking from the middle class that is going down the hill. We need a new congress that will fix things for the average American that works so hard to save for retirement and college educations.
ALL THESE PEOPLE SHOULD BE PUT IN JAIL NOW!!!
Moonwolf says
There is a word for this sort of thing. Fraud! Carrie Tolstedt should not leave the company with $124 million; she should be leaving in handcuffs! Club Fed should be her destination. The underlings should be prosecuted, too, depending on the degree of their involvement. I definitely had the wrong major in college.
AL E. GATOR says
The 5000 plus , fired employees, need to FILE A CLASS ACTION, LAW SUIT , against her an Wells Fargo. for being forced to fake it or get fired, an ask for her bonus x 5 ,
Ben L says
This person, woman or man should be required to pay: huge fines, taxes and attorneys fees fighting off law suits and the law, and after all the money is spent, used or confiscated; GO TO JAIL… GREED, especially illegal actions by willing, unscrupulous, persons MUST NOT go unpunished!!!!!
Dennis W Moore says
I will be closing all my Wells Fargo accounts and moving my mortgage account. I suggest all Wells Fargo customers do the same.
Justin W says
The banks need to get their financial houses in order. Those who still have government bailout money should be expected to pay it back with interest before giving out their lavish bonuses. I would like to see a new tax rate for paper-pusher millionaires. These people who get rich off shuffling paper rather than innovation or invention should be able to look forward to a 50 percent tax rate.
As long as the banks are rewarding the people who pull these schemes, the schemes will continue. Maybe bank regulators should go over Wells Fargo’s books to see what other ethical lapses they may be guilty of.
Keith says
That exec needs prison time, a lot of prison time.
Diane says
She more than likely had a contract or agreement of some kind. So sorry folks, that’s the way the ball bounces. It’s like everything else in life, if you did not want to go along with the agenda or you thought it was wrong to go along with the agenda, then you speak up. Look at all the people that are speaking up now, why didn’t they say something before? Most of those speaking up are former employees that did not like what was going on so they put tape over their mouths and moved on. Wells Fargo is definitely wrong but if the government bothered to check other banks or credit unions, they would probably find the same thing going on. A person I know works for a financial institution and has certain quotas to meet, so that person has their friends open accounts. Those friends never use the account but the quota was met. Isn’t this fraud???? Isn’t this more or less the same? After awhile you are going to run out of family or friends to sign up.
Most of the paper pushing millionaires as one of you called them put in more than eight hour days. In fact, they are always on the clock. That’s what you have to do in order to become one of those paper pushing millionaires. I am not jealous or do I begrudge them their wealth. The majority worked their asses off to get there. I am 71 years old and if I had a chance to live my life over, knowing what I know now, I would sure do things different. The opportunity is out there for everyone, it’s whether or not you want to put the effort forward.
Before someone jumps in, you will notice I said MOST not all.
r cook says
to b[g to fail to big to jail but not to big to bail out compliments of congress
Alan says
Did you or anyone realistically expect a different result??
Kate Lawson says
All banks are crooks in my book. My plan is stay away from big banks, go with a credit union.
Dagonet says
Payback the $? **** YES!!! Then she should be hauled off to prison.
debdell says
Every time there is corruption in a local government or a big corporation they are sued and pay big fines that are passed along to the public. This is wrong. The public should not be penalized for the actions of a few just because they work for a city or corporation. Those that are guilty of the crime should be solely responsible. There might be a large group involved such as with Wells Fargo, but so what, the wrong doers should pay the price for their dirty deeds – not citizens or investors.
Steve Dolan says
I received an email from John Stumpf, President of Wells Fargo telling me how moral they are and how they are fixing the problem. i replied (before I knew about Ms.Tolstedt’s bonus).
Dear Mr. Stumpf,
I just read your email. Here is my opinion of what went on at your bank.
You ripped off customers for millions of dollars.
You got caught.
You got prosecuted by the government,
You paid a fine without admitting guilt.
You blamed 5300 employees and fired them. This will increase your stock price (more money for you long term.)
You will probably pay nice bonuses to the administrators who set up this operation in the first place.
You oversee a criminal organization.
I believe you and the complicit administrators are morally corrupt and deserve jail time.
You won’t get any because you will indirectly pay off (donate to) members of Congress.
Most of the 5300 employees probably won’t find decent paying jobs.
You’ll probably make a large donation to some nice charity like United Way, get your picture in the paper and be proud of yourself.
You’ll still be a rat.
Steve
Marilyn Shapiro says
Just a few months before this report was published, I had pulled all my money out of Wells Fargo (accumulated over the past 10 years) and invested it through a different financial advisor! After reading this report of the despicable actions by Wells Fargo employees, setting up bogus accounts and credit cards, using customer funds without their permission or knowledge, I’ve been wondering the total amount of my personal funds were used–I will probably never know exactly. I hope my new financial advisor has more integrity and honesty. I now realize why our economy has collapsed.
Edward says
Wake up we have two tiers of justice one for the elite and one for the rest of us