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.