Wells Fargo’s board announced that it would recover an addition $75 million in compensation from former CEO John Stumpf and former head of community banking Carrie Tolstedt. Wells Fargo released a 113 page report in conjunction with the announcement that called the warning signs of the problem involving fake accounts “glaring” and demonstrated a decentralized culture that pressured employees to create the fake accounts to meet aggressive sales quotas. The claw back is in response to the blame being placed primarily on Stumpf and Tolstedt.
The report prepared by law firm Shearling & Sterling found that the suspicious signs should have added up for executives overseeing the regional banking employees. New accounts were not being funded at high rates, regional managers were asking their superiors to lower or drop sales goals, and more. Many of the sales goals were considered unrealistic by regional bankers and bad for customers. Because the operations of the bank were so decentralized, the problems were able to continue unnoticed. For her part Tolstedt saw community banking as a sales organization rather than a “service-oriented financial institution.”
Tolstedt also kept hidden from the board the true amount of employees fired for unethical actions. The board believed it was approximately 230 employees when in reality 5,300 employees had been fired over a five year period. The general view of the report was that Tolstedt was focused solely on meeting sales targets without recognizing that employees may be cheating or acting improperly to meet them. The report alleges that she persisted with this view despite multiple senior regional bank managers telling her that the sales goals were unreasonable.
The Wells Fargo scandal has persisted despite Stumpf and Tolstedt stepping down as multiple lawsuits and investigation churn through their respective systems. Wells Fargo has done what it can to mitigate the damage. However, until all of the lawsuits and investigation conclude, including allegations presented by whistleblowers, Wells Fargo will have trouble containing constant stream of new stories.
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