Further to the news last week that more than 5300 Wells Fargo employees engaged in massive fraud fabricating new applications for credit and customer accounts in order to reach mandated sales targets dictated from head office, we also learned that the bank negotiated a settlement with regulators and agreed to pay $185 million in fines “without admitting or denying allegations” (This must end).
And while employees are coming forward to decry their “living hell” as management doubled the product sales numbers they were to hit on a monthly basis, see Former Wells Fargo banker says pressure to sell products was a ‘living hell’, we also learn that Carrie Tolstedt the executive that was overseeing the fraudulent activities walked away with a $125 million pay package.
In fact, despite beefed-up “clawback” provisions instituted by the bank shortly after the financial crisis, and the recent revelations of massive misconduct, it does not appear that Wells Fargo is requiring Carrie Tolstedt, the Wells Fargo executive who was in charge of the unit where employees opened more than 2 million largely unauthorized customer accounts—a seemingly routine practice that employees internally referred to as “sandbagging”—to give back any of her nine-figure pay.
See this video report.
Banks need to be forced back to boring deposit takers and carved off from the financial product creation and sales business. Product sales targets are not something we can afford to allow in banking. And claw backs of compensation and personal prosecution for executives overseeing fraud is essential. It’s so obvious it is painful.