In the latest news concerning a six-month investigation into the fake account scandal at Wells Fargo, the board is taking back $75 million from two top executives for their roles. Longtime CEO John Stumpf was asked to give back $28 million because he was "too slow to investigate" the illegal sales tactics.
The board also asked for $47 million from Carrie Toldstedt, the former head of Wells' community banks. Toldstedt and other bank leaders were reportedly "unwilling to change the sales model" and even "impeded scrutiny" of the problems. Together, with previous actions taken last fall, Wells Fargo senior executives are returning $180 million in pay, the largest in the bank's history.
As the investigation seems to be coming to its final stages, a few key points have risen to the surface. While Wells Fargo "mass fired" 5,300 employees between 2011 and 2016 for sales abuse, this practice was common as far back as 2002 and continued sporadically over the years. For examine, in one instance, a Colorado branch was caught creating unauthorized debit cards, but only a handful of employees were fired.
Early warnings didn't seem to have a major impact, even though an internal investigation back in 2004 warned that bankers felt they couldn't make sales goals without cheating. The board's examination was especially critical of Stumpf, who was committed to the sales culture and "minimized problems" with the situation. They also criticized his praise of Tolstedt, and how his history led him to ignore doubts about her from the bank's directors.
While Stumpf was cooperative during the investigation, Tolstedt was not. The report hit her hard, and she reinforced the high-pressure sales culture. She claimed that she was scared to abandon the programs that led to bad sales practices. The investigation said she hindered investigations and had withheld information from the board. The board wasn't aware of the 5,300 firings until the information was revealed to the public.
The problem didn't surface fully until 2011, when lawyers hired by the board conducted 100 interviews of bank managers and directors, and searched 35 million documents. They also combed through hundreds of interviews of lower-level employees conducted by the bank. This information was first publicly revealed last September, when the bank reached a $185 million settlement that resulted in a hasty retirement by Stumpf. He has been replaced by Tim Sloan, who has already replaced Tolstedt. He has promised to make sweeping reforms to the bank's culture to prevent further problems.
Sloan has promised to make sweeping reforms to the bank's culture to prevent further problems.