Some executives get fired for the sins of their underlings, but banking is different. From Tyler Durden at zerohedge.com:
There was a burst of righteous populist anger anger last week, when it emerged that Wells Fargo had engaged in pervasive, “massive” fraud since at least 2011, including opening credit cards secretly without a customer’s consent, creating fake email accounts to sign up customers for online banking services, and forcing customers to accumulate late fees on accounts they never even knew they had. For this criminal conduct, Wells was fined $185 million (including a $100 million penalty from the CFPB, the largest penalty the agency has ever issued). In all, Wells opened 1.5 million bank accounts and “applied” for 565,000 credit cards that were not authorized by their customers.
As “punishment” Wells Fargo told CNN that it had fired 5,300 employees related to the shady behavior over the last few years. The firings represent about 1% of its workforce and took place over several years. The fired workers went to far as to create phony PIN numbers and fake email addresses to enroll customers in online banking services, the CFPB said. What was hushed away is that not a single employee will go to prison, and that ultimately it will be Wells Fargo’s shareholders – such as Warren Buffett – who will end up footing the bill.
What Wells did not disclose publicly to anyone is that the head of the group responsible for Wells’ biggest consumer fraud scandal in years, is quietly leaving the bank with a $125 million bonus, a bonus which as Fortune’s Stephen Gandel writes today will not see even one cent clawed back as part of the dramatic revelations.
According to Gandel, 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”— is leaving the giant bank with an enormous pay day, some $124.6 million.
Tolstedt 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, Wells 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.” In light of the record fine levied by the CFPB for the unit which Tolstedt headed, we wonder if Stumpf would like to retract his statement.
What is just as troubling is that despite beefed-up “clawback” provisions instituted by the bank shortly after the financial crisis, “it does not appear that Wells Fargo is requiring 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.”
As a reminder, on Thursday, Richard Cordray, the head of the CFPB, said, “It is quite clear that [the actions of Tolstedt’s unit] are unfair and abusive practices under federal law. They are a violation of trust and an abuse of trust.”
However, cited by Gandel, a spokesperson for Wells Fargo said that the timing of Tolstedt’s exit was the result of a “personal decision to retire after 27 years” with the bank. The spokesperson declined to comment on whether the bank was considering clawing back Tolstedt’s back pay.
To continue reading: Supervisor Of “Massive Fraud” At Wells Fargo Leaves Bank With $125 Million Bonus