Did you see The Big Short, the movie about the 2008 mortgage crisis, an event that sent the country into deep recession? Remember how angry you were at the end when you learned none of the people responsible for the crisis were prosecuted for their crimes?
Get ready to be furious again.
The executive with ultimate responsibility for the Wells Fargo employees who opened fraudulent accounts using what amounts to identity theft has “retired” from the bank with $125 million in compensation and high praise from her bosses.
Carrie Tolstedt oversaw Wells Fargo’s credit card and retail banking operations during the years in which banking center employees – under pressure to meet sales quotas – opened two million phony accounts using existing customers’ information. The federal government’s Consumer Financial Protection Board and the Los Angeles County Attorney recently reached a settlement with Wells in which the bank agreed to pay a $185 million fine for its misdeeds.
When Tolstedt announced her retirement in July she was praised by Wells Fargo CEO John Stumpf as “a champion for our customers.”
It’s unclear whether Tolstedt had direct knowledge of the fraud. She was not named in the legal actions filed by the CFPB and LA City Attorney. However, she was the captain of that crooked ship for several years. One would hope such a savvy executive would be able to ferret out such wrongdoing.
Wells Fargo, like all big banks, has a policy that allows it to “clawback” or reclaim ill-gotten employee compensation. There is no indication the bank intends to exercise that option with Tolstedt. She will exit later this year with $124.6 million in stock, options, and restricted Wells Fargo shares. All that on top of the $1.7 million base salary she has earned over the past several years.
This is such a sad story. Trust is at the center of banking, especially in this digital age. Wells Fargo is a great financial organization, but I really think they fumbled on this one. The identity theft went on far too long, and the lack of accountability is bad for everyone, including the bank.
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