The Wells Fargo debacle gets more outrageous as the executive in charge during the time of the fraud takes a timely retirement and $125 million. While the shareholders will bear the cost of the largest ever CFPB fine, there is no sign that Carrie Tolstedt will be required to pay back any of her ill-won gains.
If the news on Wells Fargo’s fraudulent goings-on did not have you enraged over the weekend, try this.
According to Fortune, Wells Fargo CEO John Stumpf lauded the person responsible for the debacle, calling the executive “a standard-bearer” for the bank. Not only that, but said executive, Carrie Tolstedt, is to receive $124.6 million for her efforts that saw the bank recover after the financial crisis by taking advantage of unassuming consumers. The latest nefarious activities saw employees opening unauthorized credit card accounts and cross-selling to customers in order to meet sales targets.
Tolstedt’s unit opened over 2 million customer accounts, most of which were unauthorized, a practice known as “sandbagging,” and she is walking away from her position with no financial consequences.
Wells Fargo agreed to pay the largest penalty ever imposed by the Consumer Financial Protection Bureau (CFPB) — $185 million — and it will be the bank’s shareholders who ultimately have to pay the piper and the cost of that settlement. The CFPB called Tolstedt out on her role in the affair. According to CFPB Director Richard Cordray:
“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.” But how much Tolstedt was responsible for or aware of the abuse at the bank is unclear, although she must have played a role in the firing of 5,300 employees previously over five years for similar inappropriate behavior and cross-selling.
Tolstedt was known for her ability to achieve high “cross-selling ratios,” and this is what earned Tolstedt her $9 million in annual pay. In a proxy statement from 2015, Tolstedt was awarded a $7.3 million stock-and-cash bonus, because “under her leadership, Community Banking achieved a number of strategic objectives, including continued strong cross-sell ratios, record deposit levels and continued success of mobile banking initiatives.”
Tolstedt made a timely exit in July, when no mention was made of the ongoing case, and Stumpf described her as one of the bank’s most important leaders, “a standard-bearer of our culture” and “a champion for our customers.” Tolstedt’s exit was apparently a “personal decision to retire after 27 years” with the bank.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More