by Shah Gilani, Money Morning
Special Report from Wall Street Insights and Indictments and Money Morning
We covered the still-breaking story last week, and I told you how it sold its customers up the river by selling them accounts and services they never signed up for, how the once-cleanest big bank in America sold its soul for a tiny fistful of dollars.
It’s already old news that the bankster culture club bred another scandal of almost biblical proportions on account of 5300 Wells’ “team members” getting the stiff arm out of the bank for doing what they were pressured to do.
It’s old news that the bank paid $185 million in fines to settle civil charges with the Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency, and the L.A. city attorney.
And it’s old news that none of that money will do one ounce of good anywhere – it’s only going to be absorbed into the black hole of the federal government.
But there’s still plenty to be said about cross-selling at Wells Fargo.
In fact, it’s worse than we thought…
Too Little, Too Late
First, for those aggrieved customers who suffered ignominious identity theft, forgery and fraud at the hands of junior banksters executing orders from above, Wells set aside $5 million to pay them back the false fees they were charged.
Do you get that? This deep and wide-ranging scheme that included the creation of two million unauthorized accounts, perpetrated by some 5300 employees (including bankers, managers, and branch managers) in 8800 branches for a measly $5 million in fees!
And we’re not talking about one of the usual suspects here (I’m looking at you, Goldman Sachs, Deustche Bank, and HSBC). We’re talking about a well-admired bank with 70 million customers and $1.9 trillion in assets.
It’s disgusting.
And to make matters worse, the Los Angeles Times unleashed an incendiary investigative piece by E. Scott Reckard titled, “Wells Fargo’s Pressure-Cooker Sales Culture Comes at a Cost” back on December 21, 2013 detailing most of what’s come to light two and a half years later.
One question: What took the CFPB and other regulators and district attorneys so long?
If You’re Not Thoroughly Disgusted, You Will Be
The other bit of news that’s breaking is about Carrie Tolstedt, the 55-year-old senior executive vice president of Community Banking at Wells, who announced her retirement this past July, and was the driving force behind Wells’ phenomenal cross-selling binge.
Tolsted, a 27-year Wells veteran and senior executive vice-president of Community Banking, was ranked the 27th “Most Powerful Women” in the U.S. in 2015 by Fortune.
That Tolstedt’s $1.7 million salary was augmented in 2015 with $7.3 million in stock and cash bonuses, which was announced in a Wells Fargo proxy statement detailing executive pay, and said, “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,” is all too telling.
When she retires, she’ll leave with an additional $124.5 million courtesy of stock, options, and restricted Wells Fargo shares, which weren’t vested but eligible because she’s “retiring.”
Yep, another exit package that should get clawed back, but probably won’t.
The facts aside, it looks like high-pressure sales tactics and a win-at-all-costs mentality trickled down from the head of the Community Banking throughout the company and bred a culture within a culture.
This coming Tuesday, Well Fargo’s CEO John Stumpf has to address a Senate Banking Committee hearing, called in astonished anger to admonish the bankster in charge. They’ll no doubt will ask him why the hell the bank is paying Tolstedt $124.5 million on the way out the door.
This travesty of a mockery of a sham is not going away so quickly for Wells Fargo.
According to The Wall Street Journal,
“Federal prosecutors are in the early stages of an investigation into sales practices at Wells Fargo & Co. that led to the bank being hit last week with a $185 million fine.”
The investigation is being conducted by the U.S. Attorney’s Offices for the Southern District of New York and the Northern District of California, and while prosecutors have yet to decide if any case can be brought, either civil or criminal charges could result.
The Journal says:
The investigation is focusing on whether someone senior within the bank directed employees to falsify documents in conjunction with the opening of accounts and products without consumers’ knowledge or authorization. Prosecutors are also focusing on whether there was willful blindness to sales practices on the part of executives at the bank.
Please! That’s a no-brainer.
It’s about the bankster culture club. We all know it. And Wells Fargo knows it too.
Upon Carrie Tolstedt’s retirement announcement, Wells’ chairman and CEO John Stumpf sang her praises and the bank’s culture saying,
A trusted colleague and dear friend, Carrie Tolstedt has been one of our most valuable Wells Fargo leaders, a standard-bearer of our culture, a champion for our customers, and a role model for responsible, principled and inclusive leadership. Because of her passion for serving our customers, wherever and however they chose to receive their banking services – online, in branches, or via mobile phones – Carrie leaves Wells Fargo uniquely positioned to continue to be a leader in retail banking, no matter how the future of banking evolves. We share in the pride that she has for the legacy, accomplishments and talent that she will leave behind.
Somebody pass me a barf bag, PLEASE!
