"Wells Fargo built an incentive-compensation program and it appears that the bank did not monitor the program carefully," said Consumer
Financial Protection Bureau CFPB Director Richard Cordray. He added that
thousands of bank employees "misused consumer names and personal
information to create new checking and credit card accounts to inflate their
sales figures to meet their sales targets and claim higher bonuses."
The bank agreed to pay full restitution to all victims and a
$100 million fine to the Consumer Financial Protection Bureau's civil penalty
fund — the largest in the regulator's five-year operating history. Wells Fargo
will pay a separate $35 million penalty to the Office of the Comptroller of the
Currency, and an additional $50 million to the city and county of Los Angeles.
The settlements, which the bank said it had made provisions
for as of June 30, include an additional $5 million in customer remediation.
In connection with the “widespread illegal practices,” Wells
Fargo has also fired 5,300 employees and managers, with one notable exception:
the executives in charge.
Instead of bearing any responsibility for this scandal,
Carrie Tolstedt, the divisional senior vice president for community banking who
supervised the 6,000 retail branches where the wrongdoing took place, is
retiring, taking with her $125 million in stock and options.
Despite being aware of the problems in her division since at
least November, Wells Fargo gave Ms. Tolstedt a glowing farewell. CEO John
Stumpf called her a “role model for responsible leadership” and “a
standard-bearer of our culture.” Her compensation — more than $27 million over
the last three years — has never been dinged as a result of these problems.
Further, Ms. Tolstedt continues to be employed at the bank
through the end of the year. She stepped down only from her division
role — getting out of the hot seat just weeks before the regulatory
settlement was announced.
So, as in most banking scandals, lower- and midlevel
employees face repercussions, but senior executives are whisked out of harm’s
way, with their reputations and full stock awards intact.
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