Wells Fargo Knew About Fake Account Problem For 15 Years
20 April, 2017, 13:42 | Author: Leticia Walters
"With a bakery in a small town, you are serving your friends and neighbors every day", she told the magazine in a 2005 interview.
"We accept the board's findings as a critical part of our journey to rebuild trust", he said in a statement. In January, the board fired four executives the board said had ties to the scandals. Last week Institutional Shareholder Services, a shareholder watchdog group, recommended that Wells Fargo investors vote against the directors due to lax oversight. The board investigation found that additional "mass terminations" and individual firings for gaming Wells Fargo's sales goals "continued sporadically over the next 10 years".
In an interview with Reuters, Sanger said the bank was not scapegoating anyone.
In his grilling before Congress a year ago before he stepped down in disgrace, Stumpf said he was "deeply sorry" the bank didn't act sooner to stem the misconduct.
Sloan promised during the conference call on Monday that Wells Fargo will "learn from these mistakes that are right there in black-and-white in this exhaustive board report".
The bank's directors also faulted the lender's decentralized organization and the autonomy it gave business heads who were encouraged to "run the business like they own it".
"There's a tremendous amount of pressure from regulators to throw someone under the bus", said Duke Law School professor James Cox, who specializes in corporate and securities law.
Then, a flawed sales model got even more flawed.
The Department of Justice declined to comment on its probe.
In the call with reporters, Sanger highlighted other actions taken by the bank, including the elimination of the sales goals that helped produce the scandal.
Arizona was one of two "epicenters", along with the Los Angeles metro region, of Wells Fargo's unauthorized-accounts scandal, according to an internal study released Monday. He refused to believe the model was seriously impaired and was full of admiration for Tolstedt, with whom he had a long working relationship. Data from a NY media tracking firm showed Wells Fargo advertising expenditures increasing by 115 percent to $183.8 million in the first two months of 2016 compared to the year before.
The report was pretty damning in its assessment of former CEO Stumpf and his lack of understanding of the depth of the problems at the bank.
The bank has fired five senior retail bank executives, including Tolstedt, over the scandal and imposed forfeitures, clawbacks and compensation adjustments on senior leaders now totaling more than $180 million, including $69 million from Stumpf and $67 million from Tolstedt. An internal investigation at the time found that many branch employees in Colorado were gaming the system to meet sales goals, including issuing customers debit cards without their consent.
"Multiple witnesses stated that she did this through employing both effective and appropriate management techniques but also through intense sales pressure, such as a very heavy emphasis on rankings and sales performance", according to the report.
In late 2015, key board members including lead independent director Stephen Sanger pushed Mr. Stumpf to remove Ms. Tolstedt from her role. After the Los Angeles City Attorney filed a suit over the bank's sales practices in May 2015, he sent an email to Sloan vowing to fight the suit.
Timothy J. Sloan, who succeeded Stumpf as chief executive, was largely exonerated by the report, despite the fact that he was also a career Wells Fargo executive.
Notably, Sloan said that the bank actually had hired back roughly 1,000 employees who may have been dismissed for not meeting those unrealistic sales quotas, or those who may have left on their own accord because they did not want to violate their ethics. No action was taken.
Wells Fargo used to have one of the best reputations of any major financial institution.
"A suspiciously high numbers of consumers were also not making deposits into their accounts".
The CFPB and OCC, as well as the LA Attorney's Office, fined Wells Fargo $185 million and found the problems reported by the LA Times were actually a nationwide issue for Wells Fargo.
Shares of Wells Fargo dipped 0.2 percent to $54.74 in afternoon trading.
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