Wells Fargo to claw back $75m from former executives after sales scandal after a scathing 113-page report that contained the scandal and pinned most of the blame on former executives.
"Well Fargo to pay $185m fine for sham accounts" by Michael Corkery New York Times September 09, 2016
NEW YORK — For years, Wells Fargo employees secretly issued credit cards without a customer’s consent. They created fake e-mail accounts to sign up customers for online banking services. They set up sham accounts that customers learned about only after they started accumulating fees.
On Thursday, these illegal banking practices cost Wells Fargo $185 million in fines, including a $100 million penalty from the Consumer Financial Protection Bureau, the largest such penalty the agency has issued.
Don't they usually "make" 5-6 BILLION -- yeah, with a B -- per QUARTER?
You do the percentages and it's a RUDE TIP!
Federal banking regulators said the practices, which date to 2011, reflected serious flaws in the internal culture and oversight at Wells Fargo, one of the nation’s largest banks. The bank has fired at least 5,300 employees who were involved.
In all, Wells Fargo employees opened roughly 1.5 million bank accounts and applied for 565,000 credit cards that may not have been authorized by customers, the regulators said in a news conference. The bank has 40 million retail customers.
Some customers noticed the deception when they were charged unexpected fees, received credit or debit cards in the mail that they did not request, or started hearing from debt collectors about accounts they did not recognize. But most of the sham accounts went unnoticed, as employees would routinely close them shortly after opening them. Wells Fargo has agreed to refund about $2.6 million in fees that may have been inappropriately charged.
Like a $hell game $kim job!
Wells Fargo is famous for its culture of cross-selling products to customers — routinely asking, say, a checking account holder if she would like to take out a credit card. Regulators said the bank’s employees had been motivated to open the unauthorized accounts by compensation policies that rewarded them for opening new accounts; many current and former Wells Fargo employees told regulators they had felt extreme pressure to open as many accounts as possible.
Wells said the employees who were terminated included managers and other workers. A bank spokeswoman declined to say whether any senior executives had been reprimanded or fired in the scandal.
“Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” the bank said in a statement.
Depends on the cu$tomer.)
One Wells Fargo customer in Northern California, Shahriar Jabbari, had seven additional accounts that he did not consent to, according to a lawsuit he filed against the bank last year in federal court.
When Jabbari called the bank asking what he should do with three new debit cards he did not authorize, a bank employee told him to dispose of them, according to the lawsuit.
Jabbari said in the lawsuit that his credit score had suffered because unpaid fees on the unauthorized accounts had been sent to a debt collector.
Such pervasive problems at Wells Fargo, which has headquarters in San Francisco, stand out given all of the scrutiny that has been heaped on large, systemically important banks since 2008.
“If the managers are saying, ‘We want growth; we don’t care how you get there,’ what do you expect those employees to do?” said Dan Amiram, an associate business professor at Columbia University.
It is a particularly ugly moment for Wells Fargo, one of the few large US banks that have managed to produce consistent profit increases since the financial crisis. Wells Fargo has earned a reputation on Wall Street as a tightly run ship that avoided many of the missteps of the mortgage crisis because it took fewer risks than many of its competitors. At the same time, Wells Fargo has managed to be enormously profitable, as other large banks continued to stumble because of tighter regulations and a choppy economy.
Analysts have marveled at the bank’s ability to cross-sell mortgages, credit cards, and auto loans to customers. The strategy is at the core of modern-day banking: Rather than spend too much time and money recruiting new customers, sell existing customers on new products.
But that approach was undercut, regulators say, by a compensation program that encouraged employees to push the limits.
"Wells Fargo cutting sales goals in wake of $185 million fine" by Ken Sweet Associated Press September 13, 2016
NEW YORK — Wells Fargo will cut its aggressive product sales goals for retail bankers, as it faces $185 million in fines and a damaged reputation after allegations that it opened millions of unauthorized accounts to meet those targets.
That doesn’t end the matter, though, as Wells Fargo’s chief executive has been called to appear before the Senate Banking Committee next week to answer questions about the bank’s sales practices.
Photo ops for campaign ad purposes!
Wells Fargo has long been known for its aggressive sales goals, but in an industry plagued with questionable action during the mortgage bubble and financial crisis, it was also regarded as a well-run, tightly managed firm that did not get into the poisonous behavior of its Wall Street counterparts.
Was all an illu$ion.
In announcing the fines last week, however, regulators said Wells Fargo sales staff opened more than 2 million bank and credit card accounts that customers may not have authorized, and that money in their accounts was transferred to the new accounts without authorization.
Looks like stealing to me.
Debit cards were issued and activated, as well as PINs created, without telling customers. In some cases, employees even created fake e-mail addresses to sign up customers for online banking services, regulators said.
Kind of an ID theft, huh?
‘‘We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers,’’ CEO John Stumpf said in a statement.
They weren't always focused on the best interests of customers?
Someone taught me wrong all along.
Wells Fargo, known for its stagecoach logo, has always sold itself as first and foremost a community bank. But as one of the nation’s biggest financial institutions, Wells Fargo executives also highlight every quarter the so-called cross-sale ratio, a metric only Wells used that reflects the number of products the bank sells to each customer. The ratio hovers around six, which means every Wells Fargo household has on average six different types of products with the bank.
The targets, pushed from Wells’s top executives, were unrealistic. Wells Fargo had a program called go for ‘‘Gr-Eight,’’ a company-wide push to get more than eight products per household, a level that was never reached. Many employees had to cheat to meet those goals, to the point where it became widespread. Thousands of employees were fired for this type of conduct.
The behavior was brought to light by an investigation by The Los Angeles Times in 2013.
Oh! So here we are, 3 years later and the fines comes in the heat of the campaign.
One person who has not been fired is the executive who ran Wells’s consumer banking division, Carrie Tolstedt. She announced earlier this year that she would retire from Wells at the end of 2016. Despite running this troubled division, the 56-year-old is expected to walk away with roughly $125 million in compensation in a mix of stock, salary, and stock options.
Wells Fargo has refused to say if it is considering implementing its executive compensation clawback provisions regarding Tolstedt. The bank adopted a somewhat aggressive clawback provision in 2013 that would apply to Tolstedt as a highly paid executive. One of the triggers for the provision could be if the executive’s business group ‘‘suffers a material failure of risk management’’ or misconduct that ‘‘expected to have reputational or other harm to the company.’’
‘‘It seems Wells Fargo’s board has equipped themselves with a broad enough tool that, if they think the situation warrants it, this clawback provision could [apply to Tolstedt],’’ said Charles Tharp, an adviser at the Center for Executive Compensation....
They are only doing $75 all the way around so....
Globe makes a deposit:
"The banking giant didn’t confess to wrongdoing, but said that over the last five years it has fired 5,300 mostly low-level workers who took part in the scam. Executive suites remain fully occupied. There’s no excuse for the employees’ deceptive — and illegal — practices, but immense pressure from management to satisfy overly ambitious quotas helped make rule-breaking the norm. Compensation in Wells Fargo’s retail banking division was largely based on workers’ ability to cross-sell — getting customers to sign up for multiple accounts and services. It’s the kind of practice that in 2008 pushed the global economy to the edge of ruin, and an indication that oversight of the nation’s major financial institutions needs more muscle. Incredibly, the executive who ran the operation is being rewarded. In July, before the fines were made public, Wells Fargo said community banking head Carrie Tolstedt would leave at year’s end, taking with her a parting package worth $124.6 million. At the time, Wells Fargo chief executive John Stumpf called Tolstedt “a standard-bearer of our culture” and “a role model for responsible, principled and inclusive leadership.” Yet that leadership apparently didn’t extend to understanding what was happening on her watch...."
Obama's, too, and he got a real grilling at the, shootout, 'er, hearing.
"Wells Fargo sued over firings for missed account quotas" by Kartikay Mehrotra Bloomberg News September 24, 2016
Two Wells Fargo & Co. bankers accused the company in a lawsuit of imposing quotas on employees to open unauthorized accounts and then firing or demoting them for missing the targets.
“Wells Fargo knew that their unreasonable quotas were driving these unethical behaviors that were used to fraudulently increase their stock price and benefit the CEO at the expense of the low-level employees,” according to the complaint filed in state court in Los Angeles.
Authorities, including the U.S. Consumer Financial Protection Bureau, fined Wells Fargo $185 million on Sept. 8 for potentially opening about 2 million deposit and credit-card accounts without authorization. The scandal escalated this week, when Senate Banking Committee members including Democrat Elizabeth Warren urged Chief Executive Officer John Stumpf to return his compensation and resign.
Wells Fargo fired 5,300 workers over the matter and said it would eliminate sales goals regulators linked to its practice of cross-selling products.
Wells Fargo hired a law firm to advise the board on potential pay clawbacks as the bank grapples with the fallout from a scandal, the Wall Street Journal reported Friday. Robert Mundheim, a lawyer with Shearman & Sterling LLP in New York, was retained to help the board determine whether to claw back compensation from Stumpf, Chief Operating Officer Tim Sloan and Carrie Tolstedt, the former head of community banking, the newspaper said, citing a person familiar with the matter.
Oscar Suris, a spokesman at Wells Fargo, declined to comment. A lawyer for the bankers, Jonathan Delshad, had no immediate comment....
So how much he going to give up?
"Wells Fargo CEO to give up $41 million in pay after sales scandal" by Renae Merle Washington Post September 28, 2016
WASHINGTON — The long-time CEO of Wells Fargo agreed on Tuesday to forfeit $41 million in performance pay three weeks after the bank acknowledged that for at least five years thousands of low-level employees allegedly set up sham accounts to meet sales quotas.
The San Francisco-based bank has repeatedly apologized for the scheme and said it had fired 5,300 employees for bad behavior and put in place more stringent internal controls. But that hasn’t been enough for lawmakers who have been pushing for the company’s top leaders to give back the millions in bonuses they earned while the misconduct was occurring.
Awwww, the poor banks!
The independent directors of the Wells Fargo board announced Tuesday that they were launching an investigation into the Wells Fargo’s retail business.
‘‘We are deeply concerned by these matters, and we are committed to ensuring that all aspects of the Company’s business are conducted with integrity, transparency, and oversight,’’ Stephen Sanger, the lead independent director, said in a statement.
John Stumpf, the chief executive, will forfeit unvested stock awards currently worth about $41 million, will not receive a salary while the investigation is ongoing and will not be eligible for a 2016 bonus, the committee said in a statement. Carrie Tolstedt, the former head of Wells Fargo community bank unit, where the misconduct took place, will give up $19 million in unvested stock awards and not be eligible for a 2016 bonus. Tolstedt had announced her retirement in July, but had initially planned to stay at the bank until the end of the year.
I $uppo$e the $entence$ are ju$t.
Both Stumpf and Tolstedt still have millions in stock and other compensation at Wells Fargo. But this action by the bank’s board is, by far, the most aggressive and public effort by a financial firm since the 2008 financial crisis to show that top executives will be held responsible for misdeeds.
A special committee of independent directors will lead the company’s review, working with the board’s human resources committee and the law firm Shearman & Sterling LLP, according to the statement. The investigation may lead to further compensation changes or employment actions, the company said.
The move by the directors follows intense pressure on the bank from Washington.
Stumpf was long admired for keeping Wells — until recently — free of scandal.
The bank did not invest in as many toxic mortgages in the 2000s as its counterparts, and Stumpf initially declined to take bailout money from Washington before accepting it in a sign of solidarity.
He also was able to expand Wells significantly as a result of the crisis, buying up Wachovia. That gave the bank known for its stagecoach logo, which was primarily a West Coast and Southern bank, access to the lucrative East Coast and New York banking markets....
Weren't they in trouble for laundering drug money?
Globe again: Wells Fargo is still getting off too easy
"Wells Fargo sees retail banking growth hurt by scandal, WSJ says" by Laura J. Keller Bloomberg News October 11, 2016
Wells Fargo & Co.’s top executives expect growth in its retail business to be “down for a while” as a result of the bank’s cross-selling scandal, while efforts by states to punish the lender are having little effect, the Wall Street Journal reported.
Chief Executive Officer John Stumpf and Chief Operating Officer Timothy Sloan, speaking Monday on a call with 500 of the bank’s senior managers, said they anticipate things getting worse for the San Francisco-based firm before they get better, according to the newspaper, which reviewed a recording of the call. Wells Fargo is scheduled to report third-quarter results on Friday.
Wells Fargo has been embroiled in a scandal involving the creation of as many as 2 million unauthorized accounts, and last month said it will pay $185 million to government agencies to settle the claims. Stumpf, who agreed to forgo $41 million in pay following a grilling by a Senate committee over the matter, said he visited numerous branches last week and “clearly this has not helped,” the Journal reported.
More like lukewarm lard.
New business at the retail bank “will be down for a while,” Stumpf said on the call. “There’s just no question about it.”
I gue$$ it would be.
Sloan told the executives that more accounts were being opened than closed, though growth in checking accounts has slowed, according to the newspaper. He said that referrals to units within the consumer lending groups have also declined and that he’d heard stories of lost business with small or midsize companies, the Journal said.
Oscar Suris, a bank spokesman, declined to comment on the Journal’s story.
The states of California and Illinois have suspended Wells Fargo from handling billions of dollars of investments and the underwriting of state debt. Other than some additional third-quarter legal set-asides, the states’ actions haven’t had that much effect yet, Chief Financial Officer John Shrewsberry told the executives, according to the Journal.
“We probably won’t broadcast that because it might incentivize people to do more, to make it tougher on Wells Fargo, but the story line is worse than the economics at this point,” the newspaper quoted Shrewsberry as saying on the call.
Wells Fargo slid 20 cents to close at $45.45 Tuesday. The stock has tumbled 16 percent this year, the worst performance in the 24-company KBW Bank Index, which has declined less than 1 percent.
And that i$ the mo$t important thing.
If you want blood....
"Wells Fargo CEO John Stumpf quits after scandal" by Michael Corkery and Stacy Cowley New York Times October 12, 2016
NEW YORK — The move was a swift and stunning fall for an executive whose bank made it through the 2008 financial crisis relatively unscathed, only to be undone by a phony-account sales scandal that pervaded its community banking division and percolated under the surface for years.
Book and movie to follow.
It was an extraordinary moment, even in the banking industry, which has been beset by constant criticism and regular scandals since the financial crisis. Despite the industry’s many troubles, relatively few banking chiefs have stepped down under outside pressure.
But Wells Fargo’s transgressions were unusually blatant and straightforward, which contributed to the still-mounting public outcry.
There were no exotic financial instruments, complicated trades, or complex mortgage trickery. The bank’s misdeeds were fundamentally simple: Under intense pressure to meet aggressive sales goals, employees created sham accounts using the names — and sometimes, the actual money — of the bank’s real customers, and in some cases the customers did not discover the activity until they started accumulating fees.
The reaction has been withering and nonstop, under relentless fire since last month.
The sales practices may reach back far longer. Former bank employees have told The New York Times of concerns they raised internally as far back as 11 years ago.
That means it began under Bush.
Stumpf, 63, who was twice called in front of Congress to testify about the scandal in recent weeks, faced vocal demands to resign from an outraged public, but the timing of his departure was not expected by many executives inside the bank, including the board. He potentially walks away with millions of dollars, including a $20 million pension, as of Wednesday, another $4.3 million in deferred compensation, plus stock worth $109 million, according to data from Equilar.
What's that, a cool $133m?
Stumpf, who grew up on a dairy and poultry farm in Minnesota and had long emphasized his folksy roots, was unable to quell the uproar. Rather, he often seemed to inflame it.
Stumpf’s retirement comes after 34 years at a bank that had once been regarded as a darling on Wall Street because of its ability to churn out profits even as other banks struggled.
Now we know how!
Stumpf, named chief executive in 2007, was one of the country’s best-paid bankers, earning about $19 million last year. He was named the 2013 Banker of the Year by the trade publication American Banker.
I'm going to be $ick.
Wells Fargo was once the most valuable bank as measured by the price of its stock, which attracted the billionaire Warren Buffett as its largest shareholder, with a stake of about 10 percent. Buffett did not respond to a request for comment Wednesday. Wells Fargo has ceded the most valuable bank distinction to JPMorgan Chase.
Federal regulators and the Los Angeles city attorney began looking into the issue in 2013. The deal Wells Fargo announced last month to settle cases brought by their offices was intended to resolve the matter, but it instead opened the floodgates, provoking a furious outpouring of questions, criticism, and new information about what former employees say was a boiler-room culture of toxic sales pressure. The Department of Justice and Labor Department opened their own inquiries....
That $hould blunt your anger over time.
Related: California AG leads criminal probe of Wells Fargo bank
Better be careful, Jerry Brown. Remember what happened to Blagojevich.
Same goes for Baker.
"In Elizabeth Warren’s latest attack on Wells Fargo & Co., she and Senate colleagues are questioning whether the bank filed misleading disclosures on terminated employees, and if it did so as retaliation for complaints about its aggressive sales tactics. Warren has been on a tirade against Wells Fargo since regulators announced in September that the bank would pay $185 million to settle allegations that it may have opened more than two million accounts without customers’ authorization....."
Also see: Warren questions removal of website for Wells Fargo complaints
It's being probed:
"Wells Fargo fires managers, denies bonuses in account probe" by Laura J. Keller Bloomberg News February 22, 2017
NEW YORK — Wells Fargo & Co. fired the head of its consumer credit-card business and three other senior managers as the bank’s board examines how abusive sales practices spread through branches before spiraling into a national scandal last year.
Shelley Freeman, the former Los Angeles regional president who went on to run consumer-credit solutions, was terminated, along with Arizona lead regional president Pam Conboy, former community bank risk chief Claudia Russ Anderson, and Matthew Raphaelson, who led community bank strategy and initiatives. The bank announced the moves in a statement Tuesday, saying the four won’t get bonuses for 2016 and will forfeit unvested equity awards and outstanding options.
Wells Fargo’s leaders have been working since September to assuage public furor after authorities fined the bank $185 million for possibly opening more than two million retail bank accounts without customers’ approval.
Well, as longs as there are no more clients that were bilked I think they'll be oka.... $igh.
Freeman and Conboy were among managers described by Bloomberg in a November story that profiled community banking supervisors who won promotions as the bank’s top brass focused on cross-selling, the practice of persuading individual customers to sign up for more Wells Fargo products.
After overseeing operations in Los Angeles, Freeman went to run Florida, where she sent e-mails to branch workers urging them to sell and describing the kind of lifestyle they might hope to achieve, former employees said. She once mentioned her Super Bowl tickets and buying an $800 pair of sunglasses, one ex-manager recalled. Conboy, who climbed the ranks in California, was sometimes sent to other regions to teach sales strategies, managers said.
Authorities haven’t accused any of them of wrongdoing.
Wells Fargo has eliminated sales goals that authorities said may have encouraged abuses. Politicians and labor groups had accused the company of putting undue pressure on workers to meet targets, then blaming them for misconduct without holding senior managers accountable.
The board will probably decide to withhold 2016 bonuses from some top executives including chief executive Tim Sloan and chief financial officer John Shrewsberry as a way to hold managers accountable for the retail bank’s performance, a person with knowledge of the matter said this month. Denying the bonuses isn’t meant to reflect findings of specific wrongdoing, the person said....
I'm $till pi$$ed.
Time to cancel your card.
If I find any more statements I'll post them below:
Pentagon halts clawback of National Guard bonuses
Call Ryan's office.
Wake up, soldiers! The war machine doesn't care about you.... or us.
Well, there is always private security.
Wells Fargo profits flat in wake of sales scandal
I ju$t don't under$tand it!
Bank regulator faults itself for missing Wells Fargo issues
Wells Fargo will face additional oversight