An independent report’s findings have spurred Wells Fargo to claw back an additional $75 million in compensation from two executives over the banks’ use of fake customer accounts. But the investigation also shows the scandal goes much deeper and has gone on for far longer than previously known.
Wells Fargo employees had opened some two million accounts that customers did not authorize. Things like multiple checking accounts, credit cards and other accounts. All this in order to meet sales goals at individual branches and improve the bank’s stock price.
Last September, the bank paid $185 million in fines over the scandal. Independent members of the banks’ board launched an investigation.
The 110-page report is scathing, filled with words like unrealistic, systemic, and "resisted and impeded scrutiny or oversight."
The report says all this starts with the corporate culture and an oft repeated mantra "run it like you own it." That’s a reference to the bank's decentralized structure that allowed bank managers at all levels to put pressure on employees to make unrealistic sales goals or risk being fired, which spurred the creation of more fake accounts.
Wells had acknowledged fraudulent accounts were opened by employees from 2011 to 2016.
But the report notes these actually go back to at least 2002. Focused most notably in Arizona, California and Colorado.
But bank executives turned a blind eye to the practice. Specifically cited is former Wells CEO John Stumpf who was "too slow to investigate or critically challenge" the bank's sales tactics. And Carrie Tolstedt who set the sales goals for the branches. The report states she was "unwilling to change the sales model or recognize it as the root cause of the problem."
Now both former executives will get a bit less of a golden parachute from the bank. Wells will claw back $28 million more in compensation from Stumpf and $47 million more from Tolstedt. All told this means $180 million in executive compensation has been withheld due to the scandal, just $5 million less than the bank has paid in fines.
“Our intent is clear," the bank says in a statement, "the practices and pressures that harmed our customers, our team members, and our brand and reputation will never be allowed to occur again.”
The justice department is still investigating the bank's practices. Well's annual shareholders meeting takes place later this month. Citing the scandal, an influential investment group is calling for 12 of the 15 board members to be voted out.