Wells Fargo Executives Ordered To Pay Back $75 Million Over Fake Accounts
AUDIE CORNISH, HOST:
After the Wells Fargo banking scandal broke open last fall, the company drew a lot of criticism for where they placed the blame for the millions of fake accounts opened without customers' knowledge. Wells Fargo had fired more than 5,000 employees in connection with the scandal, but at first there was only light punishment or no punishment for executives at the top.
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ELIZABETH WARREN: This is about accountability. You should resign. You should give back the money that you took while this scam was going on. And you should be criminally investigated.
CORNISH: That's Senator Elizabeth Warren at hearings with the Wells Fargo CEO John Stumpf last fall. Stumpf later resigned. Now a new report by the Wells Fargo board places more blame than ever on the former CEO and another executive. The company is forcing them to pay back tens of millions of dollars in what's called a clawback. For more on the fallout, we spoke to Emily Glazer from The Wall Street Journal.
EMILY GLAZER: There's actually been a collective $183 million dollars clawed back or announced to be clawed back at Wells Fargo. So I'm going to give you a quick breakdown. There's about $69 million for the former CEO and Chairman John Stumpf, about 66 million for the former retail banking head Carrie Tolstedt, about 32 million for eight members of the bank's operating committee - that includes current CEO Tim Sloan - and another 15.5 million for four retail banking executives who were fired earlier this year over the sales practices scandal.
CORNISH: Big numbers. How common is something like this after a scandal in the financial world?
GLAZER: This is a very large number, and it is not common. The bank has said that this is the largest in financial services and one of the largest for any company.
CORNISH: Wells Fargo had essentially denied that this was an executive problem. As we mentioned, they fired the lower level employees. So has something changed? Do we know more now about their role in all this?
GLAZER: Yeah, so the company fired about 5,300 employees over five years. And initially they blamed that on lower level employees. However, the board conducted an independent investigation. Those results came out today. And it was pretty eye-opening. Beyond the additional $75 million they clawed back from the former CEO and retail bank head, they laid out a pretty specific case about who they thought was responsible, particularly that retail banking head Carrie Tolstedt and the insular culture that she led and managed for the retail bank where in some cases they either didn't escalate information or hid information about sales practices or employee terminations related to aggressive sales or other matters that were related to all of this wrongdoing.
CORNISH: The whole crux of this scandal is the idea that you are walking into a Wells Fargo Bank and somebody could end up opening up an account in your name, one that you did not authorize. In the aftermath, what's been the effect on their business?
GLAZER: Yeah, so they were opening up accounts for customers using fictitious or unauthorized customer information up to 2.1 million. And that could have been in the branch or even virtually, you know, if they happened to have that customer's signature from something else. There's been a massive amount of reputational damage for the bank, more so than anything they could have anticipated. That was something that current CEO Timothy Sloan talked about on a call with media just about an hour ago.
He was asked, you know, could you - could you change anything? And he said he wished they could have gone back in time and end product sales goals and do more so that this damage wouldn't have happened. On the customer end, customers now don't trust the bank as much. Employees are having, you know, a lot of issues at the bank about what happened, investors and shareholders as well. And, of course, the politicians have been really grilling the bank both in two congressional hearings and now there's even more state and federal investigations.
CORNISH: That's Emily Glazer from The Wall Street Journal speaking to us about Wells Fargo. Emily, thanks so much.
GLAZER: Thank you. Have a good one. Bye-bye. Transcript provided by NPR, Copyright NPR.