What is the Wells Fargo CEO getting paid for?
Contrary to popular opinion, the average American is not jealous of the 1%; they are just fed up of some people profiting unfairly at their expense and getting away with it.
The recent revelation that Wells Fargo opened several fake accounts in customers’ names without authorization to fuel their profits is disconcerting for several reasons.
- What happened was essentially forgery and identity theft, which should have had criminal consequences. Yet, Wells Fargo was let off easy with a fine of $185 million, which is a very small percentage of their profit. To put this amount in perspective, compare it to the $120 million package that Carrie Tolstedt, the executive in charge of the division under scrutiny, is set to receive as part of her retirement package. Better still, compare it to the $200 million by which the Wells Fargo CEO’s personal holdings of Wells Fargo stock increased by, during the period of this scam, as pointed out by Senator Elizabeth Warren. Needless to say, I am not sure the fine will serve as a deterrent to Wells Fargo or the other banks from engaging in similar illegal activity in the future.
“I find it hard to believe that thousands of employees just happened to come up with the exact same scheme to cheat their customers without their superiors being aware of what was happening”
2. The bank responded by firing 5000+ employees for illegal behavior. Yet, no senior executive was fired or even disciplined. While I am not condoning illegal behavior of the individual employees, I find it hard to believe that thousands of employees just happened to come up with the exact same scheme to cheat their customers without their superiors being aware of the fraud that was happening. The people that were fired were probably akin to ‘foot soldiers’ in the scam working hard to just get by while the ‘big bosses’ profited heavily from it without a scratch to show for it.
3. In the senate hearing today, the CEO of the bank said that he took “full responsibility for all unethical sales practices”. Yet, he declined to resign or state what consequences he would face for being ‘responsible’ for this activity. Behavior such as this is what irks most of the people, including many of those that supported the ‘Occupy Wall Street’ movement a few years ago. The Wells Fargo CEO takes responsibility for these activities, but still stands to retain the hundreds of millions of dollars he earned when this was happening under his watch. The consumers that made him rich on the other hand suffered real consequences. There are likely many people whose credit rating was impact and as a result paid higher interest on their credit cards, mortgages and auto loans that left them with less disposable income to spend on basic necessities.
It has always been my opinion that most CEOs deserve their pay because it is not an easy job that can be done by everyone. It usually requires a high level of intelligence, skill and the ability to make hard decisions that only a small percentage of people have. Finding good CEOs is hard and it is a competitive market to find CEOs who can truly create value for shareholders which often justifies their high pay in comparison with the pay of the average worker.
However, instances like this are what give a bad name to all executives. If the CEO of Wells Fargo could not even ensure there were basic structures in place that could recognize fraudulent activity by thousands of employees, what does that say about his competence? Why does he deserve to be the CEO let alone get paid hundreds of millions of dollars for this privilege?
The most shocking thing is probably that I am not really shocked to see this sort of illegal activity happening. It is sad that I also have no expectation that there will be any real consequences for Wells Fargo or its executives. “No bank too big to fail, no banker too big to jail” is a great slogan but unfortunately it will likely remain a slogan and nothing more…