Tell banking watchdogs: Hold Wells Fargo executives accountable
Appalling: The executive who oversaw massive fraud at Wells Fargo is walking away with a $124.6 million retirement package, even as the employees who followed her orders have been fired.
Last week, Wells Fargo was fined $185 million for creating more than 2 million fake customer accounts. Wells Fargo executives put pressure on employees to sign people up for extra accounts so they could brag to Wall Street about customer loyalty and boost the company’s stock price. Under this intense pressure, employees created fake accounts, forged signatures, and charged customers extra fees in order to meet their bosses quotes.
The employees who were forced to do the dirty work were fired — nearly 5,300 people have lost their jobs. But the executive who oversaw the whole program, Carrie Tolstedt, retired in July with a nine-figure golden parachute. Once again, it appears high-level banking executives are getting away with fraud while forcing others to bear the consequences. That’s not right, and government Wall Street watchdogs need to stop it.
The Wells Fargo executives responsible for this fraud must be forced to return their ill-gotten gains. And the Wall Street watchdogs need to refer the case to the Department of Justice for possible criminal prosecution.
The Consumer Financial Protection Bureau (CFPB), the Office of the Comptroller of the Currency (OCC) and the Los Angeles City Attorney fined Wells Fargo $185 million for its actions. It was the biggest settlement to date by Sen. Warren’s consumer protection agency, but it’s just a start. The CFPB and OCC also have authority under the Dodd-Frank financial reform law to force companies to “claw back” money paid to executives who oversee lawbreaking. Sen. Warren and other Democrats recently demanded Wells Fargo do exactly that.
Wells Fargo made money from the fraudulent fees charged to unsuspecting customers. But, the big profits came from bragging about how many customers were signing up for extra accounts, which raised the company’s stock price. The executives who had stock options, included Wells Fargo’s CEO — the nation’s best-paid bank CEO — essentially appear to have lied about the company’s success and profited handsomely from it. That could meet the bar for securities fraud and warrants criminal investigation. In addition to clawing back executive pay, the CFPB and OCC need to refer the case to the Justice Department to potentially bring charges.
The Wells Fargo saga shows that Sen. Warren’s consumer protection agency is essential to protecting Americans from fraud. It makes Speaker Ryan, Congressional Republicans, and the corporate Democrats who want to sabotage the CFPB and undermine the Dodd-Frank reform law look foolish. It also puts a spotlight on the failure of other government watchdogs, like the Securities and Exchange Commission, which under the leadership of Chair Mary Jo White is missing in action on a scandal that appears to be bigger than just scamming consumers.
We will never stop fraud and Wall Street scams until bankers realize they will personally face consequences, instead of shunting those consequences onto taxpayers or their employees. We need to make sure Wells Fargo executives are held accountable for their wrong-doing.
Thank you for speaking out.
- Stephen Gandel, “Wells Fargo Exec Who Headed Phony Accounts Unit Collected $125 Million,” Fortune, September 12, 2016.
- David Dayen, “The Real Scandal at Wells Fargo: Execs Got Rich by ‘Sandbagging’ Clients,” The Fiscal Times, September 13, 2016.
- Americans for Financial Reform, “Wells Fargo execs should not profit from the company’s misdeeds,” OurFinancialSecurity.org, September 14, 2016.
- Zach Carter, “Elizabeth Warren Just Trolled Wells Fargo’s CEO So Hard,” Huffington Post, September 16, 2016.
- Dayen, “The Real Scandal at Wells Fargo: Execs Got Rich by ‘Sandbagging’ Clients.”
- Carter, “Elizabeth Warren Just Trolled Wells Fargo’s CEO So Hard.”
Originally published at act.credoaction.com.