Looks like some employees may have been fired for calling the ethics hotline.
I just looked at the transcript from the earnings call from October 2015, where Stumpf was talking about over 6.1 accounts per household. This is long after he knew about the illicit cross-selling.
If he bragged in 2011 or 2012, fine. He was touting it to analysts long after the fraud was clear to him.
And of course Carrie Tolstedt was allowed to resign with her full benefits. Stumpf argued that she improved customer loyalty. Wonder how it is doing now? That’s like not firing someone for blowing up half the factory because up to now their quality record was excellent.
Stumpf’s real sin was letting this fraud go on long after knew about it, and profiting from it. And having an environment with inadequate controls.
I watched Sen. Warren on youtube today questioning the Chairman/CEO of the bank. The person with direct responsibility for the department which perpetrated the scam was allowed to retire with approximately $90 million in cash and stock options, etc., instead of being fired (although it is possible that she had no choice but to retire). The CEO’s take from the scam (based on increased stock prices) amounted to $200 million or so.
But the CEO kept claiming that there was no scam and that he had no opinion on whether the person should have been fired or allowed to retire, but that he would support any decision made by the board (of which he is the Chairman).
Unfortunately there were 5300 or so low paid workers, who did the cross-selling scam for incentive bonuses, who are no longer with the bank.
Sen. Warren, also has asked the Inspector General of the DOJ, and the Director of the FBI to comment on exactly why there were no prosecutions when 9 banking individuals, by name and title, were forwarded to them for possible prosecution.
I definitely agree with Sen. Warren that this crap will continue to go on, with bankers, hedge fund managers, oil company and pharmacy company executives playing games unless there are some penalties that are actually coded into law and enforced.
The only people who suffer from this seem to be you and me.
Bob
The penalty is that you get to retire and enjoy your millions. Somehow I don’t think that has enough sting to deter future offenders.
Well, the Chairman did end up admitting that he was accountable, so there’s that. That flies with corporate types. Any actual demonstration of accountability was handled by low paid employees who’s golden parachute reads “don’t let the door hit you on the ass on the way out.”
More like a Golden Anvil.
I am a moderate libertarian/conservative and I agree that it is an outrage that almost anyone can get behind. It is incredibly evil and disrespectful to willfully commit or encourage fraud against millions of people in the general public, let alone the people that can afford it the least. It may be a personal quirk but I consider large scale theft and scams more serious than murder because it displays a special kind of psychopathy.
It is time to use the very extensive U.S. prison system to give a long time-out for the people that really need one. Bernie Madoff was a good start but he could use lots jail-mates for company and they can complain about their plight by finding ways to pass notes through the food slots.
The sniveling bitch, John G. Stumpf, CEO of Wells-Fargo, could use a paid vacation to one of the ultimate isolation cells in Florence, Co or Guantanamo Bay. He could bring some of his friends with him.
I work for a very large company that bought another very large company when their executives went to prison for making decisions that killed a few people through willful negligence but it wasn’t long enough. As a result, I have to go through ethics training several times a year and we all have the right to report any unsafe or unethical behavior at any time and you can bet your ass it will be acted upon. That is the way companies should work.
Wells Fargo is the largest bank in the world. It has no excuse.
You may have noticed that there are only a few mega-banks remaining.
In the case of WFB, it was little more than a name and a couple of old stagecoaches by 1960.
A large, profitable bank/S&L bought it and changed its name to, yeah “Wells Fargo Bank, NA”.
About 1999/2000 NorWest Bank bought WFB and then changed its name…
Within a year, the 3 highest levels of WFB executives were gone, replaced by NorWest execs.
All this is about: If you still have a job in the Banking industry, you do NOT rock the boat.
BS sales targets form the new boss? Grin and salute, and lean on everyone under you to find ways to make the numbers.
And: in defense of the WFB people with whom I worked all those years:
Only people and operations IN California are WFB - the rest are the remains of other banks absorbed by NorWest.
Then again, I’m sure all the folks I remember have retired by now. Except maybe Susano. Hi friend, from CFIS days.
Ahh, some good old fashioned ethic cleansing.
Don’t try to blame that on the dog, dogs can’t type!
This is absolutely damning. If this is true then there’s no way they can continue to blame the low level employees. If management was discouraging the reporting of this activity then they obviously knew about it and didn’t want to stop it.
He was ordered to open phony accounts? Wow.
I work for a big corporation too, and we also have an ethics hotline. We are told over and over that it’s confidential, separate from the company, and we can remain anonymous.
I’m starting to wonder…
Sometimes it really is confidential.
Sometimes it’s not.
You can’t know for sure until the crap hits the fan and you put it to the test.
Mr. Bado did also email human resources. That may have been his mistake. It may be that if he had just called the hotline he would have at least remained anonymous.
Or maybe not. Who knows?
As previously noted, they knew it was happening early on, but didn’t appreciate the scale until later.
In addition, it’s not like the all the accounts per household were fake ones. Their incentives did accomplish a lot of accounts per household. They also incented fraud. So I’m not really sure what your point with this is.
Even if in theory it’s confidential, I assume in many cases the people involved can narrow down the list of “suspects” fairly easily.
Personally I think most of these ethics hotlines and such are more about PR and CYA than anything else.
This was 4 years after they supposedly fired people for opening bogus accounts, so if they did not know the scale of the problem management only has itself to blame. Ditto for not adding controls when there was a known problem.
The Mercury News yesterday had an article quoting employees about the intense pressure they were under to open new accounts - even in places where they were expected to open new accounts on the order of the population of the town - each year. Customers got pressured to open new accounts also - a columnist did, and in fact we did, though that was perfectly legal. We had a checking account and when we got a mortgage we got told that we could only get benefits of being a preferred customer with a new checking account. That always seemed odd. Now I know why.
My daughter in Vegas wanted to close an extra account, and was begged not to. I guess the person had opened it and it was too soon to get credit. She had no trouble closing it here.
The point is that Stumpf set up a toxic environment for no good reason (8 rhymes with great?) and has benefited from it, especially from the bogus account growth. I’m sure setting bad goals is not illegal. I’m not sure about claiming account growth he had good reason to know was bogus. And blaming it all on low level people acting rationally to save their jobs is particularly heinous.
I figure even if the ethics people never give out names, in many cases very few people are in the position to blow the whistle on a violation.
This calls for a parody of “Maxwell’s Silver Hammer” but I’m much too busy with work.
5 people in a office somewhere = collusion.
5300 company wide = corporate policy.
Upper management needs a all expenses paid one-way ticket to McMurdo.