Wells scandal lasted 15 years
WELLS FARGO’S fraudulent account scandal stretches back at least 15 years — and went undetected for so long thanks to careless managers, an internal investigation revealed Monday.
A 110-page report from the disgraced bank’s board of directors blamed an overly aggressive sales culture for creating the fake account crisis.
Wells Fargo employees set up as many as 2 million fake checking and credit card accounts without customers’ permission, the bank admitted last September.
The fraudulent accounts were an attempt to keep up with unnaturally high sales goals, the internal report found.
In some cases, employees even set up phone email addresses that made it appear that customers had signed up for online services.
Former Wells Fargo CEO John Stumpf and community bank head Carrie Tolstedt already lost some of their compensation when the board clawed back roughly $180 million from the bank’s top executives.
Monday’s report said both should lose even more for their negligence.
Tolstedt will lose an additional $47.3 million in stock options, on top of $19 million the board already clawed back. Stumpf will lose an additional $28 million in compensation, on top of the $41 million the board already clawed back.
The former execs knew that fake accounts were a serious problem but avoided confronting the issue for years, the board investigation said.
Neither was willing to accept responsibility for the disaster at America’s second-largest bank, known for its extremely aggressive sales culture.
Wells Fargo management highlighted its “cross-sell ratio,” which is the number of accounts or other services a Wells Fargo customer typically had at the bank.
It aimed for eight such services sold per customer — while most big banks hoped to have two or three.
The internal board report found evidence of a branch in Colorado that was issuing debit cards without customer knowledge as early as 2002.
Several workers were fired by Wells, but the sales pressure didn’t let up — and branch managers turned a blind eye to the ways employees hit their numbers, the report said.