CEO: Wells Fargo has hired back 1000 employees since scandal
- Author: Zachary Reyes Apr 13, 2017,
Apr 13, 2017, 10:50
The bank was also fined by the Los Angeles City Attorney and the U.S. Comptroller of the Currency.
In total, Ellison submitted 68 questions for the bank to answer after the hearing had concluded. And why was he paid so much in the first place?
The unauthorized bank products included checking accounts, savings accounts and credit cards and carried various fees. The report backs up those employees' accounts.
Ellison also asked if some Minnesotans had multiple accounts that were affected. With the new clawbacks, Wells Fargo's board says, the bank has now recovered more than $180 million in executive compensation over the scandal.
Now, when an account is opened, an automated email is sent to the customer to confirm the account was properly authorized. New Chief Executive Officer Tim Sloan told journalists on a call Monday there isn't "another large shoe to drop" on management changes. As is, though, "It's stunning", he said. On the customer end, customers now don't trust the bank as much.
Wells Fargo, Warren Buffett's favourite bank has shown all banks the way to investigate themselves, sort of.
That created enormous pressure for employees to sell additional financial products to customers, even if those customers did not want or need them. "When Wells Fargo did identify misconduct, its solution generally was to terminate the offending employee without considering causes" or figuring out if others were responsible for creating an environment that encouraged the opening of unauthorized accounts.
In February 2013, the consulting firm McKinsey was hired to examine the bank's risk management.
The 2004 report was sent to Wells Fargo's chief auditor, HR personnel and others.
The board released Monday a 110-page report that represents its seven-month investigation into how the fraudulent sales practices occurred and persisted.
Wells Fargo & Company is a bank holding company. Public Citizen has advanced a shareholder resolution for the forthcoming annual meeting calling for a breakup study.
"In his two earlier positions, Sloan had little contact with sales practice matters".
In the aftermath of the scandal surfacing, the bank has: promoted Tim Sloan as chief executive; named Mary Mack as head of community banking; split the positions of chairman and chief executive; added two board members; eliminated retail product sales goals in community banking; and also terminating for cause on February 21 four senior managers in the community bank.
The bank said it contracted with a third party to do a survey of 22,700 employees who quit in the four-year period. That was the year the Los Angeles Times published a landmark investigation on Wells Fargo's sales culture.
It is, by far, one of the most aggressive uses of a compensation clawback by Wells Fargo in its more than 100-year history.
Despite the embarrassing revelations, Wells Fargo's longtime CEO John Stumpf was able to retire last fall with more than $83 million by exercising all of his vested stock options, which he had amassed over a 34-year career. It is not good for the chairman and some board members, past and present. In reality, it was more like 2,500. "They explicitly said in their response that they're against a union".
Sarwal said the report puts a spotlight on the fact that all corporate lawyers, both in house and at law firms, face a tension between advising their client on a specific matter, and advising them on how to run their business. Stumpf resigned in October of 2016.
"We still have a few loose ends, but we don't think it's likely to change any findings", he said. "We're looking for them to do something meaningful to help consumers out". More recently, the federal government ordered Wells Fargo to rehire one fired whistleblower and warned it may force the bank to welcome back another.
Ellison and other progressives would like to see more systemic reforms - a prospect that he admits is growing dimmer.
"As we got information, we acted appropriately", he said.