Wells Fargo fired 5,300 workers for improper sales push. The executive in charge is retiring with $125 million.
When Wells Fargo was hit last week with $185 million in fines after thousands of its employees were caught setting up fake accounts customers didn't ask for, regulators heralded the settlement as a breakthrough.
The Consumer Financial Protection Bureau noted that the $100 million it will collect as part of the deal was the agency's "largest penalty" ever. The head of Office of the Comptroller of the Currency, a banking regulator, said its $35 million penalty would "demonstrate that such practices will not be tolerated and banks will be held responsible.” “This is a major victory for consumers,” said Los Angeles City Attorney Mike Feuer, touting the $50 million the city extracted from the bank.
But the fines being levied against Wells Fargo pale in comparison to the bank's yearly profit -- more than $20 billion in 2015.
It is also less than the more than $200 million that the stock in the company held by company's chief executive, John G. Stumpf is worth. The fines also are not that much more than the $125 million one of its top executives, Carrie Tolstedt, will walk away with when she retires this year. An 27-year veteran of the bank, Tolstedt ran the community banking division where regulators said aggressive sales goals fueled illegal behavior by bank employees,
According to regulators, thousands of Wells Fargo employees were allegedly involved in a widespread scheme to reach aggressive sales goals -- and earn bonuses -- by creating 2 million accounts, including credit cards, customers didn't authorize. The employees created phony email addresses to enroll existing customers in online-banking services, for example, and issued them debit cards they didn’t request. Customers were then often hit with assorted fees for accounts they didn't know they had, the regulators charged.
So the peons were given unrealistically ambitious sales targets and when they can't make their targets honestly they set up fake accounts or signed up customers for credit cards they didn't ask for. They get fired but the executive who set their targets walks away with a fortune.