With CEO in Hot Seat, Wells Fargo Fallout Just Beginning
"Shouldn't WellsFargo CEO return $10 million in performance pay when said performance yields a $185 million fine?"
Fallout from the recent Wells Fargo fraud scandal has really just begun.
One day before its chief executive officer is expected to testify before the Senate Banking Committee, the banking giant "raised eyebrows," as CNN Money put it, when it admitted Monday that its top risk officer, who was charged with safeguarding its retail bank from illegal activities, had taken six-month leave of absence last June, amid the government investigation.
Now, with the spotlight on CEO John Stumpf, a new campaign is asking the public, "What questions should [committee member] Sen. Elizabeth Warren ask Stumpf?"
Given the scope of the scam—employees opened millions of unauthorized accounts—and disparity of punishment—5,300 low level employees were fired while the executives who oversaw the fraud were awarded massive bonuses—respondents had rich fodder for the lawmakers, which they shared with the hashtag #StumpStumpf.
Time to ask why banks pay tellers poverty-level base wages forcing them to pressure consumers to buy unnecessary products to earn commission https://t.co/Ua6S3bfLZR
— Jeffrey Buchanan (@JRBinNOVA) September 19, 2016
— Rob Wilson (@RDW0409) September 18, 2016
— Union John (@TheUnionCEO) September 19, 2016
— Howie Klein (@downwithtyranny) September 19, 2016
Indeed, a number of former employees have come forward to explain that the unethical behavior was the consequence of unrealistic sales goals and other pressures from higher up. "They warned us about this type of behavior and said, 'You must report it,' but the reality was that people had to meet their goals," Khalid Taha, a former Wells Fargo personal banker, told the New York Times. "They needed a paycheck."
Meanwhile, customers have only begun to demand accountability. On Friday, a class action lawsuit was filed in U.S. District Court in Utah accusing Wells Fargo "of invasion of privacy, fraud, negligence, and breach of contract," according to a separate report by CNN Money. "The three plaintiffs are asking for compensation to cover damages related to identity theft, anxiety and emotional distress, and legal fees."
Also last week, activist investor Bartlett Naylor, a financial policy analyst for consumer advocacy group Public Citizen, filed a shareholder resolution calling on Wells Fargo's directors to study "whether the divestiture of all non-core banking business segments would enhance shareholder value"—in other words, whether the banking giant should be broken up.
"Rather than acknowledging a management breakdown," the resolution reads, "CEO John Stumpf blamed a minority of bad employees. He claimed there was no reason for the employees to commit the fraud. 'There was no incentive to do bad things,' Stumpf told the Wall Street Journal. Taking CEO Stumpf at his word, then, we believe he effectively argues that his firm is so large as to be unmanageable."