Staggering Fraud
from Wells Fargo: Who To Blame?
It
was only a few months ago, where Wells Fargo CEO John G. Stumpf was responsible
for yet another sparkling quarterly result. However, Stumpf and the other
elites of Wells Fargo - considered once to be the squeaky-clean Wall Street
bank – found themselves in Court for the accusations of cross selling, opening over
2 million unauthorized accounts. These phantom accounts lead to a 5% revenue
increase for Wells Fargo, as well as an increase of around $30 in share price
stock. The only measures the bank has taken to address the issue of cross
selling accounts has been the firing of over 5,000 low-level employees – who
were merely following the enforced quota brought down by Wells Fargo. These
executives who have been the culprits for these accounts have used the 12-dollar
an hour employees as scapegoats, while dodging investigations and protecting
their own assets.
CEO
John Stumpf has claimed that he is accountable for these fake accounts;
however, neither he nor any other executive on the board has done anything to
hold accountability – including giving back the millions of dollars he was paid
during this. No senior executives – or any other leaders of the community bank
division or compliance division who are to oversee these scams when occurring –
had been fired from this. It seems that Stumpf’s idea of holding accountability
has been to push the blame into the lower levels of the bank that were
following the orders of higher execs; to cross sell accounts – selling more
accounts to existing customers as much as possible. Most other major banks push
their employees to sell each customer 3 accounts, while Wells Fargo pushed
their employees to sell 8 accounts. Stumpf’s rationale behind this?: Because 8
rhymes with great.
During
the Senate Bank Committee hearing, Senator Elizabeth Warren grilled Stumpf for
his justification of cross selling – among other things – for claiming that
it’s a means of deepening ties and relations with existing customers. However,
Warren surfaced the true reason of cross selling with evidence of quarterly
calls made by Stumpf. Making pitches to investors for Wells Fargo, Stumpf was
only interested in “pumping up the Wells Fargo stock”, claiming it’s a great
investment due to the banks success in cross selling retail accounts[1].
Executive who oversaw lender’s retail operations Carrie Tolstedt, who is set to
retire in the next few months, is going to claim her $124 million dollars in
shares options because of this. “Now, the question is how allegedly illegal
sales practices could have escaped her notice as the executive responsible for
the bank’s 6,000 branches across the U.S.”[2]
Stumpf’s
6.75 million shares alone, since these scams took place, have increased in
value, showing a profit capital gain of over $200 million (that does not
include is 20 million dollar salary or his 15 million dollar bonus). The firing
of the lower-level employees – including tellers, regional bankers and branch
managers – are not the employees who are supposed to be held accountable for the
fraudulent accounts. The senior executives of Wells Fargo need to be criminally
investigated for the pressure brought down on employees to achieve unrealistic cross-selling
quotas, as well as returning the fraudulent money made during the last 5-6
years when these scams were taking place.
Here
is the video of Senator Elizabeth Warren absolutely destroying John G Stumpf in
the Senate Banking Committee:
I completely agree with you. It shouldn’t be the little guys, the hard working people at the bottom of the food chain who should pay for executives’ sins. That doesn’t even make any sense to me. Stumpf and his high-up associates must pay dearly for this fraudulently-made money. It is shocking to me that people so high up the ladder are still so incredibly greedy. How much money do you need to make and how many people do you need to screw over before you’re happy with yourself? Shame on Wells Fargo’s executives. I guess it’s time to switch banks.
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