Thanks in large part to Senator Elizabeth Warren’s indefatigable efforts to hold “too big to fail” banks accountable for their part in the financial crisis that devastated the country in 2008, Wells Fargo’s CEO John Strumpf is being forced by the bank to forfeit $41 million dollars as a result of his role in the creation of over two million fraudulent accounts that has all but ruined the once-esteemed institution’s good name. The company has also launched a probe into the scandal, with former head of the division responsible for creating the bogus accounts, Carrie Tolstedt, leaving her position ahead of her scheduled retirement later this year. In addition to the $41 million in unvested stock, Strumpf will also forego his $2.8 million base salary, along with his annual bonus. The bank has stated Tolstedt will not receive a bonus or severance package, will forfeit her $19 million worth of unvested stock and has agreed “not to exercise some $34 million in stock options.” However, neither Strumpf or Holstedt will likely even notice these lost millions, as Strumpf still has his job and an additional $247 million in accumulated Wells Fargo stock and Holstedt, who already owns $43.3 million in company stocks she collected over her tenure for the bank, is likely to walk away with around $77 million total.
During Wells Fargo’s board of directors investigation into its unlawful and unethical sales practices, which former employees assert began much earlier than the bank has owned up to, Strumpf will work for free. The board has hired outside legal counsel to investigate the scam, with board member Stephen Sanger saying in a press release that should Strumpf be found liable in the scandal, the bank would “take all appropriate actions” against him, meaning his future security as CEO remains unsure at this point. However, there are countless critics who believe Strumpf should have already resigned and who have expressed outrage over the fact he still holds his powerful position at all. Strumpf has continually tried to pass the buck to the 5,300 employees who were fired (many of whom did not violate the law, but were terminated instead for not meeting their expected sales goals) in the wake of the revelation, claiming the per-hour workers are the ones to blame. He also stated in the Senate Banking Committee hearing that he “did not know” if the victims in the case experienced any negative blows to their credit scores. One would hope the CEO of one of the biggest, most powerful banks in the country would understand how credit works.
On Monday of this week, concerned members of the Senate Banking Committee passed the case to the United States Labor Department regarding the treatment of the bank’s employees. The Department will investigate how Wells Fargo conducted itself with regard to “lower-level” workers over the past five years. The Senators released a statement concerning their decision to involve the Labor Department which read, in part, “A complete review of cases and complaints is needed to determine if the second-largest US bank violated the Fair Labor Standards Act.” Though maintaining his ignorance…err…innocence during the hearing last week, Strumpf did apologize on behalf of Wells Fargo, which largely fell on deaf ears. In addition to this latest development, the bank is also facing a multi-billion dollar class-action lawsuit filed by former employees in the state of California.
Senator Warren made her disgust for Strumpf very clear last week by calling his leadership “gutless” and telling him directly: “When it all blew up, you kept your job, you kept your multimillion dollar bonuses, and you went on television to blame thousands of $12-an-hour employees who were just trying to meet cross-sell quotas that made you rich.”
It seems at this point, gutless is a gross understatement.
Sources:
Wells Fargo CEO forfeits $41 million as company launches probe
Wells Fargo execs’ bonuses slashed as feds investigate and employees sue
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