aside Fall Out From The 2016 Wells Fargo Bogus Customer Accounts Scandal

bank-hearing-150316125544-elizabeth-warren-gallery-8-super-169The 2016 news of  Wells Fargo’s millions of bogus accounts being created without their customers’ knowledge exposed the high-pressure sales tactics that caused internal chaos, and eventually forced the San Francisco-based bank to settle allegations that quota-chasing employees created more than 2 million fake bank and credit card accounts. Wells says it fired offending 5,300 employees as well as ending cross-selling and sales goals at call centers. (Based on my research of Wells Fargo, this estoppel of setting goals and cross selling at call centers is most likely a temporary measure.)

The 9/2/16 Forbes report by Maggie McGrath provides background data about the Wells Fargo couple million customer bogus accounts debacle:

“These sham accounts may have gone unnoticed were it not for a 2013 L.A. Times investigation that helped uncover the fraud. The reporting led to a 2015 lawsuit against Wells Fargo by the city of Los Angeles.  Soon thereafter, federal regulators got involved and on September 8, 2016, Wells Fargo announced that it was paying $185 million in fines to city and federal regulators to settle the matter. Bank executives wanted the issue behind them.”

bank-wf-imp-photo-numbers-card3-wellsfargotimeline-v1“The $185 million settlement was anything but the end. And while Wells said it had fired some 5,300 people over five years for creating the phony accounts, a public outcry ensued and government officials — from Senator Elizabeth Warren to the Treasury Secretary, Jack Lew — lambasted Wells for its actions. Many called for CEO John Stumpf to resign.”

“In a play for damage control, Wells said that it was abolishing all sales goals in its retail banking business starting on January 1, 2017, 17 — meaning that the types of quotas that led to the fraud will soon no longer exist. Stumpf publicly apologized.”

bank-lies-by-j-s-card6-wellsfargotimeline-v1The fall out has already started. Wells Fargo stock prices have been discounted by almost 10%. Reports indicate that federal prosecutors — the U.S. Attorneys for the southern district of NY and northern district of CA — have started the investigation process. A class action suit has been initiated for California ex- employees asking for 2.6 billion or more for workers who tried to meet aggressive sales quotas without engaging in fraud and were later demoted or fired.” The 27 year tenured executive, Carrie Tolstedt who ran the unit that was responsible for the millions of fake accounts early retired this summer with a compensation package of about $125 million. Board directors of Wells Fargo are ordering a full independent investigation of the company’s sales practices. So far, the CEO has agreed to forfeit 41 million dollars and Ms. Tolstedt will not be receiving a severance paycheck.

The Wells Fargo brand has been tarnished with this scandal. Until recent history, the street considered Wells Fargo to be the best of the 4 super large financial institutions, the others being JP Morgan Chase, Citi group and Bank of America. The negative publicity will not be easily stemmed.

bank-protest-ows_wells_fargo_ap111103126897.Continuation of the scandal’s fall out

As per the  9/25/16 New York Post article  by John Aldan Byrne, the Wells Fargo scandal puts on hold any possibility of revisiting legislated bank government regulations:

“Wells Fargo screwed the rest of the industry pretty badly,” said bank analyst Dick Bove of Rafferty Capital Markets, summing up the sentiment in many lending circles in the wake of last week’s damning Senate testimony by Wells Fargo Chief Executive John Stumpf.”

“Bove told The Post that the scandal would most likely scuttle a campaign by House Republicans to blunt the regulatory impact of Dodd-Frank.”

“And that campaign would have stymied the Financial Stability Oversight Council, and torpedoed the Volcker Rule that currently restricts speculative (and sometimes highly profitable) proprietary investing by banks.”


 Analysis regarding Carrie Tolstedt

I am certain that Ms. Tolstedt did not act in a vacuum in fulfilling her 2015 performance goals which included expanding the practice of cross-selling. Her successfully attaining this requirement is how she’s earned millions of dollars since 2008. However, in 2016, the list of her accomplishments which justified her high compensation package did not include cross selling. 

This is what the 9/12/16 Zero Hedge blog, titled, ” Supervisor Of “Massive Fraud” At Wells Fargo Leaves Bank With $125 Million Bonus/” by Tyler Durden/ reports:

“It is a fact that Tolstedt ran the community banking division of the bank, which included its retail banking and credit card divisions, during the entire period in which the customer abuse was alleged, which goes back to 2011 (How far back this scandal goes, requires verification). The CFPB said about three quarters of the unauthorized accounts opened by employees of Wells Fargo were bank deposit accounts. Another 565,000 were unauthorized credit card applications. Tolstedt took over the division in 2008, after Wells Fargo merged with Wachovia during the financial crisis.” The board may institute clawbacks (NPR: Report: Wells Fargo Considers Clawing Back Executive Pay Over Fake-Account Scandal)

bank-carrie-tolsteadt-card8-wellsfargotimeline-v2“Tolstedt was regularly praised for her unit’s ability to get customers to open numerous accounts. For a number of years, Wells Fargo’s proxy statement, which details executive pay, cited high “cross-selling ratios” as a reason that Tolstedt had earned her roughly $9 million in annual pay. For instance, in Wells Fargo’s 2015 proxy statement, the company said that its compensation committee had authorized Tolstedt’s $7.3 million stock and cash bonus that year, because “under her leadership, Community Banking achieved a number of strategic objectives, including continued strong cross-sell ratios, record deposit levels, and continued success of mobile banking initiatives.

“Earlier in 2016, when Wells Fargo released its annual proxy statement, it once again said that in order to justify her multimillion dollar bonus, Tolstedt’s division had “achieved a number of strategic objectives.” But this time (in 2016), for the first time in years, cross-selling wasn’t listed as one of them.”


On 9/27/16 Matt Eagan of CNN Money has reported the following:

The Labor Department is offering another avenue for Wells Fargo workers. It launched a dedicated page for current and former Wells Fargo employees at and is monitoring its toll-free hotline (1-866-4USADOL); email address (”

“In response to allegations of failing to pay overtime, Wells Fargo said, “We pride ourselves on creating a positive environment for our team members, including market competitive compensation” and other benefits.”

“Former Wells Fargo employees have fought back against the company this week by launching a federal class action lawsuit seeking $7.2 billion.”

This is the culture that the Wells Fargo CEO enabled to flourish within his organization. In my mind, he does not deserve a penny for this Ponzi scheme based on the backs of the front line employees. Yet, many in the financial industry are betting that Mr. Stumpf will remain in his CEO position because investors have enjoyed a high return on their dollar. Well, who’s  right!


Related Article:

Wells Fargo CEO to forfeit $45 million in pay over fake-accounts scandal /9/27/16 LATimes 


    • Dear JUESEPPI, Based on my research, this scandal goes back to at least 2006.Grazie Mille!!! Thanks a million times for all your support and for this reblog. Ciao Bello, Gronda


  1. Sure they fired “some 5,300 people”, but they didn’t fire who really DESERVED to be fired: the people who implemented these corrupt banking practices. Terrible people!


    • Dear The Warner,

      Give this story time. The Wells Fargo’s dysfunctional culture is so ingrained that there has to be some house cleaning done of top executives, to drive home the message, things are going to change for the better. The fired employees are filing class action suits to get back their fair compensation.

      Thanks for stopping by, Gronda

      Liked by 1 person

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