The sales-practices scandal at Wells Fargo & Co. that shook investors, regulators and lawmakers in 2016 was worse than you think.
‘I was in the 1991 Gulf War. … This is sad and hard for me to say, but i had less stress in the 1991 Gulf War than looking for Wells Fargo.’
That was one of the comments made by an employee to bank leaders seeking to understand how a pattern of misbehavior overwhelmed the bank and regulators when it first emerged in news reports.
Wells employees described how aggressive sales targets led them to create millions of fake accounts for existing and even fictitious customers, often without their knowledge.
The bank’s chief executive at the time, John Stumpf, was forced out and ordered to forfeit millions in compensation. On Thursday, the Office of the Comptroller of the Currency fined Stump $17.5 million in a civil penalty and banned him from the banking industry for life.
The OCC is seeking fines and other penalties against five other former executives, including Carrie Tolstedt, former head of the retail bank, where many of the illicit activities took place.
The record of management failures included forcing unneeded automotive insurance on unsuspecting customers and failing to refund optional guaranteed asset protection, so-called GAP, coverage for auto-loan borrowers. Thousands of workers were fired after the scandal broke.
Wells Fargo shares
were lower Thursday and have fallen 3% in the last 12 months, while the S&P 500
has gained 26%.
From the archives (October 2016): Wall Street rediscovers shame as Wells Fargo CEO Stumpf resigns