NEW YORK (NYTIMES) – When big companies do wrong, it’s rarely the big boss who pays the price.
But on Thursday, Wells Fargo’s former chief executive John G Stumpf was fined US$17.5 million (S$23.6 million) – the largest individual fine in the history of the bank’s main federal regulator – for his role in a toxic sales culture that foisted unwanted products and sham bank accounts on millions of customers.
In settlements with the Office of the Comptroller of the Currency, Stumpf also agreed to a lifetime ban from the banking industry, and two other former senior Wells Fargo executives – a chief risk officer and a chief administrative officer – agreed to lesser fines and restrictions on their work in the industry. Five others, including a former head of Wells Fargo’s retail banking operations, were also charged by the regulator.
In a damning 100-page legal filing, the agency offered fresh details about the bank’s relentless pressure on employees to meet its unrealistic goals, which included “hazing-like abuse.” Many employees said they felt they had only two options: Cheat or get fired.
Employees at one branch said they had been told to hit their targets or they would be “transferred to a store where someone had been shot and killed.” A veteran of the 1991 Persian Gulf war wrote in a letter to Stumpf that he had found his time in a war zone less stressful than working at Wells Fargo. From 2011 to 2016, the bank fired more than 8,000 people for sales records it deemed subpar.
“The bank had better tools and systems to detect employees who did not meet unreasonable sales goals than it did to catch employees who engaged in sales practices misconduct,” the regulator said in legal filings that contained a number of redactions.
The settlements were a rare instance of personal consequences for those at the highest echelons of the banking industry. Even though the biggest American banks paid billions of dollars to settle civil cases stemming from their mortgage activities in the lead-up to the 2008 financial crisis, their chief executives have not given up a penny to federal bank regulators.
Stumpf’s fine, while record setting, is not the largest penalty being sought by the regulator in the case. It wants to impose a US$25 million fine on one of his subordinates: Carrie L Tolstedt, Wells Fargo’s former head of retail banking.