How Corrupt Is Your Bank?

Mine is pretty corrupt because I bank at Wells Fargo. It may be the right time to check out crypto currency. like I have.

This is what congress said this week about Wells Fargo:

Whatever Wells Fargo is selling, Congress is not buying it. “Your bank was turned into a school for scoundrels,” New York congresswoman Carolyn Maloney told the chief executive, John Stumpf, at his second grilling in Washington in as many weeks.

Stumpf was quizzed by the House financial committee for over four hours on Thursday about his staff opening two million unauthorized accounts in order to meet sales quotas imposed by the bank. The hearing followed an equally contentious one in the Senate last week.

About 5,300 employees have been fired by Wells Fargo over the past few years for creating as many as 1.5m deposit accounts and 565,000 credit card accounts without customer’s permission.

Democrats and Republicans are united in their disapproval of Stumpf and Wells Fargo and its handling of the situation.

“Y’all were rotten,” said South Carolina Republican congressman John Michael “Mick” Mulvaney. Stumpf “wouldn’t even be here if I was on the board of that company”.

“You should be downright ashamed of yourself,” said David Scott, a Democrat from Georgia.

California Democrats Brad Sherman and Maxine Waters both called for big banks to be broken up.

“I’ve come to a conclusion: Wells Fargo should be broken up,” Waters told Stumpf. “It is too big to manage.”

Wells Fargo “never had a target of eight” products per customer. “That was aspirational,” said Stumpf. A former employee told the Guardian that in 2013, sales quotas for employees were to sells 20 products a day. In 2014, they were reduced to 15 products a day.

Two days before the hearing, Wells Fargo announced it was launching a new independent investigation into its sales practices going back to 2009. That same day the bank announced that Stumpf, who became chief executive in 2007 and chairman of the bank’s board in 2010, will forfeit unvested equity awards worth about $41m. Stumpf said the decision was made on his recommendation.
During last week’s hearing, Stumpf testified that he made $19.3m last year. Stumpf will not receive a salary while the bank launches a new investigation into its sales practices.

Another executive to be subject to a clawback – a recovery of money previously awarded to an executive – is Carrie Tolstedt, who oversaw retail banking at Wells Fargo during the time that such unauthorized accounts were created.

Last week, after Fortune reported that Tolstedt could walk away with as much as $124.6m after she retired this weekend, the bank sent a letter to the US Senate detailing her pay package. The letter notes that Tolstedt owns 960,017 shares of Wells Fargo. At the time of the letter – 16 September – those shares were worth about $43.6m. Her vested stock options were worth about $34.1m. Her unvested awards were worth about $18.9m.


In the aftermath of the scandal, the bank’s independent board decided Toldstedt should forfeit about $19m in unvested awards. That still leaves her with more than $77m. Tolstedt will not receive any severance or bonus for 2016 and agreed not to exercise her outstanding options while the investigation is ongoing.

Even as lawmakers called for clawbacks, experts expressed some doubt over whether the bank would be willing to enact them.

Wells Fargo’s clawback policy is very strong and thorough in listing what can trigger a clawback of executive pay, according to Matt Moscardi, head of financial sector research at MSCI. MSCI has previously flagged the fact that Wells Fargo is “largely entrenched” and that some of its members, including those on the compensation committee, have been on the board for more than 10 years and some have sat on other boards with Stumpf.

“The influence Stumpf can have being both chief executive officer and chair is not negligible,” said Moscardi. “These are people that he is on other boards with. There are a lot of cross-board connections.” When the Wells Fargo clawbacks were announced on Tuesday, the board’s lead independent director, Stephen Sanger, noted that the board reserves an option for further clawbacks pending the investigation.

Stumpf told Congress that he was not a part of the board’s determination and that the board “acts quite independently”. When questioned about whether there was a conflict with him serving as both chief executive and chairman of the board, he said: “For our company, I believe we have the right structure. I serve at the will of the board and the board can make a decision about that.”

By The Gaurdian