Wells Fargo’s board of directors will release its investigation into the bank’s recent fraudulent accounts scandal, pinning blame primarily on two former executives.
According to the report, Wells Fargo’s board will claw back $US28 million in pay from former CEO John Stumpf and $US47.3 million former head of community banking Carrie Tolstedt for their roles in the scandal.
The board determined that Stumpf and Tolstedt did not do enough to address the culture at Wells that led employees at the bank to open as many as 2 million credit card and retail banking accounts for customers from 2011 to 2015 without their knowledge.
According to the report, Stumpf was aware of individual issues as far back as 2002 but did not become aware of the systemic nature of the problem until 2012. Even when he did become aware, the board said, Stumpf did not do enough to address the issues.
“Stumpf was by nature an optimistic executive who refused to believe that the sales model was seriously impaired,” the report said.
“His reaction invariably was that a few bad employees were causing issues, but that the overwhelming majority of employees were behaving properly. He was too late and too slow to call for inspection of or critical challenge to the basic business model.”
The board’s criticisms also extended to Tolstedt, who ran the retail banking division in which the fraudulent accounts were opened.
Wells’ retail banking division used a practice of “cross-selling,” in which employees were encouraged to sign up customers for multiple financial products, leading to what the board called a “high pressure sales culture,” according to the report.
The board wrote that Tolstedt “was ‘obsessed’ with control, especially over negative information about the Community Bank, and extremely reluctant to make changes.”
The report said that Tolstedt declined to be interviewed for the investigation on advice from her lawyer.
Wells previously clawed back $US41 million from Stumpf in September and decided to forgo 2016 bonuses for their current executives.