Wells Fargo’s independent directors are punishing two top executives after the bank’s scandal over sales practices. Chairman and CEO John Stumpf is forfeiting $41 million dollars in stock awards and will forgo his salary during the investigation. Former executive Carrie Tolstedt, who oversaw retail banking during the scandal, is also forfeiting $19 million in stock awards, and both will not collect their bonuses this year.
Thefollow revelations that Wells Fargo employees opened about two million unauthorized accounts in customers’ names to meet lofty sales targets.
Wells Fargo fired more than 5,000 bank employees for opening the sham accounts, and there’s now a class action lawsuit in California on behalf of workers who claim the bank fired or demoted them, for not bending the rules to hit those aggressive sales targets. But this is a catch-22 that employees at other banks say they’ve also experienced, reports CBS News correspondent Omar Villafranca.
was contrite last week, as lawmakers quizzed him on Wells Fargo’s hyperaggressive sales tactics.
“I accept full responsibility for all unethical sales practices in our retail banking business,” Stumpf said.
But he didn’t go far enough for Democratic Senator Elizabeth Warren, who called on the CEO to resign.
“Evidently your definition of ‘accountable’ is to push the blame to your low-level employees who don’t have the money for a fancy P.R. firm to defend themselves.It’s gutless leadership,” Warren told him.
Oscar Garza was a personal banker for a Chase Bank outside Dallas. He said aggressive sales tactics aren’t just a problem at Wells Fargo.
“Deceptive sales trade practices is across the industry. It’s systematic. It is not specific to any branch,” Garza said.
Garza said he made under $12 an hour and that the only way to make extra cash was to meet certain sales goals set by managers -- even if that meant signing up customers for financial tools they didn’t want.
“Were they sales goals or were they quotas? Did they have to be met?” Villafranca asked.
“They were quotas. They had to be met and there were consequences for not meeting those quotas,” Garza said.
“What were the consequences?” Villafranca asked.
“Termination,” Garza said.
Garza claimed a manager in his branch was aware employees used questionable IDs to open accounts.
“Never a direct order, but there was definitely an, ‘I’m going to turn a blind eye. You do what you need to do to meet that quota,’” Garza said.
A spokeswoman for Chase Bank disputed some of Garza’s claims, telling CBS News: “We don’t have formal quotas that, if not met, would result in termination,” adding that, “Any manager who would encourage illegal activity and create a negative culture would be terminated.”
Judy Conti works at the National Employment Law Project, which compiled a report on aggressive bank sales tactics.
The report cited bankers from a variety of financial institutions, all with similar stories, saying managers pushed workers to meet “almost impossible” goals and to “ignore it when consumers say no.”
“They have to sell as much as they can at all costs,” said Conti, a federal advocacy coordinator at the National Employment Law Project. “It’s a scary concept for the consumers, and it’s a scary concept for the employees who are forced to engage in hard-sell techniques in order to push products that people don’t really need.”
People don’t necessarily want it either. According to federal regulators, complaints by bank customers about their accounts and services have risen 26 percent over the past year.
Garza felt the sales tactics were unethical, and left the business. He’s now a member of the Committee for Better Banks. To avoid being taken advantage of, he said customers should tell personal bankers exactly what they want.
“Do not run my credit. Do not run my social. I do not want a credit card. Be very specific in their words,” Garza said.
Wells Fargo announced that it will pay more than $180 million dollars in fines for its bogus accounts scandal. The bank has since announced it’s getting rid of retail banking sales by the end of the year.