The OCC Has Personally Fined Former Wells Fargo CEO John Stumpf $17.5 Million For Fake Accounts Fiasco
Wells Fargo indicated just over a week ago that the fallout from its fake account scandal was far from over. The bank is disclosing that it has at least $3.1 billion set aside for expected litigation payouts. In addition, former Wells Fargo CEO John Stumpf will have to pay $17.5 million in fines to regulators.
Wells Fargo executives are feeling the fallout for failing to prevent the fake account scandal.
The Office of the Comptroller of the Currency announced it is dropping the hammer on several of the bank’s former executives.
Wells Fargo CEO John Stumpf Oversaw Massive Scam
The trouble all began in 2016, when the CFPB, the OCC, and the City and County of Los Angeles fined the bank $185 million.
More than 5,000 of the bank’s former employees opened nearly 2 million fake accounts.
As a result of the scandal, former Wells Fargo CEO John Stumpf promptly resigned from his positions.
Wells Fargo took additional action to address the issues that led to the fines. They revoked 2016 bonuses for its top executives and fired four senior managers. They also outed another two executives and splitting the role of chairman and CEO.
Wells Fargo also clawed back more than $100 million in bonuses from Stumpf and former head of community banking Carrie Tolstedt. Regulators say both of them could have put a stop to the scam.
The company even prepared a new pay plan where employee compensation was no longer tied to sales.
Former Wells Fargo CEO John Stumpf Is Gone. Yet, Fallout Still Rains From The Sky
Wells Fargo executives are running around in a panic because of the checking account scandal. The OCC says the Wells Fargo executives who failed to stop the creation of the fake accounts are not done paying the piper yet.
The banking regulator announced Thursday that it is fining Stumpf $17.5 million as part of a consent order. The consent order also bans Stumpf from working in banking without the OCC’s permission.
The OCC reports:
[Stumpf] was or should have been aware of the problem and its root cause. During Respondent’s tenure, there was a culture in the Community Bank that resulted in systemic violations of laws and regulations.
To read the Stumpf’s full consent order, click here.
The OCC also levied a $2.25 million fine against the bank’s former Chief Administrative Officer and Director of Corporate Human Resources Hope Hardison.
To read the Hardison’s consent order, click here.
The OCC also fined former Chief Risk Officer Michael Loughlin $1.25 million for his role in the scandal. To read Loughlin’s consent order, click here.
Both Hardison and Loughlin were among the Wells Fargo execs who had their 2016 bonuses revoked as the scandal widened.
The OCC Has More Executives In Their Crosshairs
But those aren’t the only Wells Fargo execs in the OCC’s crosshairs.
The regulator also announced charges against five other execs, including Tolstedt, the head of the community bank during the bulk of the fake account creations.
The OCC is also seeking a fine of $25 million against Tolsdedt for her actions. The agency says she should have stopped the massive fraud.
The OCC is seeking a fine of $5 million against Community Bank Group Risk Manager Claudia Russ Anderson. The agency is also seeking a fine of $5 million against Wells Fargo General Counsel James Strother. In addition, the OCC wants to fine Chief Auditor David Julian $2 million.
As for Wells Fargo, the bank’s new CEO Charlie Scharf sent a letter to the bank’s employees addressing the OCC’s actions.
“At the time of the sales practices issues, the Company did not have in place the appropriate people, structure, processes, controls, or culture to prevent the inappropriate conduct,” Scharf said in his letter. “This was inexcusable. Our customers and you all deserved more from the leadership of this Company.”
Scharf also said that the bank may consider taking further action against the named individuals and “will not make any remaining compensation payments that may be owed to these individuals while we review the filings.”
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