Federal regulators hit a handful of former Wells Fargo executives with multi-million-dollar fines this week for the bank’s massive fake account scandal. The penalties included a $17.5 million fine and lifetime ban from the banking industry for former CEO John Stumpf, and a $25 million fine for former retail banking head Carrie Tolstedt.
Sen. Elizabeth Warren says it’s not enough.
“Giant banks like Wells Fargo will only clean up their act when their executives know they’ll face handcuffs when they preside over massive fraud,” the Massachusetts senator, who famously lambasted Stumpf during a 2016 congressional hearing, said in a statement late Thursday night.
“Tomorrow morning, former Wells Fargo CEO John Stumpf will wake up to his cushy retirement while the thousands of low-level branch employees who took the fall for him — and the hundreds of thousands of consumers who were cheated on his watch — continue to deal with the repercussions of his scams,” she added.
I've said it for years: giant banks like @WellsFargo & CEOs like John Stumpf will only clean up their act when their executives know they’ll face handcuffs when they preside over massive fraud. pic.twitter.com/xiTSi08r7b
— Elizabeth Warren (@SenWarren) January 24, 2020
Wells Fargo fired more than 5,000 lower-level employees in 2016 for opening what was ultimately revealed to be more than 3.5 million fake — and sometimes fee-accruing — accounts under the names of unsuspecting customers, amid intense pressure to increase sales from their superiors at the San Francisco-based banking giant. Warren has argued that top-level executives at the company were complicit in creating the toxic culture that led to the scandal.
The bank paid a record $100 million fine to the Consumer Financial Protection Bureau — the federal watchdog agency conceived and set up by Warren — and ultimately put most of the blame for the scandal on Stumpf and Tolstedt, both of whom left the company as the scandal was unfolding. And while Wells Fargo did claw back $41 million and $19 million, respectively, from Stumpf and Tolstedt, the rescinded pay amounted to just a fraction of their total compensation.
In addition to fining Stumpf and Tolstedt, the Office of the Comptroller of the Currency announced civil money penalties Thursday ranging from $500,000 to $5 million against five other former Wells Fargo executives.
But given the amount of money bank executives earn, Warren has argued such penalties won’t be effectively dissuasive. Last April, the longtime Wall Street critic introduced legislation to hold executives of big corporations criminally liable if their companies commit crimes or commit violations that harm consumers. In the wake of the 2008 financial crisis, only one top banker went to prison.
“It’s not equal justice when a kid with an ounce of pot can get thrown in jail while a wealthy executive can walk away with a bonus after his company cheats millions of people,” Warren wrote in the Washington Post at the time. “Personal accountability is the only way to ensure that executives at corporations will think twice before ignoring the law.”