Thread regarding Wells Fargo & Co. layoffs

WF can't fix itself because leadership constantly tries to implement stupid ideas, and has intentionally tanked morale and trust, and people that don't care and can't trust leadership, surprise surprise, aren't really conducive to fixing anything.

Article:

A former Wells Fargo executive won’t serve prison time for her role in the bank’s fake-accounts scandal.

A Los Angeles judge on Friday sentenced Carrie Tolstedt to three years’ probation and six months of home confinement. She will also pay a $100,000 fine and serve 120 hours of community service.

In a brief statement to the court, Tolstedt fought back tears as she took responsibility for her conduct.

“I sincerely apologize and I know that as the leader of the community bank, the responsibility sat on my shoulders,” she said. “I am unspeakably sorry.”

Tolstedt hugged her husband, Brad, after being sentenced and left court with several supporters without comment.

Tolstedt became the public face of a scandal that burst into the open in 2016, when the bank was revealed to have created perhaps millions of fake accounts because branch employees were under the g-n to meet aggressive sales goals.

She pleaded guilty earlier this year to obstructing regulators who probed misconduct in the business she ran, a crime that carried a maximum prison term of 16 months. Justice Department lawyers had asked that she serve one year, while Tolstedt’s lawyers asked for three years’ probation.

U.S. District Judge Josephine Staton cited federal guidelines that are set to ease prison sentences for cases like Tolstedt’s. The judge said she was imposing a “reasonable and not greater than necessary” sentence.

Justice Department prosecutors had argued that a jail sentence was necessary to deter corporate executives who are tempted to deceive regulators to protect their jobs. Staton, however, said such a punishment wasn’t necessary to send that message.

“General deterrence is better served, in the court’s view, by holding more people accountable,” she said. “A just punishment cannot morph into a harsh punishment.”

Wells Fargo CEO John Stumpf faced the Senate Banking Committee in September 2016 about the bank’s fake-accounts scandal. He later stepped down and was banned from the industry. PHOTO: SUSAN WALSH/ASSOCIATED PRESS
It has been exceedingly rare for bankers to get prison time for committing crimes on the job. Only one banker served time as a result of the financial meltdown of 2008.

The Wells Fargo scandal brought to light the bank’s aggressive sales culture in which employees were told to push as many products on to customers as possible, known internally as cross-selling. Some opened fake accounts to meet sales goals.

The initial revelations opened the door to further scrutiny, revealing problems across the bank, from wealth management to auto loans. Regulators imposed billions of dollars in penalties and restricted the bank’s growth. It is still working to overhaul itself seven years later.

Tolstedt ran the retail arm of the bank for nearly a decade. That included its thousands of branches and gave her oversight of the cross-selling goals for employees who worked in them. She was known for her attention to detail. For much of her tenure, she was lauded for the retail bank’s strong financial performance.

Underneath, thousands of employees were being terminated for opening fake accounts. As problems started to pop up, Tolstedt mismanaged the response, according to a report later commissioned by the board of directors. The report found she refused to change the broken sales model, resisted scrutiny and presented incomplete information to the board.

Tolstedt left the bank in 2016, but since then has had about $65 million of compensation clawed back by the bank. She agreed in March to pay $17 million and accept a ban from the banking industry to settle a separate case with the Office of the Comptroller of the Currency. She paid a $3 million settlement to the Securities and Exchange Commission in May.

Other executives, including then-CEO John Stumpf, were also implicated. Stumpf was banned from the industry in 2020 and paid $20 million to settle charges. He gave up more to clawbacks.

But Tolstedt is the only executive to face criminal charges. She pleaded guilty in March to the charge that she stood in the way of the OCC’s investigation into sales practices when she contributed to a memo on the topic in May 2015.

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Prosecutors alleged she omitted statistics on the number of workers who were fired or resigned during an investigation of sales-practices misconduct. She also failed to disclose that Wells Fargo proactively identified only a small percentage of employees who participated in potential sales-practices misconduct, prosecutors said.

Prosecutors acknowledged in their sentencing request this month that Tolstedt had no criminal history and little risk of recidivism. But they said a jail sentence was necessary to deter wrongdoing.

Tolstedt’s legal team argued that she has already been penalized by regulators and faced public shaming, which serves to deter potential offenders. The filing also contended that the criminal charge stands in contrast to all other facets of her life. She is the daughter of a baker who grew up in Nebraska and found success by outworking others, it said.

Wells Fargo paid $3 billion in 2020 to settle investigations by the Justice Department and the SEC. As part of its settlement, Wells Fargo admitted that it “unlawfully misused customers’ sensitive personal information” and harmed some customers’ credit ratings, collecting millions of dollars in fees and interest in the process.

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