How New Executives Plan to Sweep the Wells Fargo Scandal Under the Rug

Carrie Tolstedt used to be a name no one knew this time last year. Now millions of Americans are talking about her and her involvement in the recent Wells Fargo scandal.

Tolstedt, along with the bank’s former CEO, John Stumpf, has been taking the bulk of the blame for the recent scandal, which was outlined in a 113-page report released by the company on Monday. The former CEO and former head of retail are mentioned in the document along with about a dozen other higher ups.

So, what will come of this banking scandal? What will happen to the Wells Fargo employees (both current and past)?

What is the Wells Fargo Scandal?

Well, before you know what is happening to make the scandal “go away” you have to know what happened.

Essentially Wells Fargo executives were overseeing sales projects in which fake accounts were being opened. Since the scandal was uncovered, many employees have come forward quoting intense pressure in the workplace regarding sales. About 2,500 people lost their jobs throughout the company due to this.

Where the “scandal” comes in is that a majority of Wells Fargo executives knew what was going on. They allowed for thousands of people to be fired but wanted no responsibility of their own.

Read more about the Wells Fargo scandal here.

Wells Fargo Execs Being Investigated

As mentioned above former CEO John Stumpf and former head of the Wells Fargo retail division Carrie Tolstedt have been fired from their positions with the company due to the facts that have come to light during the scandal. Much of the blame still lies with these two former leaders, however, the report released Monday named a few other people as well.

Stumpf called one woman, Patricia Callahan, his “confidante.” Callahan has been named in the 113-page document because of this. Due to her closeness with Stumpf, board members believe that Callahan was aware of the sales abuses occurring within the company and she never raised the issue with the board. Callahan retired in 2015 before the scandal was uncovered. It is believed that her successor, Hope Hardison, may have been aware of the abuses happening at the community banks as well.

Another name singled out in the document is James Strother. Strother served as general counsel to Wells Fargo board members. He was not directly involved in the scandal but he did provide misleading information to members of the board. The key piece of information believed to be skewed by Strother was the number of terminations made in relation to the faked accounts. There were about 2,500 people who lost their jobs at community banks due to the scandal, while Strother made it seem like there were only about 230 jobs terminated.

There were also a number of other people indicated in the report on Monday. Most of them have been identified for pressuring employees to up sales or having knowledge of the bogus accounts being created. However, when it boils down to it, Tolstedt and Stumpf are carrying the weight of the scandal on their shoulders (and their wallets are feeling it too).

Former Wells Fargo Execs Asked to Pay

Both former execs have already been replaced and, to make amends for their wrongdoings, Stumpf and Tolstedt have also been asked to pay about $75 million back to the company. The replacements for Stumpf and Tolstedt aren’t wasting any time trying to sweep this mishap under the rug either.

Last month Mary Mack, Tolstedt’s replacement, began reorganizing the community bank’s leadership to insure another scandal like this wouldn’t happen in the future. The new CEO, Tim Sloan, isn’t waiting to make changes either.

Sloan pushed to rehire about 1,000 Wells Fargo employees that were affected by the terminations made last year. He also got on the phone with a group of journalists Monday to chat about what the company is doing moving forward and just how much the former execs will have to pay out.

How much will Stumpf and Tolstedt Pay?

In the document released Monday it was outlined that Stumpf and Tolstedt would pay considerable fees to Wells Fargo, its employees and customers. Stumpf gave up $41 million of his holdings in the company and will have to give up an additional $28 million while Tolstedt will have to pay an additional $19 million on top of the $47 million she’s already paid out.

It is not likely that Stumpf nor Tolstedt will have a career ever again. Both former execs went from faces on the Fortune 500 list to hated villains overnight. Understandably, scandals like this are something CEO Tim Sloan wants to make sure doesn’t happen under his watch. “When you violate your code of ethics at Wells Fargo, you don’t have an opportunity to come back,” he said.

And, although Sloan has made it clear that this method of business won’t be tolerated at Wells Fargo, the long term impact of the scandal remains to be seen.

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Photo: Talk Markets