WASHINGTON Five Democratic U.S. Senators have asked Wells Fargo if it plans to take back bonuses and other compensation to executives linked to the 2 million phony bank accounts that employees created to meet sales quotas.
The Consumer Financial Protection Bureau and other regulators announced last week that they had reached a $185 million settlement with the bank over the scam.
“…We write to ask whether the Board of Directors will invoke Wells Fargo’s clawback authority to recover any of the compensation the company has provided to its senior executives, including Carrie Tolstedt, the former senior executive vice president of community banking,” they wrote in a letter dated Thursday and released on Friday.
The five – Massachusetts’ Elizabeth Warren, Ohio’s Sherrod Brown, Rhode Island’s Jack Reed, New Jersey’s Robert Menendez, and Oregon’s Jeff Merkley – said Wells Fargo has cause to claw back money under a policy it instituted after the 2007-09 financial crisis.
“These clawback provisions are designed to prevent exactly what happened with Ms. Toldstedt: Shareholders and consumers bearing the burden of bank misconduct while senior executives walk away with multimillion-dollar awards based on what the company later finds out are fraudulent practices,” they wrote.
Toldstedt led the bank division running the incentive program that pushed the employees to create fake accounts under real customers’ names, often hurting those customers’ credit scores, and received more than $20 million in annual bonuses between 2010 and 2015, they wrote.
Wells CEO John Stumpf will testify on Tuesday before the Banking Committee, where Brown is the most senior Democrat.
(Reporting by Lisa Lambert; Editing by Cynthia Osterman)