In a first-of-its kind banking scandal punishment, Wells Fargo CEO John Stumpf and banking unit executive Carrie Tolstedt will have to give back a total of $60 million.
Although Stumpf initially tried to blame the scandal on his low-level employees, recent political pressure is forcing him to take additional steps.
Wells Fargo is facing enormous scrutiny over routinely opening unauthorized accounts for clients in order to make sales goals. The have already been fined $185 million. In response, the bank fired 5,300 employees, all at lower levels. The executive in charge of the branch that was responsible for pushing for and implementing the fraudulent accounts, Carrie Tolstedt, was set to retire later this year with a payout of $124.6 million.
But now, after pressure from senators such as Elizabeth Warren, Wells Fargo’s board is forcing the top executives to pay up out of their own pocket.
John Stumpf will have to forfeit $41 million in past compensation and Carrie Tolstedt, who has already resigned, will have to give back $19 million of her own.
This is a first. Clawbacks have never been applied to banking executives before now. The lower level, junior employees the Stumpf originally blamed the scandal on were originally affected by the fine, but forcing these top executives to pay up has never been seen before.
Clawbacks are an important concept for banking regulation. Normally banking executives aren’t affected if their company gets caught bending, or breaking, finance rules to help company stock rise. But clawbacks, the recovery of money already disbursed, can affect anyone, including top level CEOs.
Now to speed up the process of justice. Wells Fargo was first exposed three years ago by journalists and it has taken this long to finally see some repercussions.