Editorial: Wells Fargo Scandal Must Be Punished

Anyone who falsifies signatures and steals identities and Social Security numbers for their own benefit and their bosses’ is committing a serious crime that deserves to be punished. That is, unless the crime is being done by a big bank such as Wells Fargo. In this case, everything changes.

This is the story behind the bank scandal in which 1.5 million bank accounts were opened and 565,000 credit cards were applied for without the clients’ authorization.

Employees would transfer money from a real client account to create another, without consent. In some cases this resulted in extra costs for the unsuspecting client, but not always. The goal was to create a large number of clients with many accounts in order to get a lavish bonus – an additional compensation that would move through the organization all the way to the CEO.

As a result, more than 5,300 employees and managers were laid off, and now they complain about the pressure coming from above to fulfill goals. However, they were quick to cash their bonuses even when they knew about their wrongdoings.

The executive who ran this program, Carrie Tolstedt, retired in July – before the scandal exploded – with a total compensation of $125 million. Wells Fargo, whose assets amount to $1.9 billion, has so far received only a $180 million fine.

The bank says it will pay surcharges and damages to clients whose credit history was affected, but the executives have already filled their pockets. According to The New York Times, CEO John Stumpf received a total compensation of $103 million between 2011 and 2015.

Stumpf said that it took him five years to realize the magnitude of the problem and that’s why they fired a thousand employees per year. It rather seems like they delayed as much as they could until the problem was impossible to conceal, and pretended to be doing something as they got bonuses from the malfeasances they purported to investigate.

This is the perfect crime: Nobody is being charged. At the very least, Stumpf should resign and, along with Tolsted, give the money back. A message must be sent to bankers not to repeat this.

This is a failure of the bank’s internal control systems as well as the regulators’. Congress can act establishing new rules. And consumers are left knowing that they must pay close attention to their bank accounts and transactions.