In December 2016, Better Markets president and CEO, Dennis Kelleher, detailed in an American Banker Op Ed “How Wells Fargo Proves It’s Not a Wall Street Villain.” We communicated these recommendations to the highest levels of Wells Fargo, encouraging them to do the right thing rather than only after forced to do so by regulators, prosecutors and civil lawsuits.
The Op Ed had a list of very specific, concrete and meaningful steps Wells Fargo should take if it was serious about fixing the egregious illegal sales practices and genuine about putting their customers’ interests first. Executives giving up their bonuses was a leading recommendation:
“Top executives must take initiative and announce that they are voluntarily giving up a significant portion of their bonuses for 2016. In addition, regardless of rank, any performance pay related to the fraudulent and illegal actions must be clawed back from anyone who improperly benefited financially.”
Fast forward to March 2017 where we just learned that Wells has killed the 2016 bonuses for eight senior executives and is clawing back compensation since 2014, all in an effort to demonstrate that it is holding managers accountable for the years-long illegal practice of opening fraudulent accounts.
As we detailed in the Op Ed, Wells Fargo has a lot more to do to ensure its illegal business practices have ended, won’t reoccur and that customers’ interests are put first and protected. These are specific actions, not just empty words, PR spin or feel-good TV commercials.
There is no question that denying bonuses to top executives and clawing back pay are very encouraging steps. Wrongful and illegal behavior will never stop until bankers are hit where it really hurts them: their wallets and pocketbooks.
We will continue to communicate with Wells Fargo and will closely watch their upcoming announcements, including regarding the Board’s investigation and report. We hope there are more actions to come and that there is a significant overhaul of the practices and culture at Wells Fargo. As we have said, if they are looking for good ideas, there is an entire list of recommendations in the Op Ed.
