A Sacrifice to the "Beltway gods"
Wells Fargo’s Political Sacrifice - CEO John Stumpf is offered up to the Beltway gods.
Excerpt:
The political class got its second ritual sacrifice for the sins of Wells Fargo, as the bank’s chairman and CEO John Stumpf resigned Wednesday, effective immediately.
Mr. Stumpf had already forfeited $41 million in unvested equity grants as recompense for the sales tactics that caused employees to open accounts that customers hadn’t asked for. Now he’s paying with his job, as the bank tries to appease the political lords who under Dodd-Frank have become more or less co-owners of our largest banks. The politicians claim to want compensation clawbacks, but what they really want are heads on pikes.
You won’t read this elsewhere, but Mr. Stumpf has been one of the most successful American CEOs of recent times. Our colleague Dennis Berman reports that in nine years he produced some $149 billion in profits and saw an increase in market cap of $124 billion. Wells Fargo tried to turn down the government’s rescue funds during the 2008 financial panic because it didn’t need the help, only to be forced by Treasury to take the money.Comments: Oh the selective outrage in DC. Dump on Trump (he deserved it) and demand clawbacks (deserved and delivered). Why not demand clawbacks from Secretary of the Treasury Jack Lew for his Cayman connections or his tenure at Citi when it received taxpayer bailouts of $45 billion in cash, and hundreds of billions more in loans and guarantees. See Rep. Garrett Says Democrats Have Double Standard for Clawback Rules . Oh the outage over Trump (this is more the media, I suppose (and deserved)) but none for Hillary for her campaign's mocking of Catholics, Southerners, ‘needy Latinos’
Don't feel too sorry for him! Because two other big public companies still pay him $648,258 a year to sit on their boards and watch over things.
ReplyDeleteRetailer Target (TGT) and energy company Chevron (CVX) paid Stumpf $272,521 and $375,737 respectively in 2015 to be part of the group responsible for overseeing procedures and strategy. These annual retainers are on top of the $134.1 million Stumpf, 63, is walking from Wells Fargo with following his unexpected decision to retire.
Source USA Today
Respected:
ReplyDeleteThe 34-year veteran also gained the respect and admiration of his colleagues. The chairman and CEO of JPMorgan Chase, Jamie Dimon, called him a friend and expressed deep admiration for Stumpf. Wells Fargo's biggest shareholder, Warren Buffett, did too. And I've talked to other CEOs of major banks who felt the same way.
The downfall
But Stumpf's position atop one of our most revered institutions for over 160 years grew untenable after it was revealed last month that a massive fraud was perpetrated by thousands of Wells Fargo employees under his watch. We're still learning the extent of the fraud, but it transpired for somewhere between the past five and 18 years -- possibly dating as far back as 1998, the year Stumpf's predecessor, Richard Kovacevich, took the helm of Wells Fargo by way of its merger with Norwest Bank.
Overly aggressive sales targets from Stumpf and Kovacevich before him essentially forced employees in Wells Fargo's branches to create untold millions of fake deposit and credit card accounts for customers. And then, when Stumpf was called before Congress to answer for the bank's actions, he blamed its lowest-paid employees.
I'm guessing that those companies might review how good he is at oversight at this point. Just sayin'.
ReplyDeleteReally, effective oversight, and the willingness to throw a flag when something is wrong, is almost impossible to teach. It takes that rhino hide you were talking about, really.
Elizabeth Warren Claims a Scalp:
ReplyDelete... does anybody think the scandal would have blown up in the political sphere the way it did if this weren’t an election year? If the vehement person of Sen. Elizabeth Warren hadn’t raised the ante for her fellow politicians by demanding CEO John Stumpf’s head and a criminal investigation? If Sen. Warren’s status and fame didn’t depend on her periodically re-enacting the anti-banker tirades that lofted her to prominence in the first place?