Wells Fargo’s Tolstedt Did Exactly What She Was Supposed to Do


I would think that by now almost everyone has read or heard about Wells Fargo agreeing to pay $185 million for defrauding its customers, right?  It was the largest penalty ever imposed by the Consumer Financial Protection Bureau (CFPB).

Basically, the bank’s employees in one “unit” were opening accounts for customers that the customers never authorized in order to make larger bonuses.  Inside the bank, the practice was even given a name… employees called it “sandbagging.” 

And we’re not just talking about a few accounts here, or even a few thousand… more than TWO MILLION fraudulent accounts were open by these people since 2011.  According to the CFPB’s investigation, roughly 1.5 million of the unauthorized accounts were bank deposit accounts and 565,000 were unauthorized credit card transactions.

The Wells executive in charge of this insanity is Carrie Tolstedt.  She’s worked at Wells Fargo for 27 years.

In July, Wells Fargo’s CEO John Stumpf, announced that Ms. Tolstedt would be retiring.  He didn’t mention the investigation that would soon make headlines, instead he  referred to her as one of the bank’s most important leaders and “a standard-bearer of our culture” and “a champion for our customers.,” according to MSN.com.

Actually, I have no trouble believing that she was in fact a “standard-bearer” of Wells’ culture, but as far as being any sort of “champion” for Wells customers… well, not so much.

The story also quoted the Director of the CFPB, Richard Cordray as saying:

“It is quite clear that the actions of Tolstedt’s unit are unfair and abusive practices under federal law. They are a violation of trust and an abuse of trust.”

Ya’ think?  I would certainly hope there’s no debate about that. 


The story continued with a few more facts that show what may have motivated Ms. Tolstedt to make the transition from traditional banking… to a life spent robbing customers.

“… Tolstedt ran the community banking division of the bank, which included its retail banking and credit card divisions, during the entire period in which the customer abuse was alleged, which goes back to 2011.”

“Tolstedt was regularly praised for her unit’s ability to get customers to open numerous accounts.”

“ For a number of years, Wells Fargo’s proxy statement, which details executive pay, cited high “cross-selling ratios” as a reason that Tolstedt had earned her roughly $9 million in annual pay.”

“… in Wells Fargo’s 2015 proxy statement, the company said that its compensation committee had authorized Tolstedt’s $7.3 million stock and cash bonus that year, because “under her leadership, Community Banking achieved a number of strategic objectives, including continued strong cross-sell ratios, record deposit levels, and continued success of mobile banking initiatives.”

MSN.com also reported that… “the L.A. City Attorney’s office said that many of the abusive practices came from intense pressure on Wells Fargo’s employees to get customers to open up numerous accounts.”

Now, that’s a little silly, don’t you think? 

Why would you need to pressure someone get millions of new accounts opened when you’re paying that person tens of millions of dollars for doing so?  I mean, if you pay me $9 million a year, I’ll make sure that tons of new accounts get opened… and you won’t need to pressure me one bit.

Anyway, the only point I’m trying to make here is that when I first read the story about what Ms. Tolstedt had done, I wondered how could she have done something like this… 27 years at the bank and now she’d probably end up in jail.

Well, shave my head and call me baldy… was I ever wrong about that. Again, according to MSN.com

“When Tolstedt leaves Wells Fargo later this year, on top of the $1.7 million in salary she has received over the past few years, she will be walking away with $124.6 million in stock, options, and restricted Wells Fargo shares.”


Excuse me?  Did I read that correctly?  Ms. Tolstedt  is “retiring” with $124.6 million?

Am I to understand that that’s what you make for heading up the community banking division at Wells… $124.6 million?  To say nothing of her annual salary that appears to have ranged from $1.7 million to $9 million with bonuses?  For heading up the community banking division?

Look, I’ve spent quite a bit of time standing around in Wells Fargo branches and I don’t remember thinking that the person who heads up this division probably makes millions a year… let alone might retire with $124.6 million in fabulous cash and prizes.

So, I’ve changed my opinion on this matter…

Ms. Tolstedt didn’t do anything she shouldn’t have done, in fact, she did exactly what she was supposed to do, how’s that?

I’m not saying that it’s okay to open accounts for bank customers without their knowledge, much less their consent.  Obviously, doing that was wrong.

But, for a salary of millions a year, and $124.6 million in my retirement account, I’ll open up credit card accounts when people aren’t looking all day long.  I still can’t believe that’s what heads of community banking make these days… how could I not have known about this? 

I’m serious… I could have had her job or at least been her #2.  Had someone told me at 30 years of age, that all I’d have to do to make millions a year and retire with $124.6 million in the bank, is open new accounts for customers without their knowledge… OMG, what could be easier than that?  You don’t even have to convince customers to open the new accounts, you simply do it for them when they’re not around. 

See, I thought that working in the branch of a bank would mean having to talk to customers about opening new accounts.  I didn’t realize that another way to go about that would be to wait until the customers leave and then just start opening new accounts in their names willy nilly.


It’s positively brilliant.

It’s frustrating because this is not the first time I’ve missed out on this sort of lucrative career… remember the foreclosure mill attorney in Florida, David Stern.  He paid a robo-signer $700,000 a year, as I recall, for signing his name a whole bunch of times.  Anyone that knows me knows that I would have been great at that.

So, how could Ms. Tolstedt have done something like this?  You’re kidding me, right?  What did she do wrong?  She made millions a year and retired with $124.6 million.  That’s not just money… that’s like movie star type money… generational wealth, as they call it.

And she’s not going to jail… she’s not even going to get a stern talking to.  She’s retiring “later this year.” 

LATER THIS YEAR?  What would you like to bet that if a teller at a Wells Fargo branch gets caught stealing $20 out of his or her cash drawer, the police are called to take a report and Wells Fargo Security Officers escort the employee out of the building within an hour.

Ms. Tolstedt’s “sandbagging” operation got busted by the LA Attorney’s Office and the CFPB… the bank has to pay a $185 million fine as a result… and Tolstedt is retiring later this year.

And you’re going to tell me that she SHOULDN’T have done what she did?  Like hell, she shouldn’t.


How would you like to be some other Wells Fargo executive who didn’t commit any sort of fraud before retiring with maybe a million in a 401(k) or whatever?  You’d be thinking about cutting your wrists after reading about Ms. Tolstedt’s performance, wouldn’t you? 

It would be akin to finding out that you were the only person at the bank actually working hard to get your department generating credit card accounts, only to discover that you could have simply trained people to open credit card accounts for customers without their knowledge… and walked away with $124.6 million at retirement.  Talk about wanting to kick yourself.

It would be like working for Bernie Madoff and not stealing a nickel.  Or working for a Colombian drug cartell and not trying cocaine.  Living in Aspen and never taking a ski lesson?  Talk about opportunity wasted.

Don’t blame the player… hate the game.

In case you’re not good at sarcasm, what I’m not kidding about is that if you make it possible for someone to make that kind of money, anything can happen, and often does.  Put enough money on the line, reduce the chances of going to jail to nearly nil, and anyone will bend their ideas about what’s ethical and what isn’t.

For example, I wouldn’t take a job where I have to lie to customers, but for $124.6 million I think I could come up with a way to not consider it lying. 

For $124.6 million and no risk of going to jail, I think I could probably sign my mother’s name to a MasterCard application when she wasn’t looking… I mean, so what, right?  She can always close the account when she finds out about it, right?  How much harm could it really do?

$124.6 million, on the other hand…why that’s the sort of gift that keeps on giving… and giving… and giving.  So, if mom finds out what I did to her, I can always buy her a city block in Manhattan to make up for it.

And don’t start yammering on about how what she and others did was illegal because you’re obviously wrong about that… it obviously was perfectly fine because she’s retiring later this year with $124.6 million.

Oh, what the heck… hate the player too.


Mandelman out.

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