| NEW YORK, Sept 13
NEW YORK, Sept 13 U.S. Treasury Secretary Jack
Lew said on Tuesday federal regulators were correct to punish
Wells Fargo & Co for setting up sham accounts without
customers' knowledge, but stopped short of calling for a
clawback of pay from the head of the unit where the wrongdoing
"It's bad behavior they were correct to take action
against," Lew said at the CNBC Institutional Investor Delivering
Alpha Conference in New York. "This is unacceptable behavior,
and the kind of behavior we ought to catch and stop."
Last week, the U.S. Consumer Financial Protection Bureau and
two other regulators fined Wells Fargo $185 million for creating
more than two million fake accounts for products such as credit
and debit cards, to help employees at the third-largest U.S.
bank by assets to meet aggressive sales targets.
The civil enforcement action called into question Wells
Fargo's oversight of "cross-selling," long a central part of its
business model, in which employees encourage customers to buy
products or to open accounts they might not otherwise consider.
Wells Fargo, based in San Francisco, said it fired 5,300
workers as a result of the conduct. The bank on Tuesday said it
would eliminate all product sales goals in retail banking
beginning Jan. 1.
Lew used the Wells Fargo case to defend the enactment of the
2010 Dodd-Frank financial reforms, which led to the creation of
the CFPB, saying: "This is something that our watchdogs found."
Some lawmakers have called for a criminal investigation, and
some commentators have suggested that Wells Fargo should claw
back some compensation from Carrie Tolstedt, the community
banking executive who was in charge of the unit responsible for
On Monday, Fortune magazine said Tolstedt will receive a
$124.6 million compensation package in connection with her
recently announced retirement.
Lew did not discuss whether prosecutions were warranted, but
said no executive was "too big to jail," and declined to discuss
whether a clawback from Tolstedt was warranted.
Still, he said the Wells Fargo episode was a "wake-up call"
for the banking industry to show that the "culture and
compensation make a difference."
(Editing by Bernadette Baum)