A top Federal Reserve regulator on Tuesday cited Wells Fargo & Co’s accounts scandal as evidence that incentives to drive performance remain a problem on Wall Street, saying that banks have “a long way to go” in reforming internal culture.
William Dudley, president of the New York Fed branch that acts as the U.S. central bank’s eyes and ears on Wall Street, has complained about rotten bank culture for years. In a speech to bankers and regulators in London, he said the Wells (WFC.N) case showed that “compensation, once again, seems to be at the center of a scandal.”
It was revealed last year that thousands of employees at the U.S.-based bank had opened perhaps millions of unauthorized customer accounts, a scandal that rocked the bank and led its chief executive, John Stumpf, to resign.
Dudley – who did not discuss monetary policy or the state of the economy – said the Wells case appeared to involve “widespread fraud.”
He added: “Incentives shape behavior, and behavior drives culture.”
(Reporting by David Milliken; Writing by Jonathan Spicer; Editing by Leslie Adler)