“Since this massive, years-long scam came to light, you have said repeatedly, ‘I am accountable.’ But what have you actually done to hold yourself accountable?” the top Wall Street watchdog and MA senator asked during the U.S. Senate Banking Committee hearing on the bank’s opening of millions of unauthorized accounts. “The truth is there are real world implications on young and old families that are going to be put in a poverty situation because of these actions”.
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Stumpf also suggested that the Wells Fargo board, in an independent process, will consider possible clawbacks of her compensation. Elizabeth Warren called for the resignation of Stumpf.
Richard Cordray, director of the CFPB, pledged the agency would “certainly follow up as aggressively” to look at other banks’ sales practices to see if sales targets may have pressured employees into opening fake accounts, as happened at Wells Fargo. “Two million is twice the population of the entire state”.
Revelations about Wells Fargo’s sales practices severely undermine argument, especially the fact that the company fired more than 5,000 workers.
“While this scam was going on, you personally held an average of 6.75 million shares of Wells stock.
If you have no opinion on the most massive fraud to hit this bank since the beginning of time, how do you get to continue getting a check as chairman of the board?”
The issue smack dab in the middle of Warren’s wheelhouse, a sweet spot for a senator that built a national reputation on her aggressive stance against big banks and their executives in the wake of the financial crisis.
Asked if he would set aside the mandatory arbitration agreements for customers affected by the phantom accounts, Stumpf demurred. Asked whether he considered firing Tolstedt, Stumpf said Wells Fargo’s chief operating officer told her earlier in the summer that the bank wanted to go in a “different direction”.
During the hearing, Stumpf faced tough questioning from lawmakers about whether the company’s top executives should return some of their bonuses over the misconduct. The visit provided a rare moment of bipartisan consensus as elected officials from both sides of the aisle took turns pummeling the executive for what regulators have called “widespread illegal” sales practices at one of America’s largest banks.
The most anticipated face-off of Tuesday’s Senate Banking Committee hearing did not disappoint: Democratic firebrand Sen. “You should resign”, Warren said at the end of a near-monologue about the broader failures of the banking system.
Wells Fargo fired 5,300 employees after the scandal became widely known, and will refund customers for fees charged as a result of the bogus accounts, but the politicians who questioned Stumpf said that those steps are not enough.
Stumpf said 1 percent of employees were to blame for the scandal.
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“If we had class action on this in 2010, 2009, 2008, the problem never would have gotten so out of hand”, Senator Elizabeth Warren, a Democrat from MA, said later, when questioning regulators about the practice. Instead Stumpf – who seems to lavish as much attention on his public image as Leona Helmsley did on her dog – traded his persona as a hands-on manager for that of a passive executive who rarely pays attention to detail.
