“You should resign”, she told Wells Fargo CEO John Stumpf. The Consumer Financial Protection Bureau fined Wells Fargo earlier this month after it was discovered that from 2011 to 2015, many employees illegally opened bank accounts without customers’ knowledge or intent.
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He compared the agency’s planned course of action to its investigation into allegedly deceptive marketing of credit-card add-on products at banks in recent years, which led to enforcement actions against 12 companies.
For his part, Stumpf was apologetic.
Hit by a volley of tough questions from Sen.
Stumpf chimed in, saying, “I disagree with the fact that this is a massive fraud”.
“You haven’t returned a single nickel of your personal earnings”.
Mr. Stumpf started to answer “The board…” but Senator Warren interrupted him and asked him again if he had resigned to his posts. Elizabeth Warren, D-Mass., demanded that Stumpf explain why he had not offered to give up any of his compensation – he made $19 million previous year – or resigned in the wake of the scandal. “I call it fraud because I got exhausted of euphemisms”, he said. The bank has more than 268,000 employees, with about 255,000 in the United States.
Perhaps the public shaming of Wells Fargo will have an impact on other CEOs and top corporate executives.
Stumpf faced a barrage of criticism from both sides of the aisle. Jeff Merkley, D-Ore., said in a Tuesday speech. Elizabeth Warren called for the resignation of Stumpf. Regulators took a few licks, too, for failing to detect problems with the bank’s sales practices sooner. “You squeezed your employees to the breaking point so they would cheat customers”, she said.
Democratic lawmakers have been using the Wells Fargo case to stress the important role the CFPB plays to protect consumers.
The CEO did not crack on the stand and admit everything like the villain in a Perry Mason episode.
Modern Healthcare reported in June that Dean and many other not-for-profit health system executives receive lavish pay sitting on the boards of publicly traded companies. It was a portrait of the chief executive as innocent bystander.
Even when the bankers were the ones that opened the fraudulent accounts, Stumpf is being held responsible because, under his management, Wells Fargo was demanding employees to cross-sell products to reach the unreasonable goal of eight accounts per customer.
“I do think so”, Cordray said.
In a Marie Antoinette moment, Stumpf insisted that the employees who were fired had “good paying jobs”. They ranged in pay from about $35,000 to $65,000.
“I want to apologize for violating the trust our customers have invested in Wells Fargo”, Stumpf added. Richard Shelby for holding it.
The same day, three Utah residents filed what is believed to be the first class-action lawsuit brought by customers against Wells Fargo over the allegations. That’s like telling the sheriff to move faster while you’re trying to take away his horse. Hensarling, a Texas Republican, said he plans to request that Stumpf appear for that hearing, too. But it will take more than words to fix Wall Street. That means appointing regulators and Justice Department officials who will uphold the law without fear or favor.
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After two years of knowing there was a problem, Wells Fargo CEO finally hired consultants at PricewaterhouseCoopers to face the problem.
