Massachusetts Sen. Elizabeth Warren delivered an epic barrage at the September 20 Senate Banking Committee hearing with the Wells Fargo CEO John Stumpf. Richard Shelby, R-Ala., chairman of the Senate Banking Committee, said during the hearing.
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Stumpf said he was “deeply sorry” that the bank failed to meet its responsibility to customers and didn’t act sooner to stem “this unacceptable activity”.
“I disagree with the fact that this is a massive fraud”, Stump angrily responded to heated questioning from Sen.
The bank’s stock prices dipped while Warren asked for a criminal investigation.
The bank has said that it learned about the illegal practice in 2013 and traced it back to 2011, but in his deposition on Tuesday, Stumpf said that the unwanted account openings may have started earlier and that the bank was looking to see if it extended as far back as 2009.
Not surprisingly, one of the most dramatic confrontations involved Democrat Elizabeth Warren, known for harsh rhetoric about big banks.
Clinton, who faced accusations during her party’s primary elections of representing Wall Street’s interests, said in the letter that Stumpf “owes all of you a clear explanation as to how this happened under his watch”.
Stumpf, who also serves as chairman of the Wells Fargo board, declined to state a position, saying he did not want to prejudice the board’s review of Tolstedt’s compensation.
“Instead, evidently, your definition of accountable is to push the blame to your low-level employees who don’t have the money for a fancy PR firm to defend themselves”, she said. “It is gutless leadership”.
Wells Fargo, familiar to customers for its stagecoach logo, had also always been known in the banking industry for its aggressive sales goals. Wells Fargo has already fired more than 5,000 employees in connection with the fraud – but more than 90 percent of those fired were ranked lower than branch manager.
Wells Fargo did not take seriously the damages it made to their customers until the bank started to be in the loop of regulators.
Peppered with criticism for almost three hours, Stumpf appeared taken aback by the intensity of the verbal lashing.
Minutes later, after Stumpf concluded almost three hours of testimony, a top federal regulator said just the opposite.
“What is particularly disappointing to us is that we and investors have long held Wells Fargo management in very high regard – they have been smart contrarian thinkers and made thoughtful decisions”, he added.
But at the hearing Mr. Stumpf elaborated and seemed to put some distance between himself and Ms. Tolstedt.
Pressure has been building beyond Capitol Hill for Stumpf and Wells Fargo’s board of directors to come up with better answers.
Tolstedt was told that the company was “going in a different direction”, in part because of the misconduct discovered in her unit, Stumpf said. “I think the best thing I could do right now is lead this company, and lead this company forward”, he said.
According to the federal allegations, 5,300 Wells Fargo employees forged signatures and stole identities, Social Security numbers and customer’s hard earned cash, all to meet sales quotas.
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Stumpf was called to the hearing, which lasted almost five hours, after the San Francisco-based bank reached a $185-million settlement with federal regulators and the Los Angeles city attorney’s office on September 8. But Vestager signaled over the weekend that she’s not done yet with the Business Roundtable’s members.
