Senator Elizabeth Warren criticized Stumpf for not leaving his post and not assuming the responsibility of the scandal.
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The senator from OH also urged Wells Fargo to investigate whether such accounts had been opened before 2011 and make any affected customers whole for those years. Warren asked during a Senate Banking Committee hearing.
Peppered with criticism for hours, Stumpf at one point stumbled a bit over his words and bristled at Warren’s suggestion that the sales practices were a “scam”.
Abuses were found as early as 2011, Stumpf said, but bank executives only realized the scale of the problem early past year.
For Jaret Seiberg, analyst at Cowen Washington Research Group, the hearing reinforced his assertion that the market under-appreciates the risk that Congress over the next few years may take steps to restructure or break up the biggest banks.
Wells Fargo has always been known in the banking industry for its aggressive sales goals. “Here are the transcripts of twelve quarterly earnings calls that you participated in from 2012 to 2014, the three full years in which we know this scam was going on”, she said, waving the bound copies in the air. “You should resign”, Warren said at the end of a near-monologue about the broader failures of the banking system.
Former bank employees say they were under intense pressure to add accounts for each customer.
Since 2011, Wells Fargo has fired almost 5,300 employees who profited from illegally opening over 2 million deposit and credit card accounts.
Wells Fargo was accused of creating approximately 2 million fake accounts, including deposit accounts and credit card accounts – often without customers’ knowledge – in order to meet aggressive sales goals.
Earlier in the day, Stumpf testified in front of the Senate Banking Committee about the opening of authorized accounts for customers.
“Either Wells Fargo willfully turned a blind eye, or they completely failed in their legal responsibilities to oversee their operations and to catch and stamp out fraud”, Sen. Tolstedt is expected to leave with as much as $125 million in salary, stock options and other compensation.
According to ClearPoint, a non-profit credit counseling agency, you should first contact Wells Fargo and check your accounts.
“When it all blew up, you kept your job”, Warren said to the CEO.
Wells Fargo said that in 2011, a dedicated team was put in place to monitor and filter out improper sales.
“Here’s what really gets me about this”, Warren continued. “While this scam was going on, you personally held an average of 6.75 million shares of Wells stock”.
The House Financial Services Committee last week launched an investigation into the Wells Fargo scandal and said it plans told hold a hearing later this month.
Wells Fargo has said its board will assess whether to cancel or claw back any incentive compensation paid to a now-retired executive at the center of the scandal, Carrie Tolstedt. And despite being aware of the burgeoning problem for years, CEO John Stumpf signed disclosures with the Securities and Exchange Commission that did not disclose any material financial problems with the bank.
Chief Executive John Stumpf on Tuesday declined to tell the Senate Banking Committee whether he thought the executive in charge of the bank’s unit considered responsible for creating sham accounts should have her pay “clawed back”.
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Warren’s attack was the most searing but lawmakers on both sides of the aisle hammered away at the accountability of Stumpf and other top executives of Wells Fargo for letting the fraudulent activities spread – and for placing the blame on lower-level employees.
