Katie McGinty said Pat Toomey’s questions to Wells Fargo CEO John Stumpf during Tuesday’s Senate Banking Committee sounded good, but didn’t reflect his desire to “gut” the Consumer Finance Protection Bureau.
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The announcement came two days after Stumpf faced bipartisan outrage from a Senate panel over the alleged misconduct, believed to have gone on at the second-largest US bank for years. “That said, I accept full responsibility for all unethical sales practices”.
Stumpf replied that trust is essential in banking and that Wells Fargo had some work to do with restoring its trust with its customers. Wells Fargo subsequently laid off 5,300 employees related to the deceptive sales practices. Bob Corker, a conservative Republican from Tennessee, said it would be “malpractice” if Wells Fargo did not claw back executives’ compensation.
ValueEdge Advisors chairman Robert Monks told Freed that Stumpf’s responses reminded him of Muhammad Ali’s “rope a dope” defense-“he gets up against the ropes, he puts up his hands”.
Sen. Richard Shelby, R-Ala., the panel’s chairman, said Wells Fargo had a corporate culture “that drove company “team members” to fraudulently open millions of accounts using their customers’ funds and personal information without their permission”.
If Stumpf resigns, it would create a void within Wells Fargo that likely would not be filled by a current Wells Fargo executive, another industry source suggested to CNBC.
Wells Fargo has always been known in the banking industry for its aggressive sales goals. “Until then it will be business as usual and at giant banks like Wells Fargo, that seems to mean cheating as many customers, investors and employees as they possibly can”. The bank even had a “Gr-Eight” program aiming to raise that number to eight.
Stumpf defended the cross-selling of products – trying to draw customers into taking on more – as “deepening relationships”. Representatives on the council are appointed to one-year terms, and a search for Stumpf’s replacement is already underway.
“Do you know how much money, how much value your stock holdings in Wells Fargo gained while this scam was underway?” she asked. Stumpf refused to offer an opinion on Tolstedt’s conduct or whether she should receive the compensation she is set to receive, saying it was a matter for Wells Fargo’s board of directors.
The senators said their request is based on regulators’ findings of “a workplace characterized by stringent sales quotas and aggressive incentives imposed on its employees, and staggering neglect by management of the obvious consequences to consumers of those quotas and incentives”.
Buffett’s silence on Wells Fargo contrasts with his support of executives including Goldman Sachs;s Lloyd Blankfein and JPMorgan Chase’s Jamie Dimon when their companies drew regulatory scrutiny.
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Not high enough up the chain, senators retorted.
