Wells Fargo chairman and CEO John Stumpf appeared for his Senate hearing today with a lengthy apology and plan for combating backlash following the bank’s recent scandal.
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The CEO of Wells Fargo plans to apologize before a congressional panel for betraying customers’ trust in a scandal over allegations that employees opened millions of unauthorized accounts to meet aggressive sales targets.
That gets chalked up to Stumpf playing with his grandchildren, according to a spokeswoman for the bank.
But Carrie Tolstedt, the executive who ran the unit responsible for opening up the phony accounts, was awarded a $124.6 million payday.
Wells Fargo has always been known for its aggressive sales goals, but the details and the $185 million fine that regulators imposed last week have singed the consumer banking giant’s reputation as a well-run, tightly managed company removed from the reckless conduct on Wall Street that stoked the financial crisis.
Warren told Stumpf he should “give back the money you took while this scam was going on and you should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission”. Robert Menendez called the bank’s sales and management culture “despicable “. Warren said the banking industry wouldn’t see reform until executives saw actual jail time.
Wells Fargo, one of the largest six US banks and one that came away from the 2008 financial crisis least scathed, earlier this month was fined $185 million by the nation’s consumer protection agency for fraudulently opening over two million unauthorized consumer credit card and savings accounts.
The lender is also contacting all of its customers nationwide to ensure their accounts and credit cards are products they need and want, said Stumpf, who is also the bank’s chairman.
In 2015, an OCC review of Wells Fargo’s sales practices revealed shortcomings that prompted the agency to demand changes as well as requests for the bank to compensate customers for any damages that occurred. Stumpf, 63, told lawmakers he was “deeply sorry” and detailed a five-year timeline of attempts the bank made to deter misconduct. But they show she holds a variety of mutual funds with TIAA, a retirement provider for educators and researchers.
The Consumer Financial Protection Bureau, which issued the penalty, said in a statement that the problems at Wells Fargo were spurred by sales targets and compensation incentives that motivated employees to open the unauthorized accounts.
Wells Fargo said that in 2011, a dedicated team was put in place to monitor and filter out improper sales. In 2012, the bank began lowering some sales goals for compensation.
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A group of Democratic Senators, led by Warren, last week wrote a letter pressing Stumpf with questions on pay. It later said it plans to eliminate the sales targets by January 1.
