In this Monday, Dec. 7, 2015, file photo, Wells Fargo chairman & CEO John Stumpf is interviewed by Maria Bartiromo during her “Mornings with Maria Bartiromo” program on the Fox Business Network, in NY. In the aftermath, the bank fired 5,300 employees. 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.
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During his testimony in front of the Senate Banking Committee, CEO John Stumpf admitted that he and other senior executives were made aware of the account-opening scheme in 2013.
The bank would expand its review of customer accounts created in 2009 and 2010. “We should have realized much sooner that the best way to solve the problems in the retail banking business was to completely eliminate retail bank product sales goals”. Here you’ll be able to see all bank accounts opened in your name. While he accepted “full responsibility” Tuesday for the bank’s misdeeds, earlier he had pinned the blame for the affair on bad employees, telling The Wall Street Journal that “there was no incentive to do bad things”. Some 5,300 Wells Fargo employees have been fired.
At the heart of the scandal is hard selling and pressure to meet performance targets at the level of branch banks, which led many Wells employees to create false accounts and temporarily transfer money into them without customer knowledge.
Wells Fargo has always boasted to investors of its cross-selling success but never mentioned what was behind that achievement.
“I’m not on the human resources committee”, Stumpf said. As the Los Angeles Times explains, “Over the years, many Wells Fargo customers have tried to sue the bank over fake accounts, but their cases have run into an increasingly familiar roadblock: arbitration clauses”.
After two years of knowing there was a problem, Wells Fargo CEO finally hired consultants at PricewaterhouseCoopers to face the problem.
In a hearing with the Senate Banking Committee, Wells Fargo Chief Executive John Stumpf was asked repeatedly about Ms. Tolstedt’s summer retirement announcement and the tens of millions of dollars she will receive in compensation for her 27 years of service there. In media interviews after the scandal emerged, he chalked up the bank’s fraudulent conduct to dishonest employees that the bank has fired. But his words do not match his actions. Sen. Elizabeth Warren on Capitol Hill on Tuesday. “You should resign”, Warren said at the end of a near-monologue about the broader failures of the banking system.
“There’s something very different about violating our code of ethics and putting customers at risk and being dishonest”, Stumpf said, “versus someone who did not spend enough time making sure that this issue had been closed”.
The senator asked Stumpf, “Cross-selling is all about pumping up Wells’ stock price, isn’t it?” “Have you returned one nickel of the millions of dollars that you were paid while this scam was going on?”
During the hearing, Stumpf faced tough questioning from lawmakers about whether the company’s top executives should return some of their bonuses over the misconduct.
Asked directly whether he’d referred anyone to the Justice Department for prosecution, Cordray said he can not discuss referrals but then read the statute that allows him to do so.
The disgraced CEO offered a personal apology for his part in the sham accounts debacle.
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She then said that “Your definition of accountability is to push this on your low-level employees”. “You should give back the money that you gained while this scam was going on, and you should be criminally investigated by the [Department of Justice] and the [Securities and Exchange Commission]”.
