Stumpf and Wells Fargo are under intense scrutiny after allegations that more than 5,000 bank employees opened over 2 million bogus bank and credit card accounts for customers without their knowledge in order to meet sales quotas.
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“This is about accountability”.
Massachusetts Senator Elizabeth Warren, a Democrat, called on Stumpf to resign and said he should be “criminally investigated”.
Senator Sherrod Brown, an Ohio Democrat, told Stumpf that the bank’s response has been inadequate, and said, for example, that Wells Fargo hasn’t yet calculated what effect lower credit scores resulting from the unauthorized accounts might have had on customers’ finances. “The only way that Wall Street will change is if executives face jail time when they preside over massive frauds”, she said.
Last week, it became known that federal authorities and the city of Los Angeles had levied a $185 million fine on the bank to settle the case, along with $5 million in compensation provided to customers affected by the commissions and charges that originated when accounts they had never requested were opened by Wells Fargo employees starting in 2011.
She then produced 12 transcripts of Wells Fargo earnings calls Stumpf participated in from 2012 to 2014 – “the three full years in which we know this scam was going on”, Warren said. Money in customers’ accounts was said to have been moved to these new accounts without their permission.
In answer to a question, he declined to commit to setting aside mandatory arbitration agreements that prohibit clients from suing Wells Fargo. Stumpf, they said, was offering little more than platitudes while allowing his top executives to avoid any real consequences – like being fired or having their enormous pay packages clawed back. All three such funds on TIAA’s website that match the description list Wells Fargo as one of their top holdings at almost 1 percent of net assets.
“Have you returned one nickel of the money that you earned while this scandal was going on?” It remains unclear how and why Ms. Tolstedt will be allowed to walk away with millions of dollars in salary and bonuses from Wells Fargo despite the rampant misconduct that occurred under her watch.
“I have often said that banking is based on trust, and that trust was broken at Wells Fargo”, Sen.
“You’re not wiling to say publicly … that some of her compensation … should be clawed back?” asked Sen.
“I will take that as a “no” then”, Warren continued.
In an interview this month with CNBC’s Jim Cramer, Stumpf said he doesn’t plan to step down over the unauthorized-accounts scandal.
“You should resign”, she concluded. “You found out that one of your divisions had created 2 million fake accounts, had fired thousands of employees for improper behavior and had cheated thousands of your own customers and you didn’t even once consider firing her ahead of her retirement?” He instead blamed the bank’s low-level employees and fired them.
“Are you going to look into this seriously about what this person did, her responsibility and the big reward that she’s getting?” Sen.
Stumpf tried to dodge the question saying the board would take care of that, but Sen.
Alexis Goldstein of Americans for Financial Reform said Clinton’s use of the term “clawback” is a good sign, and that she thinks it may be an endorsement on Clinton’s part of stricter rules regarding executive pay.
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“I was told by Wells Fargo district and regional management to make my personal bankers and tellers sell, sell, sell”, said Julie Miller, who managed a Wells Fargo branch in Pennsylvania until 2013.
