FILE – In this Tuesday, Sept. 20, 2016 file photo, Wells Fargo Chief Executive Officer John Stumpf testifies on Capitol Hill in Washington, before the Senate Banking Committee.
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MA U.S. Sen. Elizabeth Warren blasted the head of Wells Fargo and demanded both his resignation and a criminal investigation, even as records indicate the anti-Wall Street crusader appears to hold investments in the embattled bank herself.
Stumpf told the committee that the bank fired 5,300 employees involved in the fake accounts starting in 2011, not in response to the Consumer Financial Protection Bureau, which revealed the scandal earlier this month.
If the bank starts to show signs of its reputation really taking a hit, such as customers leaving in mass quantities, then Miller says he will consider revising his rating.
“Despite all of these efforts, we did not get it right”, Stumpf said.
The exchanges between Warren and Stumpf were among the sharpest, but other senators also pressed the executive about what have become hot topics as public outrage has grown over the case. Elizabeth Warren, D-Mass., demanded that Stumpf explain why he had not offered to give up any of his compensation – he made $19 million past year – or resigned in the wake of the scandal. “You squeezed your employees to the breaking point so they would cheat customers”, she said.
“Evidently your definition of accountable is to push the responsibility” to low-level, low-wage workers, Warren said. “A cashier who steals a handful of $20s is held accountable, but Wall Street executives nearly never hold themselves accountable, not now and not in 2008 when they crushed the worldwide economy”. “You should resign”, Warren said at the end of a near-monologue about the broader failures of the banking system.
Stumpf called it an important question but drew a distinction. “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”.
Stumpf noted it was a good question, but called the matter a “problem of focus and not of size”.
A letter sent to the bank’s general counsel asked him to make four senior executives available for transcribed interviews, including Carrie Tolstedt. “It’s gutless leadership”, she said, noting that Stumpf is not resigning, returning any of his earnings or firing any senior executives. “Have you resigned as CEO or chairman of Wells Fargo?”.
Despite this, Stumpf said he had not wanted to fire Tolstedt because she had performed well in other duties like branding and improving customer loyalty, which he said were “top of class” among large banks. Tolstedt opted to retire in July. They made clear they think the board, which has known about the bank’s “cross-selling” problems since 2013, should have acted more quickly to clean up the mess – especially on deciding whether to claw back compensation from top executives.
“This isn’t the work of 5,300 bad apples, this is the work of sowing seeds that poisoned the orchard”, said Sen.
Lawmakers, including Sen. Sherrod Brown (D., Ohio), appeared incredulous.
Stumpf will also acknowledge that the bank failed to do enough to stop the behavior from continuing, the Times said. Senators are examining their role in the debacle and why the sales practices went on for years before the regulators cracked down. Money in customers’ accounts was said to have been moved to these new accounts without their permission. Warren said. “Why can you not make a change here?” And neither do the millions of Americans who lost their homes or watched their savings shrink when they paid the price for Wall Street’s risky bets.
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“I disagree with the fact this is a massive fraud”, he added.
