In two turns behind the microphone, Warren, of MA, excoriated Stumpf, repeating questions to try to get him to answer them, turning the bank’s own words against him, and using the opportunity to make a moral case for banking reforms. The pressure to cross sell is what forced Wells Fargo employees to open phony accounts.
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The company settled with the Consumer Financial Protection Bureau and 5,000 Wells Fargo employees were fired.
Lawmakers said the phony bank accounts might have hurt customer credit ratings, increased the cost of a mortgage or auto loan.
When the government discovered that his bank had since as long ago as 2011 been boosting its bottom line by creating millions of credit card accounts in the name of but behind the backs of existing Wells Fargo clients, and then running up charges on those accounts, charging the unawares named holders of the cards late fees and interest for those charges, it slapped the bank with a $185-million fine.
SEN. ELIZABETH WARREN (D-Mass.): So, you haven’t resigned. 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. “The share price during this time went up by about $30, which comes out to more than $200 million in gains, all for you personally”, Warren said.
Warren added: “Your definition of accountability is to push this on your low-level employees”. “It is gutless leadership”.
Progressives wondered what could’ve been as they watched their favorite senator take on Wall Street as the Democratic nominee tries to echo her.
“You should resign. You should give back the money you took while this scam was going on, and you should be criminally investigated”, she said. But he refused to call what happened fraud and he continued to blame 5,300 rogue employees, who have since been fired. “We never directed or wanted our employees, whom we refer to as team members, to provide products and services to customers they did not want or need”, Stumpf said.
Wells declined to comment on the analysts’ reports.
The same day, Stumpf appeared on CNBC, where he rebuffed suggestions that he resign.
“You might say the board of directors should have been sensitive to how the compensation structure might have induced them to behave that way”, said Jill Fisch, a University of Pennsylvania law professor. “You haven’t returned a single nickel of your personal earnings”. Have you fired a single senior executive?
The Banking Committee, one member noted on Tuesday, showed a rare display of bipartisanship in denouncing Wells Fargo.
Mr. Stumpf said it was up to the board’s human-resources committee to decide whether to claw back part of Ms. Tolstedt’s pay.
The bank had announced in July that Tolstedt was retiring. Anderson is the author of a recent study which documented how the exemption translated into a $725 million subsidy for the top 20 US banks over the past four years. Sherrod Brown of OH, the panel’s top Democrat, told Stumpf.
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 responded, “the board will take care of that”. In the five years (at least) where Wells Fargo employees opened unauthorized customer accounts, the bank’s stock price almost doubled, thanks in no small part how well the “cross-selling” was going. The bank sales staff had a goal of getting each customer to have eight different accounts with the bank up from the prevailing average of six.Under intense questioning, Stumpf said the bank employees who were terminated included “managers, and managers of managers, and an area president”. Warren’s cross-examination was particularly tense, as the senator had to repeat her questions three or four times before they were answered to her satisfaction.
“You are scapegoating the people at the very bottom”, said Sen.
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In prepared testimony obtained by The Associated Press, Chief Executive John Stumpf says he is “deeply sorry” the bank failed to meet its responsibility to customers and didn’t act sooner to stem what he called “this unacceptable activity”.
