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.
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Regulators on September 8 fined Wells Fargo $185 million for opening some two million customer deposit and credit card accounts without customer approval.
The CEO of Wells Fargo was in the hot seat with Warren on Tuesday at the Senate Banking Committee’s Wells Fargo hearing, and Warren was in no mood to tread lightly.
It was announced that the FBI and federal prosecutors in NY and California were probing the bank over the alleged misconduct, a development that opened the possibility of criminal charges. He declined to say whether his agency will recommend criminal charges to the Justice Department.
“So, let’s do that”, Warren said, before admonishing Strumpf for failing to accept any sort of accountability while pushing the blame on lower level employees. She also lambasted him over the bank’s cross-selling tactics, which she said he advocated for in order to increase Wells Fargo’s stock value, and therefore his personal wealth. “Since this massive, years-long scam came to light, you have said ‘I am accountable.’ What have you done to hold yourself accountable?”
“To not invoke some degree of clawback for yourself and others involved would be committing malpractice from the standpoint of public relations”, said Senator Corker.
The Massachusetts senator has built a reputation for being tough on shady Wall Street dealings and the executives she believes are responsible.
“Okay, so you haven’t resigned”, she continued.
According to Business Insider, Warren asked, “Have you returned one nickel of the money you earned while this scandal was going on?” 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.
Stumpf said he was “deeply sorry” that the bank failed to meet its responsibility to customers and didn’t act sooner to stem “this unacceptable activity”. If he was unaware of the problems, critics could seize on that as evidence that Wells Fargo is too big and unruly to be properly managed.
Stumpf has refused to step down, despite calls for him to do so.
Stumpf also said that he has not fired any senior executives as defined by Warren. “If it was you wouldn’t need to squeeze your employees so hard”, she said.
He said some members of senior executive management had suffered financial consequences and could face additional penalties. Instead, low-level employees have been blamed, who do not have the money to hire “a fancy PR firm to defend themselves”.
One of the most contentious issues was whether the company’s top executives should return some of their bonuses.
Stumpf said he was looking at Tolstedt’s “full body of work and customer service” over her 27-year tenure at the bank. Tolstedt then opted to retire in July. Tolstedt and other top executives should be forced to give back some of their compensation, they said.
“You have done something I’ve never seen in 10 years: You have united this committee – and not in a good way”, Sen. Sherrod Brown of OH, the panel’s top Democrat, told Stumpf. “If you have nothing to do there, what are you doing serving as chairman of the board?”
Stumpf faced down a rabid Sen. He apologized repeatedly throughout his testimony and said he will honor and respect any decision the board makes regarding his employment and compensation.
When asked how the problem was so widespread, Stumpf said that it was likely that employees within the organization had talked about their actions.
Democratic presidential nominee Hilary Clinton shared an open letter on her website regarding the banking industry, specifically addressed to Wells Fargo & Co (NYSE: WFC) customers.
It wasn’t the last time Warren eviscerated Stumpf using his own words. “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. “Watch what they do”.
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“Here’s what really gets me about this, Mr. Stumpf”.
