The ability to “clawback” the compensation does appear to be a viable option, with Stumpf telling the panel that “the Wells Fargo Board.has the tools to hold senior leadership accountable, including me and Carrie Tolstedt, the former head of our retail banking business”.
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Warren added that Stumpf “should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission”.
The U.S. Attorney’s Offices in Manhattan and in San Francisco are investigating Wells Fargo, a person familiar with the matter said last week.
Wells Fargo’s chief executive faced a grilling from lawmakers today during a Senate hearing questioning the bank’s aggressive sales culture that led to a $185 million settlement in Southern California.
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.
Wells Fargo has always been known for its aggressive sales goals, but the details and the $185 million fine that regulators imposed last week have singed the consumer banking giant’s reputation as a well-run, tightly managed company removed from the reckless conduct on Wall Street that stoked the financial crisis. Wells Fargo said it would pay $2.6 million in refunds to affected customers.
Wells Fargo’s CEO is expected to be grilled on Tuesday by USA lawmakers on allegations the bank’s employees secretly opened accounts over a five-year period in order to meet sales goals. In media interviews after the scandal emerged, he chalked up the bank’s fraudulent conduct to dishonest employees that the bank has fired.
Stumpf has said he takes responsibility for the fraud but also has said he does not plan to step down from the company. In some cases, employees temporarily moved money from a customer’s legitimate account to an illegitimate one, prompting overdraft and minimum balance fees.
Senator Sherrod Brown, an Ohio Democrat, told the CEO 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 fake accounts might have had on customers’ finances.
Warren, who at times became impassioned, told Stumpf that he should leave his post and face a criminal investigation.
The bank is said to have begun to use a confirmation email sent to customers “within one hour of opening any new deposit account” and an “acknowledgement letter” before creating an account. She announced in July her retirement from the bank this year. “I am deeply sorry that we have not lived up to our values in this way”.
Thomas Curry, the Comptroller of the Currency, said the agency is considering action against individual Wells Fargo executives who may have violated laws or regulations. Tolstedt retired with $125 million previous stock compensation, but she did not receive a severance, Stumpf testified.
Facing off with the CEO whose massive bank appropriated customers’ information to create millions of bogus accounts Tuesday, Sen.
Wells Fargo has always been known in the banking industry for its aggressive sales goals.
Earlier on Tuesday on CNBC’s Squawk Box, Senator Corker also stressed the need for legitimate consumer protection.
Abuses were found as early as 2011, Stumpf said, but bank executives only realized the scale of the problem early a year ago.
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“You have done something that’s never happened and united this committee on a major topic…and not in a good way”, Tester told Stumpf.
