In fact, Stumpf admitted under questioning by Senate Banking Committee member Elizabeth Warren, the Democratic senator from MA, that he earned $19.3 million last year alone, $ 4 million of that a bonus for doing such a fine job of running the operation – this in a year in which the bank and its board of directors was well aware that it was being investigated for the huge fraud.
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The most anticipated faceoff of Tuesday’s Senate Banking Committee hearing did not disappoint: Democratic firebrand Sen.
Do you trust the Senate hearing will bring about changes in the banking industry or will it continue to do business as usual? “And in all 12 of these calls, you personally cited Wells Fargo’s success at cross-selling retail accounts as one of the main reasons to buy more stock in the company”.
John Stumpf told the Senate Banking Committee on Tuesday the bank will contact all deposit customers in the US, including those who already had fees refunded, to invite them to review their accounts with their banker.
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.
Chief Executive John Stumpf said Tuesday he accepts full responsibility for what occurred and the bank should have done more sooner to address any misconduct.
“I am deeply sorry that we failed to fulfill our responsibility to our customers, to our team members, and to the American public”, Stumpf told the committee, his right hand and wrist bandaged after he hurt his hand playing with his grandchildren. “You squeezed your employees to the breaking point so they would cheat customers”, she said. “You should resign. You should be criminally investigated by Department of Justice and Securities and Exchange Commission”.
The bank has in place executive compensation clawback provisions that the board could implement. Money in customers’ accounts was said to have been moved to these new accounts without their permission. Debit cards were issued and activated with PINs being created without customers’ knowledge. Stumpf admitted that he had not resigned, nor had he returned any of his earnings to the company or fired any top executives. In 2012, the bank began lowering some sales goals for compensation.
Mr. Stumpf says Ms. Tolstedt wouldn’t get any retirement severance benefits. “Cross-selling is shorthand for deepening relationships”, he continued – before Warren cut him off.
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.
Sen. Bob Corker, R-Tenn., told Stumpf that he would be engaging in “malpractice” if the bank doesn’t “claw back” money that it paid to executives during the period that the illegal accounts were being opened. “After all, they imposed sales targets and compensation incentives in ways that led to this behavior”, she wrote in the post.
Tolstedt was told that the company was “going in a different direction”, in part because of the misconduct discovered in her unit, Stumpf said.
“It struck me that he was berated in a way that shook him a bit”, said Chris Kotowski, an analyst at Oppenheimer & Co.
The fraud was known since 2013, but it was recognized by Wells Fargo in 2015.
Wells Fargo will eliminate the sales targets by January 1.
Wells Fargo does have some apologetic tweets up on its Twitter account, but Einstein said it will take much, much more than that.
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Stumpf reiterated that “managers and managers of managers” were fired, and for the first time said at least one “area president” was also terminated.
