Wells Fargo has turned into a “school for scoundrels”, said Rep. Carolyn Maloney, D-N.Y.
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Stumpf’s appearance in front of the panel comes a little over a week since he faced blistering questions and a call to resign during a Senate Banking Committee hearing, and as the bank continues to try to stem the sustained criticism it has faced since the alleged wrongdoing was revealed by government regulators on September 8.
“Wells Fargo Bank unlawfully repossessed hundreds of servicemembers’ cars without the proper process, and the bank will now rightfully pay for its violations”, said Principal Deputy Associate Attorney General Bill Baer, according to a Department of Justice press release. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially.
“That is not the case”, Stumpf told the committee.
“Something is going wrong at this bank, and you are the head of it!”
Stumpf reiterated his word of last week, that he was “deeply sorry”. A stunning 5,300 employees were fired over several years for improper sales tactics.
“We have a culture based on ethics and doing what’s right”, said Stumpf. The abuses are said to have gone on for years, unchecked by senior management.
Stumpf finally shared some basic information about the potential victims, saying those affected skewed to younger Wells customers. Shares of Wells Fargo closed down another 2%, or 93 cents, to $44.38.
The bank agreed to pay $4.1 million to settle a Justice Department investigation into the repossession of 413 cars without the necessary court order from 2008 through the middle of past year in violation of a federal law created to provide financial protections to active-duty military members. “Wells Fargo should be broken up”.
For his part, Stumpf offered up more apologies, and said the bank planned to halt the cross-selling practices as of October 1, instead of January 1, 2017, as originally announced.
“We should have done more sooner, but we will not stop working until we get this right”, Stumpf told a panel of critical lawmakers.
Members of Congress also raised question whether other banks had similar aggressive sales cultures.
Rep. Brad Sherman (D-Calif.), meanwhile, said that the bank’s stock price would have plummeted, had the control issues been widely known. And you said in your Senate hearings last week that you first found out about the fake accounts in late 2013.
While Wells Fargo may be shielded from some customer actions, the bank may just be starting to face heightened regulatory scrutiny.
“I serve at the pleasure of the board”, Stumpf responded.
Earlier this month the bank acknowledged opening more than two million customer accounts without their consent, incurring fees and other negative financial consequences. The reduced compensation represents only a fraction of the total pay and bonuses received by Stumpf, CEO since 2007, Warren said in a statement.
Short of forcing Stumpf to resign, the board may move to split the CEO and company chairman roles that Stumpf holds, Elson suggested.
“I’m amazed at what you do not know about your business”, said Rep. Roger Williams (R., Texas).
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The bank served as senior underwriter on five Chicago bond issues totaling almost $969 million since 2006, according to Thomson Reuters data. Stumpf said all of the terminated employees were fired because of unethical conduct – not because they failed to meet sales goals.
