John Stumpf, the embattled Wells Fargo CEO, will be in the hot seat on Tuesday as Elizabeth Warren and her colleagues on the Senate Banking Committee grill the company about the stunning discovery that its employees created over 2 million fake accounts. When Stumpf testifies before a Senate committee hearing Tuesday, Sept. 20, 2016, it won’t be just his bank under fire for turning friendly branches into high-pressure sales centers.
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Many senators across the banking committee weren’t content with Mr. Stumpf’s answers, saying the low-level employees who earn far less money are taking the fall rather than the top executives of the bank.
But that doesn’t mean the practice has disappeared.
Mr. Stumpf said he and Chief Operating Officer Timothy Sloan made a decision to move in a “different direction” for the retail business Ms. Tolstedt ran since the top executives felt she hadn’t done enough to tamp down on the bad behavior.
Earlier this month, the lender agreed to pay $190 million in penalties and customer payouts to settle a case in which bank employees created credit, savings and other accounts without customer knowledge.
But no one needs a Ph.D to understand the shenanigans at Wells Fargo did. Robert Menendez said Tuesday at a Capitol Hill hearing.
Clinton reiterated in the letter her plan to crack down on bank misconduct and hold Wall Street executives accountable, vowing to protect the Consumer Financial Protection Bureau (CFPB) and appoint regulators who won’t side with big banks or members of Congress.
“If an account is set up that’s idle, it still counts as a number but overall doesn’t count toward the bonus of an individual as the account is pointless”, Rampton said.
“They couldn’t get away with that many fake accounts without someone raising an eyebrow or knowing about it”, he said. Fitch Ratings said in a report on Monday that the scandal “appears to be a significant breakdown” in what the firm “long viewed as a solid risk management infrastructure”. “It’s been going on for a while”. She also said he should personally be criminally investigated for the fraud. He noted that Wells Fargo has demanded a premium valuation because the bank, known for its aggressive pursuit of sales and earnings, has been able to deliver returns.
Banks will be reluctant to give up the revenue opportunities of cross-selling and upselling, so they aren’t likely to aggressively pull back. That responsibility ultimately lies with Stumpf and the company’s top executives, who must certify each year that the bank’s internal systems and controls are sufficient, he added.
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Wells Fargo also faces something unusual in an election year (or any year, these days): a united front from lawmakers. In a statement last week, he said the elimination of sales goals helps reinforce that message among employees. The Associated Press obtained a copy of the prepared remarks, in which Stumpf says he is “deeply sorry” the bank failed to fulfill its responsibility to customers.
