While testifying in front of the Senate banking committee, Stumpf said he was “deeply sorry” that the bank let down its customers and apologized for violating their trust.
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Stumpf was called before the committee for betraying customers’ trust in a scandsal over allegations that employees opened millions of unauthorized accounts to meet aggressive sales targets.
Earlier this month, the lender agreed to pay $190m in penalties and customer payouts to settle a case in which bank employees created credit, savings and other accounts without customer knowledge. “There is no way that 5,000 workers acted individually on more than 2m transactions”, said Shane Larson, the legislative director at Communications Workers of America, a labor union worker with USA bank workers.
“We will do everything we can to make it right by our customers”, he said, but added that the bank is still in the midst of reaching out to customers and it will take time.
“You do not have the answers here today that would allow us here to move forward”, she said.
Elizabeth Warren, D-Mass.
“You haven’t returned a single nickel of your personal earnings, you haven’t fired a single senior executive”, Warren explained.
Stumpf enumerated new actions that the bank was taking in the wake of the scandal, including ending product sales targets for all retail banking employees; sending customers email confirmations within one hour of the opening of any depository account and written acknowledgement of any credit card application; expanding an existing internal customer account review to include the years 2009 and 2010; and inviting all account holders nationwide to review their current accounts with their respective bank branches.
“You should resign. You should give back the money you took while the scam was going on”, she added.
The Massachusetts Democrat, one of the fiercest critics of Wall Street, also advocated for a criminal investigation by the Justice Department and securities regulators. Tolstedt and other top executives should be forced to give back some of their compensation, they said.
The panel’s chairman, Sen. Opening multiple accounts with each customer was part of Wells Fargo’s long-term business plan for retail banking.
He says, “If there ever were a textbook case of consumers needing protection, this was it”.
The incentive to open fake accounts was strong: Wells Fargo bankers received quarterly bonuses for cross-selling.
Sen. Bob Corker of Tennessee said it would be “malpractice” if the bank doesn’t institute the compensation clawbacks, and Stumpf said the board “has the tools to hold senior leadership accountable”, including himself and Tolstedt.
The bank has in place clawback provisions that the board could implement.
Several senators brought up Carrie Tolstedt who stands to receive $125 million after retiring as the head of scandal-plagued retail bank division in June.
Tolstedt announced in July her retirement from the bank this year. But lawmakers were peeved by reports that Tolstedt, a 27-year veteran of the bank, could leave with more than $100 million in compensation.
Chairman and chief executive officer of the Wells Fargo John Stumpf testifies in Washington, DC, the United States, on Tuesday.
Bank workers had opened more than two million deposit and credit card accounts without customers’ permission. He promised that the bank will contact every affected customer. Debit cards were issued and activated, as well as PINs created, without telling customers.
“You keep saying, ‘The board, the board, ‘ as if they’re strangers you met in a dark alley”, she said. The bank sales staff had a goal of getting each customer to have eight different accounts with the bank – up from the prevailing average of six.
Regulators fined San Francisco-based Wells Fargo $185 million earlier this month.
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The company has fired some 5,300 employees, or about 2% of its current workforce, over the fake accounts and has eliminated quotas for bankers, branch managers and district managers starting January 1. “I’ve been through many challenges at Wells Fargo (WFC) but none that pains me more than the one we will discuss this morning”, said Stumpf, who has been Wells Fargo’s CEO since June 2007.
