The CEO of Wells Fargo faced accusations of fraud and calls for his resignation Tuesday from harshly critical senators at a hearing over allegations that bank employees opened millions of accounts customers didn’t know about to meet sales quotas.
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But two years earlier, the Los Angeles Times revealed that Wells Fargo was boosting these sales by opening accounts without their customer’s permission.
Members of the Senate Banking Committee showed bipartisan outrage over the long-running conduct, unsatisfied by Chief Executive John Stumpf’s show of contrition.
Stumpf today said he was “deeply sorry” for what had happened and that the incident had pained him more than anything else that had happened during his nearly 35 years at the bank.
“Wrongful sales practice behavior goes entirely against our values, ethics, and culture and runs counter to our business strategy of helping our customers succeed financially and deepening our relationship with those customers”, Stumpf said.
“In this case, we let our customers down”, he said.
But the apology wasn’t enough for lawmakers like Sen. Elizabeth Warren of Massachusetts, Sherrod Brown of Ohio, Jack Reed of Rhode Island, Bob Menendez of New Jersey and Jeff Merkley of Oregon.
In this Monday, Dec. 7, 2015, file photo, Wells Fargo chairman & CEO John Stumpf is interviewed by Maria Bartiromo during her “Mornings with Maria Bartiromo” program on the Fox Business Network, in NY.
“That can not happen unless leadership allows it to happen”, said New Jersey Senator Robert Menendez, who’s part of a group of senators asking the company whether it will take back bonuses from senior employees who may have been rewarded for this sales strategy. “You should give back the money that you gained while this scam was going on and you should be criminally investigated by the DOJ and the SEC”. The Justice Department also has started an investigation that could lead to civil or criminal charges.
Under the settlement, Wells Fargo neither admitted nor denied the allegations.
Wells Fargo has in place executive compensation clawback provisions that the board could implement.
The panel also plans to question regulators from the Consumer Financial Protection Bureau, the Treasury Department’s Office of the Controller of the Currency and the Los Angeles City Attorney’s Office.
John Stumpf, chairman and CEO of Wells Fargo.
The company’s board is reviewing whether senior executives will face “clawbacks” of their compensation, Stumpf said. Wells was ordered to pay $185 million in fines to the CFPB and other agencies for the fake accounts.
Stumpf also said that Wells Fargo would expand its review of its sales practices to include 2009 and 2010. He promised to assist affected customers. The employee told his wife that they needed to attach a debit card to several deposit accounts; it was presented as a requirement, not a choice.
“You should resign”, 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.
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Nelson said that number represents about 1 percent of its workforce over the five-year period. Some 5,300 Wells Fargo employees have been fired and the bank has said it will end all product sales targets for all retail banking employees.
