Peppered with criticism for almost three hours at a hearing Tuesday, the CEO of the nation’s second-largest bank faced calls for his resignation from harshly critical senators.
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But Senator Elizabeth Warren, a Massachusetts Democrat, accused Stumpf of scapegoating low-ranking employees and not taking responsibility for setting up an incentive system that led to the fraud.
Regulators say employees, under pressure to meet sales goals, had secretly created unauthorized bank and credit card accounts for customers, since 2011, without their knowledge. Some customers were assessed late fees for accounts they didn’t know they had.
The House Financial Services Committee last week launched an investigation into the Wells Fargo scandal and said it plans told hold a hearing later this month. Senior management, they said, seemed to ignore this practice because it helped turn the bank into a profit machine.
“The 5300 were dishonest, and that is not part of our culture”, Stumpf said.
A Republican senator says it would be “malpractice” if Wells Fargo doesn’t institute any compensation clawbacks after allegations that employees opened millions of unauthorized accounts to meet aggressive sales targets.
The wide sweep of the strong-arm sales practices within the bank, which went on for years, has drawn attention from committees in both the Senate and House.
“While this scam was going on, you personally held an average of 6.75 million shares of Wells Fargo stock”, Warren said.
“This is about accountability”, Warren said. “It’s gutless leadership”, the senator said. “You should resign; you should give back the money”.
Warren called for Stumpf to resign and face Securities and Exchange Commission and Justice Department criminal probes.
If you have been victimized by this Wells Fargo scandal, or have any other credit-related questions, you can talk to ClearPoint’s experts for free.
During his allotted time to question Stumpf, Sen.
“I am deeply sorry that we failed to fulfill our responsibility to our customers, to our team members, and to the American public”, Stumpf said in his prepared remarks.
Public cynicism about major corporations hasn’t gone away since the Wall Street-induced recession of 2007-2008 and Wells Fargo has demonstrated why.
“You keep saying, ‘the board, the board, ‘” Warren said. “You haven’t returned a single nickel of your personal earnings”. “Have you fired any senior management, the people who actually oversaw this fraud?”
Stumpf told the Senate Banking Committee that customers who had bogus accounts opened in their name will be compensated for any damage to their credit rating. In particular, lawmakers took aim at Carrie Tolstedt, the former head of the company’s community banking unit.
Ms. Tolstedt stepped down from her role at the end of July but is still working for the bank until year-end. Stumpf, they said, was offering little more than platitudes while allowing his top executives to avoid any real consequences – like being fired or having their enormous pay packages clawed back.
Lawmakers, including Sen. Sherrod Brown (D., Ohio), appeared incredulous.
Stumpf reiterated that “managers and managers of managers” were fired, and for the first time said at least one “area president” was also terminated.
Stumpf responded, “the board will take care of that”.
Stumpf, who has been at Wells Fargo for more than 30 years, repeatedly apologized for letting down customers.
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You squeezed your employees to the breaking point, so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket. “These were not magically delivered ‘unwanted products.’ This was fraud; fraud that you did not find or fix quickly enough”. “Watch what they do”.
