Wells Fargo CEO John Stumpf is facing some tough questions at a Senate Banking Committee hearing on Capitol Hill this morning.
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John Stumpf told the Senate Banking Committee on Tuesday the bank will contact all deposit customers in the USA, including those who already had fees refunded, to invite them to review their accounts with their banker.
Bernie Sanders ripped Wells Fargo following testimony by its CEO over millions of fraudulent accounts opened by bank employees.
“I want to apologize for violating the trust our customers have invested in Wells Fargo”, Stumpf added. “Have you resigned as CEO or chairman of Wells Fargo?”.
Members of the Senate Banking Committee showed bipartisan outrage over the long-running conduct, unsatisfied by Chief Executive John Stumpf’s show of contrition. He promised that the bank will contact every affected customer. She called on Stumpf to resign.
“This is about accountability”, Warren said.
Warren also called for Stumpf to face criminal prosecution by either the Department of Justice and/or the Securities and Exchange Commission for his role in what Warren and other senators repeatedly called a “scam”. Elizabeth Warren, D-Mass., demanded that Stumpf explain why he had not offered to give up any of his compensation – he made $19 million past year – or resigned in the wake of the scandal.
The bank has in place executive compensation clawback provisions that the board could implement. 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.
The argument goes something like this: Although a customer obviously didn’t sign a contract when a fake account was created for them, agreements they signed when opening genuine accounts nevertheless require them to take all disputes with the bank to arbitration. Stumpf bristled at Warren’s suggestion that the sales practices were a “scam”.
Former employees say the unethical behavior was the effect of unrealistic sales goals-as many as 20 banking products a day in 2013-and an aggressive sales culture that came from the very top. “I am deeply sorry that we have not lived up to our values in this way”.
The senators asked that he specifically lay out action the bank will take to do so.
Last week, Warren said she and four of her Senate Democratic colleagues sent a letter to Wells Fargo urging it to consider clawing back Tolstedt’s compensation, as well as that of other top executives at the bank. The practices apparently began at least in 2009.
Wells Fargo, familiar to customers for its stagecoach logo, had also always been known in the banking industry for its aggressive sales goals. She was eligible for retirement “and she made a decision to retire” after that conversation, Stumpf said.
Tolstedt and her planned departure from the bank with well over $100 million in stock and options has been the focus of ire by Democrats and consumer advocates. Stumpf was being taken to task by the committee over news earlier this month that employees of the bank had opened 2 million unauthorized bank accounts using customers’ names from 2011 onward.
Under the settlement, Wells Fargo neither admitted nor denied the allegations.
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The bank said it has fired 5,300 people over the matter and would eliminate sales goals in its retail banking on January 1, 2017.
