Pressure Mounts on Wells Fargo CEO John Stumpf--Update
September 22 2016 - 7:09PM
Dow Jones News
By Kate Davidson, Shayndi Raice and Yuka Hayashi
Democratic senators stepped up pressure on Wells Fargo &
Co., urging the Federal Reserve Bank of San Francisco to reject the
reappointment of Chief Executive John Stumpf to an advisory council
and separately requesting an investigation of the bank's labor
practices.
The San Francisco Fed said later Thursday that Mr. Stumpf had
stepped down as a representative to the Federal Advisory Council, a
group of 12 bankers that meets four times a year to discuss
economic and banking matters with the Fed's board of governors in
Washington.
"John made a personal decision to resign," a Wells Fargo
spokesman said. "His top priority is leading Wells Fargo."
The embattled chief executive and his bank have been at the
center of a public and political storm following disclosures that
thousands of Wells Fargo employees in recent years created as many
as two million accounts without customers' knowledge. Wells Fargo
this month agreed to pay a $185 million fine and entered into an
enforcement action with regulators and a local official.
Mr. Stumpf had appeared Tuesday before the Senate Banking
Committee and was subjected to harsh questioning from both
Democrats and Republicans. Some of the sharpest exchanges were with
Sen. Elizabeth Warren (D., Mass.), who was among the signatories of
the letters to the San Francisco Fed and Labor Department.
"It would be ironic if the Federal Reserve, a key federal
banking regulator tasked in part with ensuring the fair and
equitable treatment of consumers in financial transactions,
continued to receive special insights and recommendations from
senior management of a financial institution that just paid a
record-breaking fine to the Consumer Financial Protection Bureau
for 'unfair' and 'abusive' practices that placed consumers at
financial risk," the senators wrote to the San Francisco Fed.
In the letter to the Labor Department, senators asked its Wage
and Hour Division to make an inquiry into whether Wells Fargo
"aggressively skirted" overtime laws and failed to compensate
properly bank tellers and associates who worked long hours to meet
sales quotas, or salaried bank associates misclassified as
overtime-exempt officers.
Former and current Wells Fargo employees have told The Wall
Street Journal that intense pressure to meet sales quotas helped
fuel improper sales practices at the bank. Wells Fargo said last
week that it would eliminate sales quotas for retail-bank employees
beginning next year.
A Wells Fargo spokeswoman said the bank prides itself on
"creating a positive environment for our team members, including
market competitive compensation, career-development opportunities,
a broad array of benefits, and a strong offering of work-life
programs."
Labor Department officials weren't immediately available for
comment.
Write to Kate Davidson at kate.davidson@wsj.com, Shayndi Raice
at shayndi.raice@wsj.com and Yuka Hayashi at
yuka.hayashi@wsj.com
(END) Dow Jones Newswires
September 22, 2016 18:54 ET (22:54 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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