Lawmakers Take More Swings at Wells Fargo CEO
September 29 2016 - 3:00PM
Dow Jones News
Wells Fargo & Co. Chief Executive John Stumpf struggled to
mount a defense Thursday in the face of repeated attacks over the
bank's sales practices from Democratic and Republican members of
the House Financial Services Committee.
In his second Capitol Hill appearance in as many weeks, Mr.
Stumpf again expressed regret for his company's actions and said
Wells Fargo's board was working to investigate how problems with
sham accounts and unauthorized meddling in customer business
snowballed over five years.
Fighting to stay in his job as the bank encounters increasing
attacks from politicians and some customers, Mr. Stumpf was grilled
again during the hearing and at times didn't have specific answers
to defend the bank's actions.
"You ought to be downright ashamed of yourself," Rep. David
Scott (D, Ga.) told the 63-year-old chief executive.
Though Mr. Stumpf came to the committee with more statistics to
share, including the $41 million in compensation he had agreed to
forgo because of the sales problems, he was often cut off by
representatives eager to use their allotted time to criticize the
bank and Mr. Stumpf's leadership.
"A whole host of federal laws were potentially violated here,"
said Rep. Jeb Hensarling, the Republican committee chairman from
Texas. Noting seven laws that the bank potentially broke including
the Sarbanes-Oxley Act and the Truth in Savings Act, Mr. Hensarling
told Mr. Stumpf: "Today's hearing is just the beginning." He left
open the possibility of more hearings with other Wells Fargo
employees, as well as subpoenas for more information.
Some representatives called for Mr. Stumpf's resignation, adding
to the calls from some Democratic lawmakers including Sen.
Elizabeth Warren (D-Mass.) at the Senate Banking Committee hearing
last week.
"I serve at the pleasure of the board," Mr. Stumpf replied to
one of the calls that he resign. "I'm giving all of my energy to
leading the company through this."
Mr. Stumpf has been on the hot seat since the bank earlier this
month paid a $185 million settlement and entered into an
enforcement action with two regulators and a city official over
allegedly "widespread illegal" sales tactics. The bank opened as
many as 2 million customer accounts with fictitious or unauthorized
information. The bank has said it fired 5,300 employees over five
years. Earlier this week, the bank's board said it would rescind
$41 million from Mr. Stumpf and $19 million from former retail
banking head Carrie Tolstedt, who oversaw the unit responsible for
the bad behavior.
Mr. Stumpf said the bank plans to end its sales goals Friday,
speeding up the timeline as the spotlight has intensified on the
bank since it announced the change earlier this month after its
settlement announcement. He also gave more details on the 5,300
people who were fired, saying about 10% were branch managers.
One area of interest for lawmakers: exactly when Mr. Stumpf
learned about the problems in the bank's retail business.
At the Senate hearing last week, Mr. Stumpf had left the timing
vague by simply saying it was "later in 2013." Answering a question
from Rep. Michael Fitzpatrick (R., Pa.) Thursday, Mr. Stumpf said
he learned about it in the "fall time frame" of 2013, and before
the Los Angeles Times carried a detailed report on the issue in
December. That article, Mr. Stumpf said "didn't surprise me because
I had heard the acceleration of problems" in certain markets.
Mr. Stumpf also deflected a question from Rep. Nydia Velazquez
(D-N.Y.) about whether any sales problems extended to the bank's
small business division. When Mr. Stumpf said he would have his
staff get in touch with her staff, Rep. Velazquez responded that
she would be writing to the U.S. Small Business Administration to
urge it to investigate the matter.
Write to Emily Glazer at emily.glazer@wsj.com, Yuka Hayashi at
yuka.hayashi@wsj.com and Rachel Louise Ensign at
rachel.ensign@wsj.com
(END) Dow Jones Newswires
September 29, 2016 14:45 ET (18:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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