WFC Wells Fargo and Company

By Aruna Viswanatha 

Wells Fargo & Co.'s political problems continue to mount.

In a letter Thursday to Wells Fargo's chairman, Sen. Elizabeth Warren (D., Mass.) asked the directors whether they had sufficiently questioned Timothy Sloan about his knowledge of the bank's sales-tactics scandal -- what he knew and when he knew it -- before he was appointed the new chief executive officer.

The letter, co-written with Sen. Robert Menendez (D., N.J.), also asked whether Mr. Sloan's predecessor, John Stumpf, would receive any retirement benefits after abruptly leaving the bank earlier this month.

Mr. Stumpf's departure, announced on Oct. 12, followed a $125 million settlement with regulators over bank employees opening as many as two million accounts for customers who didn't authorize. The scandal, which took place over a number of years, landed Mr. Stumpf at the witness table at two heated congressional hearings. Ms. Warren asked many of the most pointed questions at the Senate hearing.

Mr. Sloan, who immediately took over, is a Wells Fargo veteran who was serving as the bank's chief operating officer.

"It is difficult to believe that [Mr. Sloan] had no knowledge of or bears no responsibility for the actions of thousands of Wells Fargo employees creating fake accounts...we continue to have questions about who is being held accountable at Wells Fargo," the lawmakers wrote to Wells Fargo Chairman Steven Sanger.

A spokesman said the board's independent directors "appreciate" the senators' concerns and will "follow the facts" wherever the board's independent investigation of the matter leads.

"The board of directors has great confidence in Tim Sloan's leadership. He has strong relationships with our stakeholders and is committed to addressing cultural issues and improving systems and processes so this conduct does not occur again," the spokesman said in a written statement.

In their letter, the lawmakers also asked about Mr. Stumpf's pay. "What will happen with Mr. Stumpf's compensation dating from the time when wrongdoing at Wells Fargo was first reported?," they wrote.

Wells Fargo's board, at Mr. Stumpf's own recommendation, had previously decided he should relinquish $41 million in unvested equity, one of the biggest-ever forfeitures of pay by a bank chief. He still retires with tens of millions of dollars earned during roughly 35 years at the bank.

"Mr. Stumpf will walk away from Wells Fargo with $133.1 million...if Mr. Stumpf stays on the Wells Fargo payroll as a "consultant," he could receive benefits -- including a personal driver -- worth $200,000 over the next two years," the letter said.

Bank representatives couldn't immediately be reached for comment on the letter. The bank has said it regrets the improper behavior, has ended sales goals for retail-bank employees and has been refunding customers improperly charged.

The pair asked the bank to respond by Oct. 27.

Sen. Warren's comments to Mr. Stumpf at the Sept. 20 Senate hearing over the scandal, became a defining moment in the fallout: "It's gutless leadership...you should be criminally investigated," she told him.

Mr. Menendez also pressed Mr. Stumpf at the hearing, reading an email that he said was written to Mr. Stumpf in 2011 by a Wells Fargo employee, reporting concerns about cross-selling pressure. When Mr. Stumpf said he didn't remember that, Mr. Menendez replied, "Well, she was fired."

In the Thursday letter, Sen. Warren extended her criticism. "If Mr. Stumpf is simply replaced by another top company executive who was aware of, but did nothing to prevent the widespread fraud that harmed hundreds of thousands of Wells Fargo customers and shareholders, then the bank is turning its back on accountability," the two lawmakers wrote.

Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com

(END) Dow Jones Newswires

October 20, 2016 18:46 ET (22:46 GMT)

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