The Senate Banking Committee conducted a hearing Tuesday about the massive scandal currently engulfing Wells Fargo. The word “fraud” was used repeatedly by senators on both sides of the aisle when describing the bank’s creation of millions of unauthorized bank and credit card accounts for existing customers.
Fallout from the account scandal continues to pile up. The bank is also facing an investigation by the House Financial Services Committee, subpoenas from the Department of Justice, and at least one potential class action lawsuit.
First up at Tuesday’s Senate hearing was Wells Fargo CEO John Stumpf, who was grilled by the committee for almost three hours.
Massachusetts Sen. Elizabeth Warren—a long-time advocate for more stringent regulation of Wall Street—tore into Stumpf, describing the unauthorized accounts as a “massive, years-long scam.” She asked Stumpf what he has done to take responsibility for his bank’s actions. “You have said repeatedly ‘I am accountable,'” she said. “But what have you done to actually hold yourself accountable? Have you resigned?”
Stumpf avoided answering the question directly, prompting Warren to repeat her question, her voice rising, at least three times. Finally, an exasperated Warren said, “I’ll take that as a ‘no.'”
Warren proceeded to pummel Stumpf with more questions. “Have you returned one nickel of the money you earned while this scam was going on?” she asked. Stumpf, stumbling, said the unauthorized accounts weren’t a scam and answered the question directly only after Warren repeated the question. “No,” Stumpf said. Stumpf said earlier in the hearing that he earned $19.3 million last year.
She then asked if he’d fired any members of his senior management. Stumpf initially began by describing the firing of regional branch managers, but Warren stopped him, emphasizing that her question was not about low-level leadership but about the people at the top. Again, Stumpf’s answer was no.
When Warren asked Stumpf if he knew how much the value of his bank’s stock had gone up over the time that the unauthorized accounts were created and maintained, Stumpf replied the information was in the public record. “You’re right, it is all in the public records,” Warren said, “because I looked it up.” She continued: “While this scam was going on, you personally held an average of 6.75 million shares of Wells stock.” The share price went up by about $30 in that time frame, Warren pointed out, “which comes out to more than $200 million in gains, all for you personally.”
Warren ended her speech by calling on Stumpf to resign and for both the Department of Justice and Securities and Exchange Commission to investigate the CEO. Here’s an excerpt of her speech:
You know, here’s what really gets me about this Mr. Stumpf. If one of your tellers took a handful of $20 bills out of the cash drawer, they’d probably be looking at criminal charges for theft. They could end up in prison. But 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. And when it all blew up, you kept your job, you kept your multimillion dollar bonuses, and you went on television to blame thousands of $12-and-hour employees who were just trying to meet cross-sell quotas that made you rich. This is about accountability. You should resign. You should give back the money that you took while this scam was going on, and you should be criminally investigated.
You can watch Warren’s full questioning above.