John Stumpf arrived at Tuesday’s Senate Banking Committee hearings with one hand in a bandage. He left even more battered and bruised.
The Wells Fargo & Co. chief executive officer took fire from Democrats and Republicans alike, who blasted the executive’s handling of a scandal over the opening of more than 2 million accounts without customers’ authorization, as employees sought to meet cross-selling targets.
“You should resign,” Senator Elizabeth Warren told Stumpf, who had injured his right hand while playing with his grandchildren. “You should give back the money you took while this scam was going on and you should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission.”
Warren, a Massachusetts Democrat, led a chorus of criticism as lawmakers demanded more accountability from the company’s leadership and made clear the San Francisco-based firm is far from putting the matter behind it. Bank executives are “completely out of touch,” Patrick Toomey, a Republican from Pennsylvania, told Stumpf.
“This isn’t cross-selling, this is fraud,” Toomey said.
Well Fargo agreed to pay $185 million to authorities including the Consumer Financial Protection Bureau after a review found employees opened accounts and credit cards without customers’ permission. Stumpf told lawmakers he was “deeply sorry” and detailed a five-year timeline of attempts the bank made to deter misconduct.
“The Wells Fargo board is actively engaged in this issue,” Stumpf, 63, said in his prepared remarks. “The board has the tools to hold senior management accountable, including me and Carrie Tolstedt, the former head of our retail banking business. Any board actions taken with our named executive officers will be appropriately disclosed, and I want to be clear on this, I will respect and accept the decision of the board.”
Wells Fargo said it expanded its internal review of the matter to include 2009 and 2010 and is contacting all customers nationwide to ensure their accounts and credit cards are products they need and want. The bank announced in July that Tolstedt was retiring, and said on Monday that Claudia Russ Anderson, who had overseen risk in the retail-banking unit, is taking a six-month unpaid leave for personal reasons.
“Carrie chose to retire,” Stumpf said, adding that he and Chief Operating Officer Tim Sloan told her the bank wanted “to go in a different direction.” She was eligible for retirement “and she decided to retire” after that conversation, Stumpf said.
Warren criticized Stumpf for pushing the blame to lower-level employees. “It’s gutless leadership,” she said.
The tenor of the hearing contrasts with JPMorgan Chase & Co. CEO Jamie Dimon’s testimony before the same committee in June 2012 on the so-called London Whale trading debacle, in which the bank lost more than $6 billion on botched derivatives bets. While some lawmakers grilled Dimon over the incident, others apologized for questioning him or sought his opinion on subjects including regulation and the national budget.