To not invoke some degree of clawback for yourself and others involved would be committing malpractice from the standpoint of public relations. At a minimum, I am sure that is going to take place. I would be surprised if it doesn't.
U. S. Senator Bob Corker meets with members of the Chattanooga Time Free Press editorial board Wednesday, Aug. 19, 2015, in Chattanooga, Tenn.
Wells Fargo Chief Executive Officer John Stumpf testifies on Capitol Hill in Washington, Tuesday, Sept. 20, 2016, before Senate Banking Committee. Stumpf was called before the committee for betraying customers’ trust in a scandal over allegations that employees opened millions of unauthorized accounts to meet aggressive sales targets. (AP Photo/Susan Walsh)
Senate Banking Committee member Sen. Elizabeth Warren, D-Mass., center, questions Wells Fargo CEO John Stumpf, foreground, on Capitol Hill in Washington, Tuesday, Sept. 20, 2016, during the committee’s hearing. Stumpf was called before the committee for betraying customers’ trust in a scandal over allegations that employees opened millions of unauthorized accounts to meet aggressive sales targets. (AP Photo/Susan Walsh)WASHINGTON – The chief executive of Wells Fargo – where bankers opened secret and unauthorized credit card and deposit accounts for customers for at least five years in an attempt to meet sales goals – told a Senate panel Tuesday that the illegal activity might have gone on even longer and that no senior executives had been fired as a result.
Senators on both sides of the aisle expressed anger and indignation at the chief executive, John G. Stumpf.
Although the bank has traced the illegal account openings to 2011, it is investigating whether they may have begun even sooner, Stumpf told the Senate Banking Committee. The executive who oversaw the retail bank, Carrie Tolstedt, was permitted to retire in July rather than be held accountable for the problems, Stumpf acknowledged.
He defended that decision by saying that the responsibilities of her job included much more than just account openings.
But the senators seemed unmoved by Stumpf’s attempts to explain why more senior bank executives had not been tied to the widespread illegal sales activity. Bank employees may have opened as many as 2 million accounts in customers’ names without their knowledge.
Sen. Elizabeth Warren, D-Mass., said the illegal sales were a big driver of Wells Fargo’s success as one of the nation’s most profitable banks. She called on Stumpf to resign and for him to be criminally investigated.
“Have you returned one nickel of the money that you earned while this scandal was going on?” asked Warren. She helped create the Consumer Financial Protection Bureau, which imposed its largest penalty ever on Wells Fargo for the sham accounts.
“Have you fired any senior management, the people who actually oversaw this fraud?” Warren continued.
“No,” Stumpf replied.
Warren added: “Your definition of accountability is to push this on your low-level employees. This is gutless leadership.”
More than 5,300 employees have been fired for the unethical sales since 2011, but they have been mostly lower-ranking workers, including many who say they felt pressured to bend the rules to meet sales goals.
U.S. Sen. Bob Corker, R-Tenn., told Stumpf that it would be “malpractice” not to claw back compensation from executives who were involved.
“To not invoke some degree of clawback for yourself and others involved would be committing malpractice from the standpoint of public relations,” said Corker. “At a minimum, I am sure that is going to take place. I would be surprised if it doesn’t.”
Corker also questioned how the former senior vice president of community banking failed to recognize the dangerous sales culture that led to the unauthorized accounts.
Under intense questioning, Stumpf said the bank employees who were terminated included “managers, and managers of managers, and an area president.”