Wells Fargo CEO raked over coals
THE more the chief executive of Wells Fargo tried to explain, the more sceptical the senators became. On Tuesday, John Stumpf expressed regret that Wells Fargo had created 2 million bogus bank and credit card accounts without its customers’ consent. He apologised for failing to stop the illicit behaviour sooner.
Some senators on the Banking Committee scoffed. Stumpf, they said, was offering little more than platitudes while allowing his top executives to avoid any real consequences.
Instead, the bank’s lowest paid workers have borne the brunt of the punishment, the senators noted. Senior management, the senators said, seemed to ignore this practice because it helped turn the bank into a profit machine.
Senator Elizabeth Warren took the step of telling Stumpf that he should resign. “Your definition of accountability is to push this on your low-level employees. This is gutless leadership.”
The extent of Wells Fargo’s problems came to light on September 8 when the bank agreed to a $185 million settlement with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the Los Angeles city attorney.
The illicit activity at Wells is easy for the public to comprehend: Bank employees were creating fake bank accounts to pad their sales numbers.
As a result, thousands of Wells Fargo customers paid overdraft fees and late fees on credit cards and deposit accounts they never knew they had. Wells refunded more than $2 million and is still reviewing whether other bogus fees were charged.
The bank has said that it learned about the illegal practice in 2013 and traced it back to 2011, but in his deposition Tuesday, Stumpf said that the unwanted account openings may have gone back earlier, and that the bank was looking to see if it extanded as far as 2009.
At the hearing, the Banking Committee, one member noted, showed a rare display of bipartisanship in denouncing Wells Fargo. And Stumpf’s testimony is likely to fuel the public outrage rather than contain it.
Stumpf said the 5,300 employees who have been terminated, many of them earning $12 an hour, deserved to lose their jobs.