On Tuesday there was a hearing before the Senate Banking Committee looking into Wells Fargo. It was attended by Wells Fargo CEO John Stumpf, who faced some harsh criticisms at the hearing. The matter at hand was that between 2011 and 2015 around 2 million accounts were opened by the bank’s employees, unbeknownst to its customers. Although this all came out back in 2013 it has resurfaced again due to the Consumer Financial Protection Bureau fining the bank $185 million.
Mr. Stumpf claimed he was made aware of this in 2013 upon hearing of it from lower-level executives. It appears that there was a company culture at the bank that encouraged this type of behavor. Although it wasn’t officially condoned, employees were under intense pressure to meet sales targets, and around 5,300 employees ended up creating these false accounts. There was a goal to have eight accounts per customer, in a process known as cross-selling.
Elizabeth Warren doesn't hold back
At the hearing Sen. Elizabeth Warren (D-Mass) did not hold back and laid into John Stumpf. She addressed concerns of him blaming lower level employees instead of taking responsibility. As well, she raised the issue of these tactics being used to pump up the stock price of Wells Fargo, which in turn boosted his personal net worth by $200 million. In her final remarks to him she went on to say:
And when it all blew up, you kept your job, you kept your multi-multimillion-dollar bonuses, and you went on television to blame thousands of $12-an-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 by both the Department of Justice and the Securities and Exchange Commission. This just isn't right.
- Sen. Elizabeth Warren
As of yet John Stumpf has not resigned, although there will be those calling for this. In addition, there will be many who want to see if he has violated any laws and can be charged.