Wells Fargo CEO apologizes; senators heap criticism on bank

Hillary Clinton in Scranton

A top federal regulator says the case of Wells Fargo employees having opened millions of accounts without customers' permission shows "overall weaknesses in (the bank's) management", especially in the area of compliance with laws and regulations.

Wells Fargo's case has become a new flash point in the debate over whether, eight years after the financial crisis, USA regulators are doing enough to hold Wall Street accountable for bad behavior. A Wells Fargo official said CEO John Stumpf would attend the Senate hearing. The committee also requested documents from the federal regulators involved in the settlement: the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, which imposed a $100 million fine on Wells Fargo, its biggest enforcement action ever. Speaking at a banking conference in NY, he said 10 percent of the 5,300 employees fired were branch managers or more senior staffers.

In this Monday, Dec. 7, 2015, file photo, Wells Fargo chairman & CEO John Stumpf is interviewed by Maria Bartiromo during her "Mornings with Maria Bartiromo" program on the Fox Business Network, in NY. She asked whether he had returned "one nickel" of what he was paid while the conduct went on or had fired any senior executives. She also lambasted him over the bank's cross-selling tactics, which she said he advocated for in order to increase Wells Fargo's stock value, and therefore his personal wealth.

Sen. Elizabeth Warren, D-Mass., who has made anti-Wall Street measures a centerpiece of her political agenda, excoriated Stumpf, saying he should resign and be "criminally investigated" for allowing Wells Fargo to perpetuate a "massive fraud".

Wells Fargo has always been known for its aggressive sales goals, but the details and the $185 million fine that regulators imposed last week have singed the consumer banking giant's reputation as a well-run, tightly managed company removed from the reckless conduct on Wall Street that stoked the financial crisis.

Wells Fargo employees have said they were pressured to meet unrealistic sales goals and that they opened the bogus accounts so they wouldn't lose their jobs.

The bank's board of directors is examining what action it should take against company executives, Stumpf told the Senate Banking Committee. The bank does have in place provisions its board could implement to claim back executive compensation.

Tolstedt announced in July her retirement from the bank.

Tolstedt oversaw retail banking at Wells Fargo while about 1.5m deposit accounts and 565,000 credit cards were opened without customers' permission. "That said, I accept full responsibility for all unethical sales practices".

Stumpf said he would defer to a Wells Fargo board committee responsible for executive compensation on whether to claw back any pay.

"Whether tacitly through sales guides and employee training manuals, which I've reviewed, or more explicitly from demands from hard-driving managers, you and your senior executives created an environment where this culture of deception and deceit thrived", said Sen.

The Wells Fargo CEO seemed caught off guard by the intensity of Warren's comments and was barely able to get a word in.

In prepared remarks, Stumpf said he is "deeply sorry" that the bank "failed to fulfill our responsibility to our customers, to our team members, and to the American public" and didn't act sooner to stem what he called "this unacceptable activity".



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