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Wells Fargo chief gets chewed out on Capitol Hill over account scandal

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How much anger have Wells Fargo and its CEO stirred up?

Enough to get Democrats and Republicans at the U.S. Capitol to agree on something.

A rare dose of bipartisanship was displayed by the Senate Banking Committee Tuesday when members of each party aimed their wrath at John Stumpf, whose employees at Wells Fargo spent years inflating their sales figures by creating new accounts for customers who were unaware of it.

Earlier this month Wells paid $185 million to settle a lawsuit and mollify a federal regulatory agency. But Senators suggested Tuesday that should not be the end of it.

In four hours of questioning (CSPAN has the whole hearing on its website), senators asked Stumpf in various ways:

  • how the shady practice of creating bogus accounts could go on for years without being stopped or detected
  • why only rank and file employees, not top executives, have been fired
  • why Stumpf and the now-retired head of consumer banking have not returned any of their compensation over the scandal
  • how Wells is helping the customers it exploited, many of whom paid fees on unauthorized accounts

Some particularly aggressive questioning came from Democrat Elizabeth Warren of Massachusetts, who said in so many words that Stumpf should resign, should give back some of his compensation, and should be criminally investigated by both the Justice Department and by the Securities and Exchange Commission.

https://www.youtube.com/watch?v=xJhkX74D10M

Some senators suggested that aggressive sales goals at Wells Fargo – and incentive payments for reaching them – were contributing factors in the scandal.

The Los Angeles Times, which first reported on Wells Fargo's practices, says regulators now say they'll take a closer look at other banks, too.

Regulators themselves also came in for criticism during Tuesday's hearing.

The Wall Street Journal reports Banking Committee Chairman Richard Shelby, a Republican from Alabama, wondered where the Consumer Financial Protection Bureau was, noting "If there were ever a textbook case where consumers needed protection, this was it."

https://twitter.com/WSJ/status/778403485721255936

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