Banking

Lawmakers Pull No Punches For Wells’ Stumpf

Bank Merger Hearing

Wells Fargo CEO John Stumpf went to Washington on Thursday (Sept. 29) for the second time this month. And it was not exactly a lark the latest go round.

The executive faced grilling from the House Financial Services Committee from members across both sides of the aisle, with focus on the sham accounts that had been set up at the bank. As has been widely reported, that proactive remained in place for years as Wells Fargo employees opened accounts without consumer consent or knowledge in an effort to drum up new business and fees. The practice, which created as many as 2 million dubious accounts, finally led to a $190 million fine against Wells. There may be far-reaching consequences, as Rep. Maxine Waters, the top Democrat on the committee, stated that she would seek to introduce legislation that would break up the bank.

Stumpf was adamant that Wells, which has been looking to arbitrate with consumers over the accounts, would not step away from arbitration and allow lawsuits to proceed — even though, as he concurred during a line of questioning that, in some cases, employees “stole” from clients. Nor would he answer calls to step down from his role as CEO. The company has clawed back $41 million in stock that had been awarded to Stumpf, who gave back that award earlier this week. He also stated that product sales goals would be eliminated by the end of the week, three months earlier than planned.

Separately, the Office of the Comptroller of the Currency said it would fine Wells $20 million in the wake of violating lending rules, as interest rates charged to members of the military, above caps that are in place for personnel on active duty. That news led Rep. Waters to claim: “It appears that the company just can’t make it through even this congressional hearing without us learning more and more information about what is going on at Wells Fargo.”

Referring to the sham account scandal, Stumpf refuted lawmaker claims that it has been a failing of corporate culture that led to the activities at the bank, maintaining that he “led the company with courage.”

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