Radio Website Header-Waves 6 3.0.jpg
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations

Wells Fargo CEO Testifies Before Senate In Secret-Accounts Scandal

ARI SHAPIRO, HOST:

The CEO of Wells Fargo, John Stumpf, likely won't forget this day. On Capitol Hill, senators hit him with a withering round of questions about his bank's aggressive and illegal sales tactics.

Regulators say Wells Fargo opened some 2 million fee-generating accounts in customers' names without the customers' permission. Stumpf apologized repeatedly. But he sidestepped a lot of questions about how the scandal happened. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: Stumpf told the Senate Banking Committee he was deeply sorry for what had happened. And he said the bank was trying to make right by those customers who were hurt.

(SOUNDBITE OF ARCHIVED RECORDING)

JOHN STUMPF: I've been through many challenges with Wells Fargo but none of which pains me more than the one we will discuss this morning.

ZARROLI: Stumpf said Wells Fargo and its board were still investigating when the illegal activities began and who was responsible. And he repeatedly stressed that just a small portion of the huge bank's many employees played a role in the scandal. That did little to satisfy the ire of the senators. And what followed was a two-and-a-half-hour bipartisan drubbing.

(SOUNDBITE OF ARCHIVED RECORDING)

PAT TOOMEY: What we've been learning is so deeply disturbing at so many levels.

ZARROLI: Republican Pat Toomey of Pennsylvania said Wells Fargo executives were out of touch and didn't have the kind of commonsense controls needed to prevent customer abuse. And he took issue with Stumpf's attempts to pin the blame on a relatively few dishonest employees.

(SOUNDBITE OF ARCHIVED RECORDING)

TOOMEY: When thousands of people conduct the same kind of fraudulent activity, it's a stretch to believe that every one of them independently conjured up this idea of how they would commit this fraud.

ZARROLI: Over the course of the hearing, Stumpf dodged questions about who was responsible or to clarify when he found out about the fake accounts.

He refused to say anything significant about the role played by former retail-banking head Carrie Tolstedt, who resigned in July, or to speculate about what might happen to the tens of millions of dollars in stock and bonuses she received before her departure.

Democrat Jon Tester of Montana wanted to know what impact the fake accounts would have on customers' credit scores.

(SOUNDBITE OF ARCHIVED RECORDING)

JON TESTER: Just tell me. Did the information, if there was fees and fines involved, and the credit bureaus requested it - or even if they didn't - did that information get forwarded to the credit bureaus?

STUMPF: I'm trying to - sir, I'm trying to work with you.

TESTER: Yes or no works.

STUMPF: Yes. Yes.

ZARROLI: Stumpf told the committee several times that he was accountable for what happened at Wells Fargo. But Democrat Elizabeth Warren of Massachusetts was clearly skeptical of that claim. And she said Stumpf should be criminally investigated.

(SOUNDBITE OF ARCHIVED RECORDING)

ELIZABETH WARREN: Your definition of accountable is to push the blame to your low-level employees who don't have the money for a fancy PR firm to defend themselves. It's gutless leadership.

STUMPF: Warren said Wells Fargo was known for cross-selling products to its customers, encouraging those with checking accounts to open credit cards, for instance. That put a lot of pressure on employees to meet ambitious sales targets. But Wall Street loved it. And the bank's stocks soared.

(SOUNDBITE OF ARCHIVED RECORDING)

WARREN: Do you know how much the value of your stock went up while this scam was going on?

STUMPF: It's - all of my compensation is in our public...

WARREN: Do you know how much it was?

STUMPF: It's all in the public filing.

WARREN: You're right. It is all in the public records because I looked it up.

ZARROLI: Warren said, by her calculation, the value of Stumpf's shares had risen by $200 million during the time when the illegal activity was taking place. Stumpf said several times that the board was now reviewing its executive compensation.

That means some top officials, including Stumpf himself, could end up having to give back some of the compensation they received. Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.