Massachusetts senator Elizabeth Warren unleashed one of her signature fiery takedowns on Wells Fargo CEO John Stumpf today (Sep. 20) in a Senate Banking Committee hearing. Under Stumpf’s watch, the bank will pay a record $185 million fine after employees opened more than two million unauthorized accounts, passing off almost $2.5 million in fees to legitimate customers.
“Have you returned one nickel of the money you earned while this scam was going on?” Warren demanded. “Have you fired a single senior executive? And by that I don’t mean a regional manager or branch manager. I’m talking about the people who actually led your community banking division or your compliance division.”
“I’ll take that as a no,” she said, as Stumpf stumbled over his words.
“Okay, so you haven’t resigned,” she continued. “You haven’t returned a single nickel of your personal earnings, you haven’t fired a single senior executive, instead, evidently, 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.” Here, she refers to the company’s mission statement, which champions accountability by actions over words.
“Gutless leadership,” she declared, going on to eviscerate the bank’s policy of “cross selling,” which encourages customers to open and hold numerous accounts. Wells Fargo’s ideal number was eight, because “eight rhymes with great,” according to Stumpf. The pressure to cross sell is what forced Wells Fargo employees to open phony accounts.
“Cross selling isn’t about helping customers get what they need,” she explained. “If it was, you wouldn’t have to squeeze your employees so hard to make it happen. No, cross selling is all about pumping up Wells’s stock price, isn’t it?”
Stumpf denied this, calling the term “shorthand for deepening relationships.” Warren quickly cut him off, citing transcripts for 12 quarterly earnings calls from the three years in which the scam was ongoing. “These are calls where you personally made your pitch to investors and analysts about why Wells Fargo is a great investment. And in all 12 of these calls, you personally cited Wells Fargo’s success at cross selling retail accounts as one of the main reasons to buy more stock in the company.” She went on to shame the CEO for taking millions in personal earnings, partially derived from this wide scale cross selling practice.
“If one of your tellers took a handful of twenty-dollar bills from the cash drawer, they’d probably be looking at criminal charges for theft. They could end up in prison,” she said. “But you squeezed your employees to the breaking point so they would cheat customers, and you could drive up the value of your stock, and put hundreds of millions of dollars in your own pocket. And when it all blew up, you kept your job, you kept your multi-million-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.”
“You should resign,” she concluded. “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.”