Earlier this week, Wells Fargo’s CEO John Stumpf agreed to forfeit $41 million in bonus pay, in response to the scandal that has engulfed his bank.
If he thought that act of penance would earn him some good will with the House Finance Committee today, he was sadly mistaken.
Representatives from both sides of the aisle took turns assailing Stumpf, his board and his institution. He was called no better than a bank robber, accused of racketeering, and charged with dumping stock to profit from the scandal. He was mocked for serving as both chairman and CEO, accused of bringing dishonor to all bankers, and warned that he could face criminal sanctions.
“Your problem is coming,” said Michael Capuano, a Democrat from Massachusetts. “You think today’s tough? It’s coming when the prosecutors get ahold of you. It’s going to be a lot of fun.”
This was Stumpf’s second appearance in front of Congress, after testifying before the Senate Sept. 19. Wells Fargo was fined $185 million Sept. 8, after it was revealed that, in an effort to reach sales targets and earn bonuses, its workers systematically forged customer information to open accounts in their names without their knowledge. The bank fired 5,300 employees it said were responsible, although critics have accused Wells Fargo of scapegoating its lowest-paid employees while senior managers have yet to lose their jobs.
“You took 5,300 good Americans and turned them into felons,” said Brad Sherman, a California Democrat.
Stumpf said the bank was ending its sales goals for opening new accounts this week, accelerating the deadline from the end of the year it previously announced.
Representatives wanted to know how many law-abiding employees were fired for not meeting sales goals, whether the targets applied to its small business lending, and when the bank notified its insurers of its employee’s criminal actions. Stumpf promised to get back to them.
He got no relief from the Republicans normally friendly to bankers. Rep. Sean Duffy a Republican from Wisconsin, said the fraud was tantamount to theft, and said the board ignored it even as thousands of employees were fired year after year.
“What I think Wells Fargo was doing was making a lot of money off of what you were doing, and you hoped you wouldn’t get caught, and (firing workers) was a cost of doing business,” Duffy said. “The concern we have is you turned a blind eye: You didn’t take this seriously, you didn’t remedy it and shame on you.”
When Stumpf repeatedly tried to assure the committee that most of his employees were following the law, and that the bank’s corporate culture was sound, they scoffed, and noted the billions fines the banks has paid since the financial crisis. “It’s really hard to say that when you’re before Congress for the second time,” said Patrick McHenry, a Republican from North Carolina. “You’ve clearly failed.”
David Scott, a Democrat from Georgia, accused Wells Fargo of setting a “rancid example” for the banking industry, and while some members bemoaned the damage Stumpf was causing his peers, Sherman wanted the CEOs of Citigroup, JP Morgan Chase and other banks to discuss their cross-selling practices. “I don’t think you should be the only one at this joyous experience,” Sherman said.
Wells Fargo’s vast size was made clear, as Representatives across the country noted how their constituents were clients and customers. A few Congressmen also noted they had accounts, including Chairman Jeb Hensarling, a Texas Republican who said “regrettably” he had a Wells Fargo mortgage.
“I wish I didn’t,” he said. “I wish I could pay it off.”