Wells Fargo (WFC) CEO John Stumpf drew a sharp rebuke from Sen. Elizabeth Warren, who called for a criminal investigation of the executive at the helm of the bank as it opened millions of fake customer accounts.
“Since this massive years-long scam came to light, you have said repeatedly I am accountable,” the Massachusetts Democrat told Stumpf Tuesday during a. “Have you returned one nickel of the millions of the dollars that you earned while this scam was going on? Have you fired a senior single executive?”
Pressed by Warren, Stumpf acknowledged that Wells Fargo had not fired any senior executives for the behavior. In media interviews after the scandal emerged, he chalked up the bank’s fraudulent conduct to dishonest employees that the bank has fired. He reiterated that assertion during his testimony.
“Your definition of accountable is to push the blame on low-level employees” who can’t afford to fire an expensive public relations firm to protect the bank’s reputation,” said Warren, accusing Stumpf of “gutless leadership.”
The Consumer Financial Protection Bureau finedfor opening millions of phony accounts without customers’ knowledge.
Stumpf sat largely stone-faced as an indignant Warren ripped into the executive, telling him that he set the target for bank employees to open eight accounts per customer, a target some experts has said is unrealistic. The lawmaker said Stumpf had picked the number because “eight rhymes with great,” the lawmaker said, citing Stumpf’s letter to shareholders in the bank’s 2010 annual report.
The executive touted Wells Fargo’s success at cross-selling in a dozen calls with investors, said Warren. “The ratio kept going up and up, and it didn’t matter whether customers used those accounts or not. Wall Street loved it.”
Warren also asked Stumpf whether he knows how much money he had earned as the result of the increased value of the 6.75 million shares of stock he owned in the bank “while this scam was going on.”
Stumpf objected to the term “scam,” but did not have the chance to reply to much of what Warren said, other than to state that the numbers she requested were public.
The senator agreed, saying she had done the math herself, telling him that the share price went up by about $30, which came to $200 million in gains, “all for you personally, and thanks in part to the cross-selling numbers you talked about.”
If a bank teller took a handful of $20 bills from a Wells Fargo drawer, they could be charged with theft, yet when the fraudulent activity came to light, Stumpf kept his job, while blaming “thousands of $12 an hour employees that were just trying to make cross-sell quotas that made you rich,” said Warren. “You should resign. You should be criminally investigated.”
She added: “The only way that Wall Street will change is if executives face jail time when they oversee massive scams.”