aside Breaking News: Senator Elizabeth Warren Take Down Of Wells Fargo CEO

This breaking news is by NPR which posted its information on 9/20/2016 by Bill Chappell and titled, “You Should Resign’: Watch Sen. Elizabeth Warren Grill Wells Fargo CEO John Stumpf. Here is the story:

“Facing off with the CEO whose massive bank appropriated customers’ information to create millions of bogus accounts, Sen. Elizabeth Warren, D-Mass., had sharp questions Tuesday for Wells Fargo CEO John Stumpf. She said Stumpf made millions of dollars in the “scam,” telling him, “You should resign … and you should be criminally investigated.”

“As we’ve reported before, Wells Fargo is paying $185 million in penalties for acts that date to at least to 2011. The firm says it fired some 5,300 employees who were found to have created false accounts as it sought to increase “cross-selling” — building the number of accounts each customer holds.”

Sen. Elizabeth Warren questions John Stumpf, chairman and CEO of Wells Fargo, about the unauthorized opening of customer accounts by Wells Fargo during a Senate Banking Committee hearing Tuesday. Saul Loeb/AFP/Getty Images
Sen. Elizabeth Warren questions John Stumpf, chairman and CEO of Wells Fargo, about the unauthorized opening of customer accounts by Wells Fargo during a Senate Banking Committee hearing Tuesday.
Saul Loeb/AFP/Getty Images

“The exchanges between Warren and Stumpf were among the sharpest, but other senators also pressed the executive about what have become hot topics as public outrage has grown over the case. Here’s some of what panel Chairman Sen. Richard Shelby, R-Ala., and others wanted to know:”

  • Whether Stumpf regards the case as one of fraud
  • Whether the bank will “claw back” any of the millions it has paid to former executive Carrie Tolstedt, who is retiring with nearly $125 million 
  • How the bank will help customers whose credit ratings have been hurt by the fake accounts

banks-forbes-stumpfcover2012“Responding to those questions, Stumpf said he lacked the appropriate expertise, declaring himself at various times not to be a lawyer, a compensation expert or a credit consultant.”

“Warren began her questioning by citing Wells Fargo’s Vision and Values Statement, particularly its suggestion, “If you want to find out how strong a company’s ethics are, don’t listen to what its people say, watch what they do.”

“So, let’s do that,” Warren said. She then accused Stumpf of failing to hold himself or any other senior executives accountable for the company’s actions. “It’s gutless leadership,” she said, noting that Stumpf is not resigning, returning any of his earnings or firing any senior executives.”

Warren moved on to the subject of cross-selling — calling it a particular focus of Stumpf’s tenure as CEO, citing his goal of eight accounts per customer and saying that cross-selling was “one of the main reasons that Wells has become the most valuable bank in the world.”

bank-hearing-150316125544-elizabeth-warren-gallery-8-super-169“The senator asked Stumpf, “Cross-selling is all about pumping up Wells’ stock price, isn’t it?”

“No,” the executive answered. “Cross-selling is shorthand for deepening relationships,” he continued — before Warren cut him off.”

“She then produced 12 transcripts of Wells Fargo earnings calls Stumpf participated in from 2012 to 2014 — “the three full years in which we know this scam was going on,” Warren said.”

bank-good-warren-photo-hqdefault“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,” Warren told Stumpf. She went on to quote him from the transcripts, as he touted the company’s record growth to more than six accounts per household.”

“When Warren asked Stumpf — who made $19.3 million in annual compensation (including a performance bonus of $12.5 million) in 2015, how much his stock holdings at Wells Fargo had gained during the period in question, the executive said that the information was all in the public record.”

“Warren then produced the information herself, saying that Stumpf held an average of 6.75 million shares in the company in that time frame — and that the share price had risen by about $30, “which comes out to more than $200 million in gains, all for you, and thanks in part to those cross-sell numbers that you talked about on every one of those calls.”

bank-john-stumpf-4-908“Here’s what Warren said toward the end of her allotted time to question Stumpf:

“Here’s what really gets me about this, Mr. Stumpf. If one of your tellers took a handful of $20 bills out of the crash drawer, they’d probably be looking at criminal charges for theft. They could end up in prison.

bank-best-cross-selling-cartoon-girl-scouts-disruptive_brand_extensions-565x406“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-multimillion-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.

“This is about accountability. You should resign. 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. This just isn’t right.”

bank-warren-987download“Stumpf testified with a conspicuously bandaged right hand — it was particularly noticeable when he raised it to be sworn in Tuesday morning. A bank representative says he injured himself playing with his grandchildren.”

“During his allotted time to question Stumpf, Sen. Patrick Toomey, R-Pa., voiced skepticism at the idea that the 5,300 Wells Fargo employees who were fired had all acted independently.”

bank-wells-fargo-grat-photo-davidson-the-record-fine-against-wells-fargo-1200x630-1473711788“You state that there are no orchestrated effort or scheme, as some have called it, by the company,” Toomey told Stumpf. “But 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.”

NOTE: There is no way that the CEO was not aware of what was going on regarding the bank’s cross selling practices. There have been numerous complaints by consumers regarding their controversial practices regarding cross selling. Their representatives were set a goal of attaining eight accounts per customer which put unrealistic pressure on their agents to make “mission impossible” occur.

NOTE: Wells Fargo has several call centers located throughout the country.

NEWS ARTICLES ABOUT WELLS FARGO SELLING PRACTICES DATING BACK TO 2013:

consumerist.com/…/wells-Fargo-employees-say-threat-of…Dec 23, 2013 – … for McDonald’s,” one former branch manager from Florida tells the L.A. Times. … Wells Fargo averages more than 6 financial products per household … accounts, one of the 30 Wells employees dismissed in October tells the Times … We are taught exactly how to sell multiple accounts,” says  former …

Times investigation of Wells Fargo culture provokes strong …  articles.latimes.com/2013/…/la-fi-mo-wellsfargosales-pressure-2013122…     Dec 28, 2013 – A Times investigation into the intense sales culture at Wells Fargo Bank, published in … Luis Sinco / Los Angeles Times

13 comments

    • Dear Horty, I actually watched CSPAN and the hearing. She skewered him and made him look like the cowardly CEO that he is. For the record, there was bipartisan support for being tough on Mr. Stumpf. Thanks a million for all your support and for this reblog. Hugs, Gronda

        • Dear Horty,

          I watched Rachel last night as well. This is a major story because it is easy for the average person to understand what the bank did wrong. I’ve been following this Wells Fargo story since 2013. This is how I know that there have been numerous consumer complaints against this bank for their cross selling practices. Other companies were following in their shoes and I blogged about this under the icon, “Nutty Consumer.” There is no way that the CEO was unaware of this problem. I hope someone has the courage to file a class action suit v these guys because there is a lot of dirt to uncover.

          Hug, Gronda.

  1. Gronda, great post. Two things. It irks me how many Republicans, especially Richard Shelby, who are shocked and dismayed at this. Shelby is adamant against Dodd-Frank, but especially the Consumer Financial Protection Bureau, that Senator Warren helped get off the ground. The CFPB is the group that fined Wells Fargo and has fined other banks. There is a huge dose of hypocrisy here in Senator Shelby.

    As for Mr. Stumpf, companies take on the personality of its leaders. Wells Fargo, of which I am a shareholder and customer through their acquisition of banks, has been known for twenty years as a cross-selling bank. They have been less known for customer service. The CEO is responsible and this failure of stewardship has damaged the company’s credibility and standing. For that, I must agree with Senator Warren. Keiith

    • Dear Keith,

      These banks want to do away with CFPB because they can’t stand the lime light that they were exposed to yesterday. It isn’t just the fines, it is the bad publicity that they want to avoid. This is a perfect bank to investigate as there is a lot more dirt. As I mentioned to Horty, I have been following the business news on Wells Fargo since 2013. There were other companies adopting their model of doing business. I blogged a series on the issue of “call center “cookie cutter” companies under the icon of “nutty consumer..”

      Wells Fargo used to have a decent reputation but their brand has been compromised because of greed.

      Ciao, Gronda

    • This also explains why so many are so angry to where they are planning to vote for Donald Trump. This time Wells Fargo is getting the critical publicity it deserves. Thanks for stopping by, Gronda

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