John Stumpf just dug a deeper hole for Wells Fargo – and himself. Senator Elizabeth Warren fired the most effective broadsides at the $240 billion U.S. bank’s chairman and chief executive during a banking committee grilling over alleged fake accounts. Stumpf apologized, but also made excuses and hid behind his board.
He acknowledged that Wells should have acted sooner in addressing the more than 2 million deposit and credit-card accounts created apparently without customers’ knowledge, making the lender’s cross-selling performance look better than it actually was. But he downplayed the scale of the problem, equating the 5,300 employees who were fired to 1 percent of total bank workers – a misleading comparison at best.
Stumpf said he took responsibility, but punted any consequences to the bank’s board, saying he would accept whatever directors decided was appropriate. Lawmakers were incredulous when he declined to recommend clawbacks of compensation from executives like Carrie Tolstedt, the former head of the bank’s retail unit, who retired in July having accumulated some $120 million of Wells stock. The CEO said he didn’t want to prejudice the board’s deliberations. Maybe at a minimum that’s an argument for letting someone else take the chairman title.
As for Tolstedt, Stumpf said he hadn’t considered firing her and added that she should be judged on her decades at Wells, during which she improved customer loyalty. “Are you sure those were not fake?” Warren countered.
The senator called Stumpf’s leadership “gutless” and spurned his characterization of the bank’s cross-selling practices as a way of deepening relationships with customers. She quoted quarterly earnings calls in which Stumpf bragged about the bank hitting record numbers for products per household, metrics which helped drive up the value of the bank’s stock and his compensation. She said he should resign and return pay, and suggested that he should face criminal investigation.
It was quite the pummeling for a bank boss who has, until now, escaped almost all the brickbats thrown at other big U.S. lenders. Other lawmakers, regulators and enforcers have launched probes into Wells, suggesting Stumpf will be put on the spot again. On Tuesday at least, he didn’t look like the best person to rehabilitate the bank’s sullied reputation.