Lawmakers Take More Swings at Wells Fargo CEO John Stumpf

By Emily Glazer 

Wells Fargo & Co. Chief Executive John Stumpf struggled to mount a defense Thursday in the face of repeated attacks over the bank's sales practices from Democratic and Republican members of the House Financial Services Committee.

In his second Capitol Hill appearance in as many weeks, Mr. Stumpf again expressed regret for his company's actions and said Wells Fargo's board was working to investigate how problems with sham accounts and unauthorized meddling in customer business snowballed over five years.

Fighting to stay in his job as the bank encounters increasing attacks from politicians and some customers, Mr. Stumpf was grilled again during the hearing and at times didn't have specific answers to defend the bank's actions.

"You ought to be downright ashamed of yourself," Rep. David Scott (D, Ga.) told the 63-year-old chief executive.

Though Mr. Stumpf came to the committee with more statistics to share, including the $41 million in compensation he had agreed to forgo because of the sales problems, he was often cut off by representatives eager to use their allotted time to criticize the bank and Mr. Stumpf's leadership.

"A whole host of federal laws were potentially violated here," said Rep. Jeb Hensarling, the Republican committee chairman from Texas. Noting seven laws that the bank potentially broke including the Sarbanes-Oxley Act and the Truth in Savings Act, Mr. Hensarling told Mr. Stumpf: "Today's hearing is just the beginning." He left open the possibility of more hearings with other Wells Fargo employees, as well as subpoenas for more information.

Some representatives called for Mr. Stumpf's resignation, adding to the calls from some Democratic lawmakers including Sen. Elizabeth Warren (D-Mass.) at the Senate Banking Committee hearing last week.

"I serve at the pleasure of the board," Mr. Stumpf replied to one of the calls that he resign. "I'm giving all of my energy to leading the company through this."

Mr. Stumpf has been on the hot seat since the bank earlier this month paid a $185 million settlement and entered into an enforcement action with two regulators and a city official over allegedly "widespread illegal" sales tactics. The bank opened as many as 2 million customer accounts with fictitious or unauthorized information. The bank has said it fired 5,300 employees over five years. Earlier this week, the bank's board said it would rescind $41 million from Mr. Stumpf and $19 million from former retail banking head Carrie Tolstedt, who oversaw the unit responsible for the bad behavior.

Mr. Stumpf said the bank plans to end its sales goals Friday, speeding up the timeline as the spotlight has intensified on the bank since it announced the change earlier this month after its settlement announcement. He also gave more details on the 5,300 people who were fired, saying about 10% were branch managers.

One area of interest for lawmakers: exactly when Mr. Stumpf learned about the problems in the bank's retail business.

At the Senate hearing last week, Mr. Stumpf had left the timing vague by simply saying it was "later in 2013." Answering a question from Rep. Michael Fitzpatrick (R., Pa.) Thursday, Mr. Stumpf said he learned about it in the "fall time frame" of 2013, and before the Los Angeles Times carried a detailed report on the issue in December. That article, Mr. Stumpf said "didn't surprise me because I had heard the acceleration of problems" in certain markets.

Mr. Stumpf also deflected a question from Rep. Nydia Velazquez (D-N.Y.) about whether any sales problems extended to the bank's small business division. When Mr. Stumpf said he would have his staff get in touch with her staff, Rep. Velazquez responded that she would be writing to the U.S. Small Business Administration to urge it to investigate the matter.

Write to Emily Glazer at [e-mail]

(END) Dow Jones Newswires

September 29, 2016 14:13 ET (18:13 GMT)

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