When Wells Fargo CEO John Stumpf appeared before the Senate Banking Committee recently to testify about the fake account scandal surrounding the bank, senators from both sides of the aisle united in a rare moment of bipartisanship and took turns battering Stumpf for the bank’s conduct that led to as many as 2 million fake accounts being opened by more than 5,000 of the bank’s former employees.
That hearing proved to be a harbinger of things to come, as it was more of the same when Stumpf appeared Thursday morning before the before House Financial Services Committee to discuss the scandal, with representatives repeatedly calling for Stumpf to resign, for Stumpf and others to be sent to jail, and for Wells Fargo to be broken up.
During Stumpf’s second appearance on Capitol Hill in just over a week, representative after representative battered Stumpf for his bank’s conduct, his own actions, the repercussions of the fake accounts and more.
“Shame on Wells Fargo,” Rep. Sean Duffy, R-Wisc., said during his heated questioning of Stumpf. “The banking business is built on trust. And your bank violated that trust.”
Duffy repeatedly called on Stumpf to categorize the nature of the bank’s employees’ actions. “Was it fraud? Was it theft?,” Duffy repeatedly asked.
“You’re stealing from people,” Duffy told Stumpf.
Duffy then characterized Wells Fargo’s actions in terms that are familiar to anyone who was around during the housing crisis.
“Wells Fargo was making a lot of money of what (the bank’s employees) were doing,” Duffy said. “And you were hoping you didn’t get caught. You kept the practice in play because you were making money. You turned a blind eye to people who were being stolen from.”
Duffy was hardly the only member of Congress to land body blows on Stumpf.
Rep. Michael Capuano, D-Mass., also launched into a stream of heated questions and accusations of Stumpf, and noted the uniqueness of the situation in Congress.
“We are all together on this,” Capuano said with a twinge of sarcasm. “You’ve brought true bipartisanship to Congress.”
Capuano then launched into a series of accusations about the implications of the fake accounts, saying that Wells Fargo “screwed” student loan borrowers, mortgage borrowers, credit card holders, and others.
“And you’ll pretend to be sorry, fire some workers and move on,” Capuano said. “You encouraged subordinates to take advantage of your customers. Then you fired 5,300 employees as if you cared. Why shouldn’t you be in jail?”
Rep. Brad Sherman, D-Calif., suggested that the fake account issue goes far beyond Wells Fargo and called for the CEOs of the nation’s other largest banks, including Bank of America, Citi, and others, to appear before the House Financial Services Committee to testify about each bank’s cross-selling tactics.
Sherman also questioned, as did many other representatives, about the timeline of when Wells Fargo first learned of the issue and why it didn’t act faster to stop it from happening.
“Why didn’t you tell shareholders in 2013 that some of our accounts were fake accounts?,” Sherman asked Stumpf.
During Duffy’s questioning, he noted that the 5,300 employees were fired not all at once, but rather in intervals of roughly 1,000 per year from 2011-2015, after discovering the fake accounts, but did not address the issue from a company-wide perspective until 2015.
Sherman closed his testimony by calling for Wells Fargo to be broken up.
“This bank is too big to manage and it’s time to break them up,” Sherman said.
Early on in the session, Rep. Carolyn Maloney, D-NY, accused Stumpf of “dumping $13 million” of Wells Fargo stock immediately after he learned of the opening of fake accounts, citing Securities and Exchange Commission filings relating to Stumpf’s stock in his bank.
Maloney’s full testimony can be seen below.
Stumpf’s day on Capitol Hill with House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, laying the groundwork for how Stumpf’s day would go.
“We are here today because millions of Americans were ripped off by their bank and seemingly let down by their government,” Hensarling said. “Fraud is fraud and theft is theft. What happened at Wells Fargo over the course of many years cannot be described any other way.”
Hensarling closed his opening statement by lamenting his own involvement with the bank.
“Mr. Stumpf, I have a mortgage with your bank,” Hensarling said. “I wish I didn’t. I wish I was in the position to pay it off because you have broken my trust as you have broken the trust of millions and it’s going to take a long time to earn it back.”
Rep. Al Green, D-Texas, stated that Wells Fargo’s culture and actions in this case recalled the actions that led to the housing crisis.
“This is about greed,” Green said. “This is about the same kind of greed that created collateralized debt obligations, no-doc loans. This is the same kind of greed that created the housing bubble. This has now created a cross-selling bubble at Wells Fargo.”
