Lawmakers to Wells Fargo CEO: 'Why shouldn't you be in jail?

[kscarbel2]

The Washington Post  /  September 29, 2016

For the second time in two weeks, John Stumpf, the long-time chief executive of Wells Fargo, entered into the halls of Congress to take a bipartisan beating from lawmakers over the bank's role in a scandal involving the creation of hundreds of thousands of sham accounts to meet aggressive sales goals.

"Fraud is fraud and theft and is theft. What happened at Wells Fargo over the course of many years cannot be described any other way," said Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee. Rep. Maxine Waters, D-Calif., called the case "some of the egregious fraud we have seen since the financial crisis." Wells Fargo has turned into a "school for scoundrels," said Rep. Carolyn Maloney, D-N.Y.

Stumpf has repeatedly apologized for those misdeeds and agreed earlier this week to forfeit $41 million in his own personal unvested stock and go without a 2016 bonus. "I am fully accountable for all unethical sales practices in our retail banking business, and I am fully committed to fixing this issue, strengthening our culture, and taking the necessary actions to restore our customers' trust," he told the House Financial Services Committee.

But the hearing quickly turned hostile as some lawmakers called for Stumpf to resign and questioned whether he should be criminally prosecuted.

"Why shouldn't you be in jail?" Rep. Michael Capuano, D-Mass., asked. "When prosecutors get hold of you, you are going to have a lot of fun."

"Do you think what you did was criminal?" Rep. David Scott, D-Georgia, asked. Stumpf responded that he had led the bank with "courage," but was interrupted again.

Several lawmakers raised the prospect of calling executives from other banks to testify about their sales tactics, and the practice of cross selling--an effort to persuade customers to sign up for multiple products like a checking or savings accounts. Others called for a separate hearing to hear from former Wells Fargo workers, who were either fired for setting up unauthorized accounts or were fired for not meeting the company's aggressive sales goals.

"These were people trying to make a living," said Rep. Al Green, D-Texas. "These people deserve a fair day, not just an exit from your company. . . They deserve an opportunity to be heard."

Stumpf was repeatedly questioned about when he, and others in the bank's leadership, realized there was a problem. Hensarling noted the Federal Reserve had found the bank had weak internal controls in 2011 in its mortgage lending business. "If you saw the problem in one area of the business, why wouldn't you do it for the other?," he said.

For years, Stumpf has strived to separate Wells Fargo, one of the largest banks in the country, from the controversy that has typically dogged many of its biggest competitors. But now the San Francisco-based institution has become entangled in a controversy of its own after acknowledging that it fired 5,300 employees over five years for setting up unauthorized accounts customers didn't request. In some cases, customers were charged fees for accounts they didn't know they had or employees moved money from authorized accounts in order to create a fake one.

"You fired 5,300 people, you took 5,300 good Americans and turned them into felons with a system that you created, benefited from and drove your stock price up by bragging about your levels of new accounts," said Rep. Brad Sherman, D-Calif.

In one tense exchange, Rep. Gregory Meeks, D-N.Y., said Stumpf was running a "criminal enterprise," noting that the bank had been penalized multiple times during the CEO's leadership, and should step down.

"I serve at the pleasure of the board," Stumpf responded.

"Then the entire board needs to go," Meeks said. "Something is going wrong with this bank. If the bucks stops with you" then you should be held responsible.

"The board has that power," Stumpf said.

In another exchange, Rep. Carolyn Maloney, D-N.Y., noted that Stumpf sold $13 million in stock around the time he learned of the problem in 2013. "My question was did you dump the stock after you found out about the fraudulent accounts," Maloney said. "Because it seems the timing is very very suspicious and raises a very serious question." Stumpf said the sale was unrelated.

The controversy has already blossomed with investigations being conducted by the Department of Labor and federal prosecutors. On Wednesday, California Treasurer John Chiang imposed sanctions, saying the state would not invest in the firm's stock or use many of its services for a year. On Thursday, several lawmakers, including Sen. Elizabeth Warren, D-Mass., asked the Securities and Exchange Commission to investigate whether Wells Fargo and senior officials violated the law by misleading investors.

Wells Fargo was fined $185 million and has returned more than $2 million to customers who were charged fees for accounts they didn't authorize. Stumpf said the bank's efforts were costly even before any fines were levied or refunds paid. Just the paperwork involved in opening and closing the sham accounts cost the institution $10 million. This was not a money-making scheme, he said.

"We have a culture based on ethics, and doing what's right," Stumpf said. "I stand with the people who are doing the right thing."

As the hearing dragged into its third hour, Stumpf was asked about the show "Undercover Boss" and if he had ever served as a teller when visiting one of the bank's more than 6,000 branches and experienced the pressure to sell customers more products.

"I'm not trained or permitted to do that," he said.

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[kscarbel2]

If a small business owner acted alike Stumpf and was caught, he'd be in jail. But when you lead a large company, you can avoid punishment, as the senior management at VW has done.

[grayhair]

I watched the questioning and his responses during both of his sessions before congress.   I think he took a lot of insults and bs from grandstanding democrats.  Typical congressional grandstanding by our do-nothing legislators.  Get seen on TV so your constituents think you actually do something in Washington.   I felt like saying "if you got something that goes to him personally, then charge him with the crime and prosecute him - or shut up.)

And where the heck was the federal CFPB (Consumer Financial Protection Board) during the years this was going on?  Answer - totally asleep.  The banks bad practice was discovered by an LA Times reporter, not the CFPB.  

Edited September 30, 2016 by grayhair

[carlotpilot]

mr stumpf must surely be an independent or republican . if he was a demmmmocrat they would all be applauding him

[kscarbel2]

Wells Fargo will pay $24 million to settle allegations that it mistreated members of the military -- including illegally repossessing their cars.

CNN Money  /  September 29, 2016

The bank, already reeling from a scandal over fake accounts, will pay $4.1 million to settle Justice Department charges that it seized 413 cars owned by service members without a court order, a violation of federal law.

The Justice Department said the illegal repossessions took place from 2008 to 2015.

[Where were the authorities those EIGHT years? Sleeping at the switch or lobbied to intentionally look the other way?]

The first complaint came from an Army National Guardsman in North Carolina who said the bank seized his car while he was preparing to deploy to Afghanistan.

Wells Fargo then auctioned his car and tried to collect a balance of $10,000 from his family, the Justice Department said.

The bank will pay $10,000 to each of the affected service members, plus lost equity in the cars with interest, and repair their credit.

The bank was fined $20 million more by the Office of the Comptroller of the Currency for breaking three provisions of the same law by denying members of the military certain banking protections, including capping their interest rates at 6%. Those violations began in 2006, the OCC said.

Wells Fargo said in a statement that it apologizes for not living up to its commitment of ensuring that all service members "receive the appropriate benefits and protections."

"We have been notifying and fully compensating customers and will complete this work in 60 days," the company said.

News of the penalties came as Wells Fargo and CEO John Stumpf faced the wrath of the House Financial Services Committee at a hearing about the millions of fake bank and credit card accounts, plus claims that it retaliated against whistleblowers.

The company is also facing lawsuits from shareholders, former employees and customers.

[grayhair]

And Berkshire Hathaway (Warren Buffet) owns 9.4% of Wells Fargo valued at over $22 Billion. The old coot's position is "no comment."

Top Institutional Holders

Holder	Shares	Date Reported	% Out	Value
Berkshire Hathaway, Inc	479,704,270	Jun 29, 2016	9.45%	22,704,404,058

[mowerman]

Amazing thanks for sharing.bob

[BillyT]

Once again a CEO of a major corporation denies both responsibility or knowledge of indictable offenses by his underlings! Ok, he's either stupid or a liar. Well we know damn well he isn't stupid no person who stood to"earn" 19 million in compensation is stupid! So the board has taken away his 19 mil. And 41 mil. In stock options.How will he live!😁 I predict at some point the board at the request of the stockholders will ask the pos to resign! I also predict his "severance" package will be more than the average skilled tradesman will earn in a lifetime! Gray hair has commented that Warren Buffett owns a big piece of  Wells Fargo.Not surprising, his role as chairman of Berkshire Hathaway demands that he make profitable investments for his stockholders.Of the well known billionaires I have More respect  for him than most.But if he did a "morality check" on the corporations he intended to invest in there would be nobody left!! If it happens Mr Stumpf will accept his resignation with "courage" at the "pleasure" of the board!😁 Warren Buffett pissed me off a couple years ago when he bought Nocona and Tony lama boots and "offshored" their manufacturing to China from Texas! He was making a profitable move for his stockholders! The last " name brand " boot  to my knowledge made in America is Red Wing!.

[41chevy]

1 hour ago, BillyT said:

 I predict at some point the board at the request of the stockholders will ask the pos to resign! I also predict his "severance" package will be more than the average skilled tradesman will earn in a lifetime!

Retirement compensation ... $134,000,000.00

[grayhair]

2 hours ago, BillyT said:

The last " name brand " boot  to my knowledge made in America is Red Wing!.

A few of their boots are still made in America.  The last 2 pairs of steel-toe works shoes I bought from Red Wing were marked "Made in Vietnam."  I'm pretty much done with Red Wing.

[grayhair]

Or if you wanna go cowboy-dress up, you can get yourself a pair of Lucchese, made in TX, but they ain't cheap... 

https://www.lucchese.com/shop/boots/hugh/GY1024.X13

[grayhair]

On 9/30/2016 at 8:11 AM, grayhair said:

 

And Berkshire Hathaway (Warren Buffet) owns 9.4% of Wells Fargo valued at over $22 Billion. The old coot's position is "no comment."

 

Update...  The "smiling crocodile" apparently spoke to Stumpf but still has no public comment. And he must have sold a bunch of shares, note the 6% ownership mentioned in this article.

 http://finance.yahoo.com/news/warren-buffett-finally-speaks-wells-151918046.html

Edited October 1, 2016 by grayhair

[carlotpilot]

3 hours ago, grayhair said:

Or if you wanna go cowboy-dress up, you can get yourself a pair of Lucchese, made in TX, but they ain't cheap... 

https://www.lucchese.com/shop/boots/hugh/GY1024.X13

to rich for my wallet i have to go with dan posts

[kscarbel2]

No arrest.....just resign and walk away. And one of the accomplices takes over.

 

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Wells Fargo chief John Stumpf to step down

The Financial Times  /  October 12, 2016

John Stumpf, the Wells Fargo chairman and CEO, is to leave with immediate effect after conceding that he had “become a distraction” as the bank tries to recover from its sham account scandal.

However, Wells’ decision to replace Mr Stumpf with two longstanding insiders drew immediate political fire.

Tim Sloan, a 29-year veteran of the bank and its president and chief operating officer, will become chief executive while Stephen Sanger, the board’s lead director, is to be chairman.

Mr Stumpf caved in to pressure from Washington five weeks after regulators found that thousands of the bank’s employees, under pressure to meet sales targets, had fraudulently created as many as 2m accounts.

However, the change at the top was not enough to mollify Maxine Waters, a Democratic member of the House of Representatives’ financial services committee.

“Tim Sloan is also culpable in the recent scandal, serving in a central role in the chain of command that ought to have stopped this misconduct from happening,” she said.

Mr Stumpf, who made cross-selling a central part of Wells’ strategy, had been lambasted over the episode, enduring hostile grillings from lawmakers on Capitol Hill.

In an interview on Wednesday, Mr Sloan said his predecessor had decided to go “without any pressure from the board”.

“He felt that he’d become a distraction. There was so much focus on John. That’s not what Wells is about. What Wells is about is servicing its customers … It’s an incredibly selfless act when you think about it.”

With a background in the commercial and wholesale side of the business, Mr Sloan has not been dragged into the scandal, which took place at its community banking division.

He emerged as heir apparent last November, when he took on the titles of president and chief operating officer while remaining head of wholesale banking.

The bogus accounts debacle has accelerated a long-planned succession. Mr Stumpf, a 34-year veteran of the bank, had been expected to go before he turns 65, in two years.

The new chairman, Mr Sanger, has sat on the Wells board since 2003 and been its lead director since 2012. He ran General Mills, the food producer and distributor, between 1995 and 2007 and is also on the board of Pfizer.

Mr Stumpf has said he is “deeply sorry” for the bank’s conduct and forfeited more than $40m in pay over the row. In a statement on Wednesday he said he was “optimistic” about the bank’s future.

“While I have been deeply committed and focused on managing the company through this period, I have decided it is best for the company that I step aside,” he said in a statement. “I know no better individual to lead this company forward than Tim Sloan.”

[41chevy]

Wells Fargo CEO John Stumpf is retiring with a nest egg that would make any retiree envious. At $134 million, the 63-year-old's retirement fund will pull in $3.6 million a year. Good reward for his indiscretions.

[kscarbel2]

Sen. Warren to Wells Fargo CEO: "You should be fired."

.