Senate Banking Holds Hearing on Wells Fargo’s Unauthorized Accounts

September 20, 2016

On Tuesday, September 20, 2016, the Senate Committee on Banking, Housing and Urban Affairs held a hearing, “An examination of Wells Fargo’s Unauthorized Accounts and Regulatory Response.” Witness panels included testimony from Wells Fargo Chairman and CEO John Stumpf; Comptroller of the Currency Tom Curry; CFPB Director Richard Cordray; and Los Angeles City Attorney, Chief Deputy James Clark.

 

Chairman Richard Shelby (R-AL) began by stating 5,300 employees were terminated as a result of the possible fraudulent opening of 2 million deposit and credit card accounts. He noted Wells Fargo has agreed to set up a $5 million remediation fund for consumers and pay nearly $185 million in fines to the CFPB.  Further, he noted there were reports of employees under intense pressure to meet ambitious sales goals for financial products which led to questionable cross selling practices. 

 

Ranking Member Sherrod Brown (D-OH) commended the OCC and CFPB for bringing light to the activity and criticized Wells Fargo for not treating the situation seriously until the issue was covered in newspapers. He stated low-paid employees opened “fraudulent” accounts to keep their jobs and pay the salaries of executives, while senior executives were not held accountable. Sen. Brown also broadened his criticism to the banking industry at large, stating the biggest banks have not learned the lessons of the crisis and bank culture must change to hold executives accountable in order to better protect customers.

 

In his testimony, John Stumpf apologized, stating Wells Fargo had failed in its responsibility to customers, team members, and the American public.  He also said wrongful sales practices go against the firm’s core principles, ethics, and culture. Stumpf said he accepted “full responsibility” for the misconduct, adding the Board of Directors has the tools necessary to hold senior management accountable.

 

For additional details, read our full summary of the hearing.