© 2021 WFAE
90.7 Charlotte 93.7 Southern Pines 90.3 Hickory 106.1 Laurinburg
Play Live Radio
Next Up:
0:00
0:00
Available On Air Stations

Wells Fargo CEO Testifies Before House Financial Services Committee

ARI SHAPIRO, HOST:

Sometimes saying sorry isn't enough, like when the bank you lead creates as many as 2 million fake accounts under the names of real customers. The CEO of Wells Fargo, John Stumpf, went back to Capitol Hill this morning, taking blows from the House Financial Services Committee. The hearing went on for four hours, and as NPR's Yuki Noguchi reports, his apologies didn't go very far.

YUKI NOGUCHI, BYLINE: The last time stump was on Capitol Hill, he swore in with a bandaged right hand. Then the Senate Banking Committee issued its beating. Today Stumpf entered the ring again, this time with his arm in a splint and plenty of new problems. He is at least $41 million poorer after the board clawed back a good chunk of his compensation earlier this week.

Yesterday the bank's home state of California said it would sharply curtail the business it does with Wells Fargo for a year. Stumpf began by emphasizing the ways the bank is trying to right its wrongs - getting rid of sales targets and reaching out to affected customers.

(SOUNDBITE OF ARCHIVED RECORDING)

JOHN STUMPF: Any fees these customers may have paid already has been refunded, and we are developing a process to deal with any other forms of harm.

NOGUCHI: This did not appease committee chair Jeb Hensarling of Texas. He questioned why Stumpf didn't warn the board sooner after similar problems surfaced in its mortgage business in 2011.

(SOUNDBITE OF ARCHIVED RECORDING)

JEB HENSARLING: But if you saw the problem in one area of the business, why didn't you thoroughly investigate in the other?

STUMPF: There's no question, Mr. Chairman. We should have done more sooner.

NOGUCHI: Again and again the committee pressed Stumpf for a timeline, what he knew and when he knew it. Then they questioned why he didn't immediately disclose the problems to the board of directors. Stumpf tried to explain that problems existed in only about 1 percent of accounts which he said was not materially significant and therefore didn't merit a warning.

But California Democrat Brad Sherman said Stumpf's story didn't square with the bank's firing of more than 5,000 employees connected with the unethical sales.

(SOUNDBITE OF ARCHIVED RECORDING)

BRAD SHERMAN: The peak firings, according to your own documents, was in 2013. So you knew you had a problem then.

STUMPF: Correct.

SHERMAN: Why didn't you tell shareholders, our penetration rates are phony; our new accounts are phony accounts, and you...

NOGUCHI: Around the same time, Stumpf sold off $13 million dollars of his shares. New York Democrat Carolyn Maloney did not accept his explanation that the two things were unrelated.

(SOUNDBITE OF ARCHIVED RECORDING)

CAROLYN MALONEY: It seems that when you found out about the fake accounts, instead of helping your customers, you first help yourself.

NOGUCHI: For the second time, Stumpf met with calls to step down here from New York Democrat Gregory Meeks.

(SOUNDBITE OF ARCHIVED RECORDING)

GREGORY MEEKS: You came out here and said, I apologize; the buck stops with me. And you have to also admit that criminal activity was going on in your bank. Then you should be fired because it stops with you.

STUMPF: Again, Congressman, the board has that power.

NOGUCHI: Michael Capuano, a Massachusetts Democrat, went further, posting a photo of a man he said was convicted of robbing a Wells Fargo Bank.

(SOUNDBITE OF ARCHIVED RECORDING)

MICHAEL CAPUANO: Why shouldn't you be in jail? He didn't use a gun. You got the money back. I understand that at his arraignment, he said he was sorry.

NOGUCHI: Today, Capuano warned, is just the beginning, and indeed it very likely is. Wells Fargo faces local, state and federal probes as well as allegations it violated a host of banking and securities laws. It also faces a fresh round of lawsuits, including from former employees and investors. Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright NPR.