House Panel Calls Stumpf to Testify as Part of Wells Probe

  • Hensarling says committee to hold hearing later this month
  • House panel will interview Tolstedt as part of investigation

Wells Fargo & Co.’s John Stumpf is already gearing up for a tough U.S. Senate interrogation next week. Now, it looks like he’ll have to face the House of Representatives, too.

The House Financial Services Committee said Friday it’s going to investigate the scandal engulfing Wells Fargo, including interviewing former community banking head Carrie Tolstedt, according to the panel’s chairman, Jeb Hensarling.

Hensarling said Friday the committee will call Stumpf, the bank’s chairman and chief executive officer, to testify at a hearing later this month, and has asked Wells Fargo to provide internal documents related to the timing and discovery of the unauthorized customer accounts. Tolstedt, as well as other corporate officers including Chief Financial Officer John Shrewsberry and Chief Operating Officer Tim Sloan, will be called to appear for transcribed interviews. Further action, such as subpoenas, will be considered, Hensarling said.

“The Committee is very concerned by these serious allegations and is investigating Wells Fargo’s questionable sales practices and corresponding agreements with federal regulators in order to evaluate the application, administration, execution, and effectiveness of Federal laws," Hensarling said in a separate letter addressed to the lender.

Senate Hearing

Pressure from lawmakers on both sides of the aisle is mounting after Wells Fargo agreed last week to pay $185 million to the Consumer Financial Protection Bureau and other regulators to resolve claims that employees opened more than 2 million accounts that consumers may not have known about.

Jennifer Dunn, a spokeswoman for Wells Fargo, declined to comment.

The panel’s top Democrat, Maxine Waters, said on Friday that she had talked to Stumpf earlier this week, and he took full responsibility and had expressed regret over the fake accounts.

“We need to know if this sort of conduct is a systemic issue,” Waters said. “I know Mr. Stumpf very well. We talk from time to time."

The Senate Banking Committee, chaired by Republican Richard Shelby, plans to hold a hearing on the matter on Tuesday, where Stumpf will testify. Other witnesses include U.S. Comptroller of the Currency Tom Curry and Consumer Financial Protection Bureau Director Richard Cordray. Tolstedt currently isn’t on that witness list.

Lawmakers are increasingly turning their focus to Tolstedt, who led the unit where the alleged misconduct occurred. Policy makers including Senator Elizabeth Warren have questioned the role she had in the misconduct and demanded answers about whether the banks plans to claw back her pay.

Recouping Pay

Tolstedt hasn’t responded to repeated messages seeking comment this week.

Tolstedt, 56, has spent 27 years at the bank. In her July retirement announcement, Stumpf praised her as “one of our most valuable Wells Fargo leaders, a standard-bearer of our culture, a champion for our customers, and a role model for responsible, principled and inclusive leadership.”

The bank could recoup about $17 million in unvested shares from Tolstedt, according to a Bloomberg analysis of figures compiled from regulatory filings. Cash and stock she already owns -- including about $51 million of shares amassed during her 27-year career and $36 million in previously vested stock options -- aren’t eligible for claw back, according to the filings.

Representative Brad Sherman, a California Democrat, said earlier Friday he planned to send a letter to the CFPB asking how consumers’ credit scores were affected by credit-card accounts that were opened without them knowing. He also said he was looking into whether Wells Fargo shareholders should have been made aware of the situation sooner.

Wells Fargo fell 1.5 percent to $45.44 at 1:12 p.m. in New York, on pace for its sixth straight daily decline. The stock has dropped 16 percent this year, the worst performance in the 24-company KBW Bank Index.

— With assistance by Laura J Keller

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