Stumpf’s Bad Day: A Summary of Lawmakers’ Withering Attacksby
CEO faces blistering criticism for selling stock in 2013
House members say pain is just beginning for Wells Fargo
John Stumpf walked into a firing line Thursday when he appeared before lawmakers who were furious over revelations that Wells Fargo & Co. may have opened 2 million customer accounts that were fictitious or unauthorized.
Attacks from members of the House Financial Services Committee ranged from implying that he sold shares in 2013 because he knew the scandal would tank the stock to assertions that he should be imprisoned and that the entire board should be ousted.
It was the second time this month that the embattled Wells Fargo chief executive officer has trekked to Washington to face a blistering assault from Congress. And many lawmakers said this was just the beginning of his pain. If Stumpf thought Wells Fargo’s Tuesday announcement that he would give up $41 million of pay would buy him a reprieve, he was sadly mistaken.
Here’s an overview of the attacks:
House Financial Services Committee Chairman Jeb Hensarling, a Texas Republican, said he might drop Wells Fargo as his bank because of the misconduct.
“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.”
Representative Carolyn Maloney, a New York Democrat, laid into Stumpf over his sale of $13 million of stock in 2013, the same year that the CEO has said he first learned employees might have been opening accounts that customers didn’t approve.
Maloney said the timing of the sale was “very, very suspicious” and that it appears Stumpf tried to “help himself” before assisting the bank’s customers.
Stumpf said the share sales had nothing to do with the problems at the bank.
Representative Mike Capuano, a Massachusetts Democrat, questioned why Stumpf shouldn’t be sent to jail. He also congratulated Stumpf for unifying bitterly divided lawmakers for the first time “in years” because all of them are disgusted with Wells Fargo. For good measure he asserted that the entire management team at the bank appears guilty of fraud.
“Your problem is coming,” Capuano said. “You think today is tough? It’s coming. When the prosecutors get a hold of you, you’re going to have a lot of fun.”
Prosecutors haven’t levied any accusations.
Ed Royce, a California Republican, pushed Stumpf to give more details about the company’s sales goals, and said that the cross-sell data the bank shared in quarterly earnings reports over the years helped bolster the stock price.
“It isn’t material to the bottom line,” Royce said. But it is “certainly material in terms of the stock price.”
In one of the most heated exchanges, Greg Meeks, a Democrat from New York, accused Stumpf of being a criminal and chastised him for not being held accountable. Meeks added that the board should be fired and that Wells Fargo had hurt its competitors by giving the entire finance industry a “black eye.”
Watch Next: Stumpf Denies 2013 Share Sale Tied to Bogus Accounts
Wells Fargo “is a criminal enterprise,” Meeks said. “Would you allow someone to walk out after robbing your bank?”
Representative Denny Heck, a Washington Democrat, said that after listening to Stumpf testify for hours, his conclusion was that the CEO is “in denial.” Heck added that he thought it was “inconceivable” that the board would recoup $41 million of Stumpf’s pay without also removing him as CEO.
“I don’t personally see how you survive,” Heck said.
Representative French Hill, an Arkansas Republican, asked whether Stumpf has discussed the scandal with Warren Buffett, Wells Fargo’s biggest shareholder. Hill drew a comparison between Wells Fargo and Buffett’s famed testimony before Congress in 1991 on Salomon Brothers, in which the billionaire said he would be “ruthless” with anyone who lost a “shred of reputation for the firm.”