- Title: Congress grills Wells Fargo CEO
- Date: 29th September 2016
- Summary: NEW YORK, NEW YORK, UNITED STATES (FILE) (REUTERS) EXTERIOR OF WELLS FARGO BANK BRANCH CUSTOMER USING WELLS FARGO ATM
- Embargoed: 14th October 2016 17:47
- Keywords: Wells Fargo credit cards Stumpf abuse
- Location: WASHINGTON, D.C., UNITED STATES; NEW YORK, NEW YORK, UNITED STATES
- City: WASHINGTON, D.C., UNITED STATES; NEW YORK, NEW YORK, UNITED STATES
- Country: USA
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA00251ME9AL
- Aspect Ratio: 16:9
- Story Text: Wells Fargo & Co Chief Executive Officer John Stumpf returned to Capitol Hill on Thursday (September 29) offering a package of actions to fix widespread sales abuses that exploded into a scandal in Washington and on Wall Street.
Stumpf, who again faced tough questioning, told House of Representatives lawmakers that Wells Fargo will eliminate sales quotas for branch staff beginning Oct. 1, accelerating the plan from Jan. 1.
He said the bank has begun contacting customers about credit card accounts to ask if they wanted accounts kept open.
Earlier this week, the bank took back $41 million in stock awarded to Stumpf, an unprecedented rebuke to a major U.S. bank CEO, but the move is unlikely to silence calls for his resignation. Investigators found that branch staff opened as many as 2 million unauthorized credit card and deposit accounts to meet sales quotas.
Customers harmed in the accounts scandal are welcome to seek arbitration over any alleged harm, Stumpf said.
The CEO again faced skeptical lawmakers who questioned why management did not act sooner to prevent the questionable practices.
Jeb Hensarling, the Republican chairman of the House Financial Services Committee, said in his opening statement that he has lost faith in Wells Fargo, where he has a mortgage.
"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 raised questions about $13 million in stock sales by the CEO in 2013 after he learned about the abuses. Stumpf said he sold stock with proper approvals.
More than three dozen lawmakers were on hand at the hearing for Stumpf's opening statement as three large screens over the witness table scrolled details of past federal settlements with Wells Fargo.
The affair has triggered lawsuits, more investigations and wiped more than $20 billion from the bank's market value.
On Wednesday (September 28), California, Wells Fargo's home state, suspended business relationships with the bank for a year and said it would work with the state's two giant public pension funds to change the management structure at the bank, including separating the roles of CEO and chairman.
The episode has been a stunning reversal for Stumpf, long regarded as a safe pair of hands in the industry for navigating Wells Fargo successfully through the financial crisis.
It was the second congressional appearance this month for Stumpf, who has worked at the bank for about 35 years. Thursday's testimony before the House Financial Services Committee follows a bipartisan tongue-lashing Stumpf received from the Senate Banking Committee on Sept. 20, when Senator Elizabeth Warren of Massachusetts called him a "gutless leader" who should be criminally investigated.
Warren, along with two other senators, called on the U.S. Securities and Exchange Commission to investigate the company, which is already under scrutiny by the Department of Justice, state Attorney General offices, and others.
At least five Wells Fargo employees have sued the bank or filed complaints with regulators, claiming they were fired after reporting the opening of customer accounts without permission, according to a Reuters review of lawsuits and complaints to the U.S. Labor Department.
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