Wells Fargo bank was recently fined $185 million by the Consumer Financial Protection Bureau for setting up sham credit card and checking accounts so they could charges fees they were not entitled to and raise the value of their stock. As a result, Wells Fargo fired 5,300 employees they said were responsible for creating the fraudulent accounts.
And today on Capitol Hill, Wells Fargo CEO John Stumpf was dragged over the coals by Massachusetts Senator Elizabeth Warren, who accused Stumpf and other top executives of blaming low-level bank employees instead of taking responsibility. Warren angrily declared:
“You haven’t returned a single nickel of your personal earnings, you haven’t fired a single senior executive Instead, evidently, your definition of accountable is to push the blame to your low-level employees who don’t have the money for a fancy PR firm to defend themselves.
“It’s gutless leadership. Cross-selling is all about pumping up Wells’ stock price.”
Stumpf attempted to defend the company when Warren accused him and his cronies of being involved in a scam by saying:
“It was not a scam. And cross-sell is a way of deepening relationships.”
But Senator Warren countered by asking:
“We’ve been through this, Mr. Stumpf. I asked you a very simple question. Do you know how much the value of your stock went up while this scam was going on?”
The banking executive declined to reply, so Warren gave him the cold, hard facts:
“The share price during this time period went up by about $30. Which comes out to more than $200 million in gains. All for you personally, and thanks in part to those cross-selling numbers.
“When it all blew up, you kept your job, you kept your multi-million-dollar bonuses and you went on television to blame thousands of $12 an hour employees who were just trying to meet cross-sell quotas that made you rich. You should resign, you should give back the money that you took while this scam was going on and you should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission.”
Warren also noted that Wells Fargo had engaged in the same type of shady banking practices which led to the financial collapse of 2008:
“The only way that Wall Street will change is if executives face jail time when they preside over massive frauds. We need tough new laws to hold corporate executives personally accountable, and we need tough prosecutors who have the courage to go after people at the top.
“Until then, it will be business as usual. And at giant banks like Wells Fargo, that seems to mean cheating as many customers, investors and employees as they possibly can.”
Thank you for looking out for American consumers, Senator Warren. We are fortunate to have you in the Senate where you can hold these big banks accountable for their crooked actions. Bravo!