The Best Lines from Elizabeth Warren's Lashing of Wells Fargo CEO John Stumpf
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The Senate Banking Committee held a hearing Tuesday to look at the unfolding scandal at Wells Fargo.
Earlier this month the bank agreed to pay $185 million to settle allegations by the Consumer Financial Protection Bureau that more than 5,000 employees had illegally created millions of bank and credit-card accounts in customers' names without the customers' knowledge or approval.
Wells CEO John Stumpf apologized and took "full responsibility" for the actions during the hearing. But Massachusetts Senator Elizabeth Warren wasn't buying it. Here are five of the most stinging verbal lashings the senator aimed at the executive.
On 'gutless leadership'
You haven’t resigned, 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 push the blame to low-level employees who don’t have the money for a fancy PR firm to defend themselves. It’s gutless leadership.
On cross-selling
Wells Fargo is known for "cross-selling," which is when a bank convinces existing customers to open additional types of accounts—a checking customer might take out a home-equity loan, say, or mortgage customer might open a credit-card account. Stumpf said Tuesday that the practice is about deepening customer relationships. Warren disagreed:
Cross-selling isn’t about helping customers get what they need. If it was, you wouldn’t have to squeeze your employees so hard to make it happen. No, cross-selling is all about pumping up Wells’ stock price, isn’t it?
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On Stempf's personal gain
So when investors saw good cross-sell numbers—which they did while this scam was going on—that was very good for you personally, wasn’t it, Mr. Stempf?... Do you know how much money, how much value your personal holdings of Wells Fargo stock gained while this scam was underway? I looked it up. While this scam was going on, you personally held an average of 6.75 million shares of Wells stock. 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.
On pressuring bank employees
You squeezed your employees to the breaking point, so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket. And 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.
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On consequences
This is about accountability. 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.
On jail time
A cashier who steals a handful of twenties is held accountable, but not Wall Street executives, who almost never hold themselves accountable—not now and not in 2008 when they crushed the world economy. The only way that Wall Street will change is if executives face jail time when they preside over massive frauds.