This Tuesday, the CEO of Wells Fargo, John Strumpf, endured over two hours of questioning on Capitol Hill over a scam that created of millions of fake customer accounts to meet sale goals.
The Wells Fargo bank has been in a continuous legal battle with lawmakers after it’s employees were discovered to have created up to two million fake accounts. These accounts ranged from credit card fraud to checking accounts, and in many cases, customers were charged for accounts they didn’t request. In some cases, employees used money from an authorized account to make a fraudulent one.
The San Fransisco based bank fired 5.300 employees during 2011 through 2016. According to Strumpf, this included managers and an area president. Strumpf apologized repeatedly for failing his customers, but has faced questions over not catching the problem sooner.
The Capitol Hill committee demanded the details of the scheme, questioning that senior management let the problems exacerbate for so long before taking decisive action.
Senator Elizabeth Warren in particular questioned Strumpf’s personal gain during the scam. Strumpf earned $19 million last year. Senator Warren also noted that the chief executive flaunted the bank’s ability to sell more products in quarterly calls, even as investors raised the stock price, increasing his earnings by around $200 million over the five years of the scam.
Senator Warren expressed her distaste for the CEO writing on her Twitter account that “Strumpf should resign, give back the money he took while the scam was going on, and be criminally investigated.”
Warren’s case raises questions over whether in the eight years following the Great Recession, U.S regulators are doing a sufficient job of holding Wall Street accountable for bad actions.
Strumpf was also questioned over whether his top executives should be made to return a part of their bonuses during the scheme. This was particularly aimed at the former head of the banking unit, Carrie Tolstedt.
Tolstedt resigned with more than $100 million dollars in compensation. Senator Sherrod Brown said to Strumpf, “Despite firing thousands of team members, Ms. Tolstedt seemingly decided it was not important enough to alert the head of the company or the board of directors or anyone else for two years, if ever, even though you both sat on the bank’s board.” The committee also expressed doubts that the 5,300 fired employees had all acted independently.
Strumpf stumbled over these questions, but admitted that the bank learned of the misconduct in 2013, and could have done more to alleviate the problem. He apologized once more, saying “I want to apologize for violating the trust our customers have invested in Wells Fargo [and] for not doing more sooner to address the causes of this unacceptable activity.”