Skip to main content

tv   Key Capitol Hill Hearings  CSPAN  September 21, 2016 6:00am-7:01am EDT

6:00 am
if something is being asked of them that they think is not right. they are asked to go to a manager's manager and having anonymous ethics line. >> i wish we would not have this behavior but we have also instituted some things today you mentioned getting rid of the sales goals that we also today have an e-mail we sent within an hour of opening the account on the deposit side or credit card without his signature and we are also doing a big mystery shopping program.
6:01 am
>> it's important for me to finish. i would love for the record to have a better understanding of the culture of checks and balances that were not there that would help customers have confidence and you become a model for doing it right. thank you. >> you open an account -- i apologize for going over my time for a minute or so, you have an account, i hope to keep them
6:02 am
there if i didn't sign for it, it is fraudulent. i like the simple definition. open an account in my name. there are fees attached to some of the accounts. they are not paid because we are ignorant of those accounts. at some point it's related to a credit agency because i didn't patheydidn't pay the fees becaui didn't know about it because i didn't open the account. so when it creates a negative impact on the credit statement it translates into high gear interest rates were said differently, a different way of exacting resources out of my limited pocket especially for folks working paycheck to
6:03 am
paycheck throughout south carolina. so when that happens, it is impossible for us to figure out the actual dollar amount the impact of all the customers that goes through and i would like for it also to be included in the questions for the record. helping me and others understand how we create a solution for those identified by you or attorneys looking to sue. so i would love to understand and appreciate the process so that i can go back to my constituents that i look for and give them a plausible path forward for actual resolution for those who were injured and a
6:04 am
clear path forward for restoring confidence in financial institutions because my fear is this is not simply going to be a wells fargo question. it will be a question for the entire financial footprint in the nation. >> i think it's a good point. and again i would need to check with the team but we are already going back on the deposit side and made those fixes with the credit bureau and we are working to rectify that but i will make sure we get back to you on that. >> thank you mr. chairman in and for calling this meeting. i know this probably many other places you would rather be right now. but i think this is a critical time as we look at the pushback that we have seen from the so
6:05 am
many financial institutions. what we have lost has been not only between you and your customers between you and a very bipartisan way between this committee and financial institutions. you've said repeatedly that one of your failures is you didn't act fast enough. today you are sitting in front of the committee and i'm telling you you are still not acting fast enough. you do not have the answers we need to say that we are moving forward so let's start with remediation. anand i got by that i mean repae credit ratings, taking a look at refunds, taking a look at restoring what the customer lost. you have said repeatedly to the folks here we are working on it. we start this story as far back
6:06 am
as we don't know. but let's start at 11 there's something going on in wells fargo is addressing it. at 13 or something going on in that 15 there's something going on in wells fargo is addressing it. but yet i it didn't get done and now you are coming to us and saying trust us. now we know and now we figured it out. we need a clear dialogue but one of the failures today is you haven't come with a whole lot of remediation or a whole lot of dialogue to us and like senator scott, you are not doing what you need to do to restore customer confidence with this
6:07 am
committee and the american public. i want to talk about changing the culture. there's no one on the committee that he leaves 5,000 people independently act with impunity and dishonesty. no one believes that. this is a behavior that was created by the culture that was allowed. a lot of folks are saying let's do it this way. and i get what you're saying it wasn't just the lower-level. but yet, the one person that was responsible directly for making sure this doesn't happen is in the committee today. she walked off with a pretty good deal hoping that all this
6:08 am
blows over. they should have already acted. if you come here and say these are the things we are doing and you would've been would be in r position sitting in that chair right now so i will tell you you haven't done enough to restore confidence today and this will continue in the committee and the american public. with that said, i want to turn to the 5,000 people and i want to say maybe they deserve to have their reputation restored. maybe it is a person that is now fired on a resume. maybe instead of focusing on the customers you should focus on the 5,000 people who i'm sure it's not unilaterally designed to be dishonest so it is and if
6:09 am
she were that hasn't been raised here but i think it is a critical issue because when you punish the guy at the end we end up with a attitude that quite frankly this is a corporate culture that doesn't care they are just trying to get through the day. i don't think that your day has yet ended so i want to thank you for appearing that it's not enough. ..
6:10 am
what was different about los angeles than places elsewhere in your banking system that would suggest the number of times the volume of fraudulent acts that occurred there, how do you explain that? >> as senator said, if i did not share this, i want to want to make sure, i also agree, 5000 people just don't do 5000 random things all on their own. i am sure there were people talking to one another within a branch and so forth, but that analytical analytical work is being done and has been done. i want to make sure that i work with my staff and have whatever you need on that. >> i'm interested in knowing if you see this as a customer issue, a more vulnerable
6:11 am
population of pinking customers or as the word culture has been used, was there something different about los angeles, which i assume, illegal behavior and breaking the rules is wrong wherever it happens but our goal in management, your management of a financial institution is to diminish the chances of that happening. you never condone bad behavior but we want to make certain that the circumstances in which it is discouraged and never encouraged and i don't have a feel for that circumstance. i don't really know what is the facts within the banking leadership that may have encouraged this behavior. we have seen this before. i serve, a number of my colleagues and i serve on the veterans committee where we saw the consequences of a system that rewarded appointments for veterans who needed medical care
6:12 am
we saw scandal across the country where they were put on a list suggesting they had an appointment. they didn't. certain circumstances were those individuals were lifted, the allegations certainly had death as a result of the va providing necessary health care. i think the point that the senator makes, i would make to you again. there have been a number of us on this committee and in congress who worked to find the rate regulatory talents for financial institutions. just to stress with you the importance of them having our financial institutions behavior conduct be a certain level, otherwise it undermines the efforts for that attempt to change the regulatory environment for financial success and we particularly focused that on community banks
6:13 am
but we care about those financial and patients that have a relationship with their customers. one of the arguments that has been made is those relationship bankers can rely upon the relationship. what we are hearing from the circumstance that we find out wells fargo is that relationship was taken advantage of, it didn't accrue to the benefit of the customer. >> senator, you are right for that portion and what hurt so much is that we spent so much time trying to do the right thing and when a customer gets a product that's not used or benefiting them, that hurts them and it hurts us. we have no interest. if i could just take one second, i want to correct or share something that i wasn't as clear on. on deposit fees, none of those
6:14 am
were reported to credit bureaus. the credit bureau impact relates >> let me ask a final question. i don't think you provided us with the precise timeframe in which voters were notified but i would be interested in knowing which voters were notified, when, who and what steps they took as regulators in response to the information they had. again, my recollection is that we were notified and active in the 2013 timeframe at about the time of the lawsuit from the city of los angeles, we informed the cfpb. i can tell you what we did and i know you have a panel later with them, but dash.
6:15 am
>> none of these actions came to light as the regulators finding that behavior, it was reported to them subsequent, is that true? >> i don't want to speak for them and i don't know what part of this is confidential supervisor information but my recollection of what we did is deal with this issue, terminate people, inform our regulator and after the city of l.a. informed the pd. >> i would say my experience in dealing with the, in weights many cases the employee became the scapegoat for what i saw as action or encouragement behavior by their supervisors and i would encourage your circumstance to make certain that the employees are not. [inaudible]
6:16 am
for employees a higher level. >> our team members of the most fabulous people, i just love them and what they do. the 5300, for whatever reason, they were dishonest and i'm not scapegoating but that is not part of our culture. in some of those jobs, most of of them were very good american jobs. >> thank you. did wells fargo create a pressure cooker sales pressure that put bankers and tellers in an impossible situation between iraq and a hard place? >> i do not believe that. >> let me continue. i got your answer, thank you. so rita, operate, branch manager said they were required to have hourly conferences on daily quotas for selling customers
6:17 am
extras such as overdraft protection, an issue that hadn't been addressed yet. >> employees had to stay late and work weekends. then where the threats, anyone falling short after two months would be fired. we were told we would be working for mcdonald's if we did not make the sales quotas. we had to stay with afterschool detention is what it felt like. where we would have to stay on saturday spirit is that a pressure cooker situation putting them in an impossible situation? >> it hurt to hear those words and people like that do not belong here. >> managers coached workers on how to inflate sales numbers. employees opened duplicate accounts without the customers knowledge for the use the database for customers that were preapproved for credit cards and ordered them. they were coached on it. is that a setting in which a pressure culture -- pressure
6:18 am
cooker culture puts bankers in an impossible situation? >> that has no place in wells fargo. there is nothing that we did to encourage that. >> nothing you did but bank managers were being coached on how to coach their employees on how to do this. how about a branch manager in the pacific northwest where i come from. she was very upset that a homeless woman was talked into opening six checking accounts. it's all manipulation. we are taught exactly how to sell multiple accounts. it sounds good but in reality it doesn't benefit most customers. let's talk about 2008 after being hired for two months, one employee found these false accounts were happening and she went to her trainer and her manager and she was basically found -- she was pushed very
6:19 am
hard to shut up in all kinds of different ways. you say the employee could have gone to somebody. she did. eventually, she filed a whistleblower suit and why did wells fargo say that was not legitimate? i will save you the time for the answers because wells fargo said we fired her because she didn't meet her quotas. so, here here we have a situation where employees are written up, they have to stay late, they have to come in on weekends to be coached, they are risk of being fired. that sounds like a systemic strategy for caught cross-selling but you refuse to take any responsibility, blaming blaming it on the personal ethics of individual employees who are at risk of losing their job if they didn't meet their daily solutions target. can you even conceivably place yourself in a position of an ordinary working position and
6:20 am
has a child in daycare and told her going to be fired if they don't do it and say there was no culture established that caused these problems. >> senator i am very sorry that happened. that is not what we wanted to have happen. when those things happen, i wish we would've rooted all of it out >> branch managers were always asking how many solutions or new accounts did you sell today? they wanted three or four each day. in my mind that's crazy. that's not how people's financial work. i was always getting written up for failure to bump my numbers. some employees would ask local business members to ask additional counts as favors to them. it seems as though you would have to be willing and fully ignorant to believe these goals are achievable through any other means. cross-selling is a major pride point for the management of
6:21 am
wells fargo including your reports to customers. it was so high because you created a culture of cross selling that pushed everyone to the maximum. the casualty are these folks that are going to be fired because they would lose their job if they didn't meet it. you can only sit here and say there was no coaching, there is no management strategy, cost cross-selling was at the heart of the program and you are at the top of this for a very long time. let's go back to 2005, 2007, 2010. 2007, 2010. you had one promotion after another with cross-selling at the heart of it and you just blame the little person who was pressured into an impossible situation. isn't that really kind of a failure to accept responsibility? >> i started out today by accepting full responsibility.
6:22 am
>> you accept full responsibility for putting people in this position. you should resigned and help fund assistance for all these people who were fired for the culture that caused this. it's the fault of the 5000 people who just want ethical enough and opened an account they shouldn't have opened. that's not not accepting responsibility. this was a systemic problem that you benefited from an enormously and you are scapegoating the people at the very bottom. >> i don't want to be confrontational but i just want to tell you that the vast majority did the right thing. we love the idea of having deep mutually beneficial relationship with our customer. having a product that a customer does not use, does not need or want does not help the customer.
6:23 am
it does not help me and it does not help the shareholder. >> these sarbanes-oxley reports, did you ever reveal the problem with this high-pressure sales strategy in terms of fraudulent credit card accounts anytime and that course towards 2 million fraudulent counts? did you ever disclose that to your investors? >> let me just say -- >> yes or no. >> there were too many accounts that we could not rule out as a possibility that they weren't authorized. >> i'm so glad you crossed that tea and dotted that i. did you ever disclose the systemic problem of fraudulent accounts to your investors? >> it was not a material event. >> so you brag on the one end about the in pensive ability to get cross-selling and how that would be beneficial but the problems that came from that strategy, the very problems that
6:24 am
dozens and dozens of people have shared their stories about how it was on the ground and you can only blame them for ethical problems and you never except you have a systemic problem. you sign those reports personally, didn't you think that was material when you are saying this is our big win is our cross-selling strategy, not to disclose it also had a dark side. >> there were a lot of things that our customers do and a lot of businesses that we have. this is one ratio and most of the businesses, first of all all of the accounts are off the books, most of them went on are often the same quarter of which they happen. having a customer with a product that they do not need is not helpful and is not what we want. >> i'm going to close by saying i would like to hear about the amount of slamming that went on on overdraft protection since that has come up in a number of employees were talking about how
6:25 am
they were pressured into that. >> i don't know that issue off the top of my head, but i will have my staff, i will instruct them to work with your team as quickly as they can. >> can you get the information for the full committee? >> i will have my team work with your team. i don't even know exactly what were talk about. >> you don't know what overdraft protection is. >> i know what overdraft protection is but i know we had a credit card product for overdraft protection but i will have my team work to your team. >> please get the information to the full committee. thank you. >> thank you for starting a second round him i appreciate that. there's so much more to discuss. first there are two people that worked at wells fargo and we need to enter this to the record a couple clarification points and then two or three more questions. we've discussed who was fired, whether the employees were
6:26 am
fired, understand for those watching and listening and for the record, especially, 90% of the people fired were not managers. that means they were tellers, 12 - 15-dollar an hour personal bankers maybe 19 - $20 an hour but most that were fired were not branch managers. there's a mention that only credit cards would affect credit scores and the answer to one of these questions but if funds were moved out of a checking account and 70 bounced a check for a car payment, that could end up affecting credit scores. while it may narrowly only be credit cards, it was not met definition. senator scott asked about employees and where they can go with ethics concerned. it sounded like from whistleblower lawsuits that complaints often resulted in confronting the managers
6:27 am
condoning behavior. is that true? >> i don't believe that is true. >> how do you register and ethics complaint other than calling the county attorney or the l.a. times. >> i understand our ethics line is an anonymous call and it's handled by a third-party party outside of the company who does work on that and reports it to the company. >> i would more on that because my understanding is it lease that initially you have to confront your supervisor who has much to say about it. now that we know what we do, wells fargo continue to take the position in court that contractual agreements on mandatory arbitrations, the fine print of so many of these contracts, if you will, wells fargo will continue to take the position in court that contractual agreements on mandatory arbitration covering real a accounts will apply to
6:28 am
fraudulent ones as well and customers will be forced into arbitration rather than having access to the courts. >> i've instructed my team to do whatever it takes within reason to take care of these customers but i would have to talk to my legal team and we can get back to you on that. >> understanding what has happened in the past, these mandatory arbitration clauses which many of us i know on this committee don't think are fair in general and most consumers don't understand they are part of a mandatory arbitration arrangement or even know what it is, that's been applied to these fraudulent accounts in addition to the ones that were not fraudulent. i understand that's what happened. i hope your answer is specifically in response to that. >> again, i will talk to her team and we will get back to you i'm not an expert in that. >> this employee that reported
6:29 am
directly to you. how often did you speak with one another. >> we had at least weekly meetings. >> from 2007 when you both took your respective roles until the end of 2013, did none of this firing for fraudulent accounts, did none of this ever come up in your weekly or more than weekly meetings? >> i remember at least making an impression upon me in 2013. >> from 2007 when you had your respective roles, so for six years, regular meetings with one of your most important in managers, this discussion of 1000 people a year beginning in 11, but maybe going earlier than that, those discussions you have no recall that ever came up? >> not in the way it had in 2013. >> okay. over the past ten years, your
6:30 am
bank bank has had 39 enforcement actions, just a few of which have come up today. many were related to failure to serve or abusive conduct toward customers and investors. you talk much about wells culture, how proud you are of it and its ethics, what does this say if you've had 39 enforcement actions, what does this say about the culture and compliance programs? >> we have more work to do and we are trying very, very hard to build out all the compliance that we need to treat customers fairly and to make sure we do things right every day. >> last question, mr. chairman, i appreciate your indulgence. we know about the 5300 employees who use a committed, many people here have said the pressure was on them and it was so great that they did things they shouldn't
6:31 am
have were may be they all deserve to be fired, i think think you said. what about the people, there were 5300 hundreds more who refused to cheat or quit because they didn't want to be part of this and they saw what happened to others, but what about the people who got fired for not meeting goals. you are now saying were ill advised. there's a large, certainly a significant number of people who were fired for not meeting their goals, now you see say those goals were ill advised. what you do to make those employees, how to identify them, how many are there and what you do to make those employees? >> i don't know about those numbers, i don't know how significant or widespread that is and i'll get back to you on that. >> while more precisely, i understand i expected you not to know the number but if there is
6:32 am
one, that's one, if there are 100 or thousand, for those who were fired for not meeting those goals that you say are now ill advised, do you have plans to make them whole? >> i have to talk to our team, again, i don't know the numbers and frankly. >> i didn't expect you to know the numbers, but in your mind, in your conscience doesn't say those people were fired because they didn't meet goals on the goals were ill-advised, shouldn't you make it up to them? >> again, i know where you're going through on the question and i'm trying to be cooperative but i haven't talked to her hr team and i don't know the numbers of the situations where other things involved. >> i'm less concerned with the numbers than the morality of it but i would like to ask you to do this, once you've made that determination of how many there are, i would like you to make
6:33 am
them whole and if you're not willing to make them whole i'd like a written response about why you have made the decision not to make them whole. >> i will talk to my team and get back to. >> thank you, mr. chairman. >> let me give you a real-life example. we talk about people whose credit scores were hurt. linda edwards and her daughter are wells fargo customers from new jersey. accounts were opened in their name without their acquiescence, knowledge and including credit cards. of her daughter who was just starting college, she has a negative consequence on her credit score which has not been resolved by wells fargo. you got the wrong person when you did it to this lady because she happened to be a former staffer at the new jersey division of banking and insurance. when she culture company and asked for the fraud division she was told just call customer service. to that day, the question of her daughter's credit scour who is starting college and honestly wants a good credit score is affected.
6:34 am
there are real life people here who wells fargo have not responded to. >> let me ask you this, is cross-selling and industrywide reality? is that evidenced by wells fargo or is it unique to wells fargo. >> i don't know what other companies do. i know we view it as an important metric as it relates to depth of relationship. >> so no other banks do this. >> i don't know what they are doing. >> you're not your competition so you have no idea of their doing cross-selling. >> i do not know. >> okay will have to ask the regulators. so material events for the fcc disclosure which you say you never made. >> i'm not a lawyer and i rely on my legal team. >> based on what's happened to the stock for your shareholders, it definitely was a material event event that should have come forward. the me ask you this, in response
6:35 am
to one of the questions you said you and the 00 met with her and you wanted to move in a different direction direction and she decided to leave. that sounds to me a lot like you can either leave where you're going to be fired, maybe. is it that you created a situation to give her the option to leave because you were concerned about what she might say about practices of the bank and higher-ups? in fact, when they spoke with her, they said we wanted to going to different directions and there was a number of things he was thinking about doing differently in the business and we had not made enough, along with my consultation, had not made enough progress here and she was retirement eligible and decided to retire. he never went beyond that. >> it had no concerns about what she might say if brought before the senate or any other entity under oath about what she might
6:36 am
say about what was known or not known. >> that didn't come into the equation. >> let me ask you this, what were the repercussions of not meeting sales quotas besides not getting the bonus? can you tell me how many workers face discipline over the same five your time. for failing to meet sales goals? how many workers failed to meet those sales goals were terminated? >> do not have those numbers but i will tell you this. >> i think it's important to know those numbers. you don't know how many people you terminated? you know how many people you terminated who did the wrong thing, but you don't know how many people you terminated because they didn't meet the over whelming boiler that you put them under. >> i don't have those numbers. >> i would like you to get those numbers to the committee. >> i will talk with our team. >> you said to senator scott, of course there were opportunities when asked about safe harbors, you can raise your hand, there was an anonymous ethics line, there there was no pressure cooker. you read your e-mails?
6:37 am
>> i read my email. >> i would like to read to you an excerpt from an email that one of my constituents it to sent to you in 2011. she was a branch manager at wells fargo. i spoke to her yesterday about her experiences at wells fargo. in 2011 she wrote to you, i am currently in an assistant vice president manager at northern new jersey. i have been an employer of wachovia for over 22 years of which wells fargo acquired. i'm writing to you because there as a team member i feel hurt by this country. there are -- company we should not be moving money from one of count to another and fooling the motivator who was badgering out you about whether or not you had enough accounts, to show growth
6:38 am
went in actuality there is no net gain to the company and it is wrong. in the past month i was placed on warning for not meeting these goals and the reason that the bankers underneath me do not is because i will not tolerate the movement of existing money just because we need checking account solutions and proxy to move up the motivator. these accounts makes no sense for the customer. did you read that e-mail? >> i don't remember that one. >> okay well, she was fired. so much for the safe haven. so much for coming forth. she went to the president and ceo of the company. that's about as good as it gets and she found no safe haven there. >> finally, let me ask you this, in 2012, wells fargo, then and now the largest lender in the company agreed to pay $175 million to settle accusations that the bank discriminated
6:39 am
against african-americans and hispanic borrowers and their mortgage lending from 2004 - 2004 - 2009. an investigation by the department of justice of civil rights division found that wells fargo discriminated by approximately 4000 african-american and hispanic borrowers into subprime mortgages when non- his panicked white borrowers with similar profiles received prime loans. when i look at this history, i get concern of what's gone on here. do you have demographics of those customers who were hurt in this process and can you share with the committee? >> me just go back to that particular case. i regret that was done through a wholesale business. other people outside of our company were originating those mortgages and we were closing them and we shut down that division. in this case, we don't take applications or we do business for depositing credit card, we capture age and there was no, in
6:40 am
fact it skewed toward younger and middle-aged american. >> i suggest you reach for page 36d on page nine of the l.a. city attorney 2015 complaint filed against wells fargo describing a wealth fargo gaming practice of targeting individuals holding mexican consulate cards. >> i will look at that, yes. thank you. >> senator schumer. >> thank you. >> i apologize to the witness, it's been a busy morning. first i want to just say, i know other people have spoken about this, in terms of rescinding the bonuses, the average american, it seems appalling that somebody who could make such large mistakes should be rewarded with almost an obscene amount of money, almost $120 million.
6:41 am
i would simply, i know know this has been discussed, i would say your bank has, overall, a good reputation. for the reputation the reputation of your bank, the value of your shares as well as relationships with customers, i would urgently urge you to not allow those bonuses to occur and urged that the compensation committee, i know which you sit on, to do that. that's just a statement. i would like to talk about the cf pd because they have done incredible work over the last few years but this case exemplifies why the organization was created. the consumer financial protection bureau was created to ensure that financial institutions that harm consumers are held accountable and that consumers are made whole again. in fact, over the course of the history and has gotten
6:42 am
$12 billion of restitution. it reminds us why it was formed. the practices at wells fargo were wrong and bad, as i'm sure you've said. it affected work environments including in new york. wells fargo's actions violated consumer trust. those americans will rest assured now more than ever knowing that there is a cf p be out there. i know it's not bennett pleasant experience that you've been through, do you agree with federal regulators serve a valuable role in promoting safety and stability as well as
6:43 am
consumer protection. i'm saying this because of a lot of our friends on the other side of the i'll want to get rid of or reduce the power. >> we share the mission of all of our regulators created by congress including the cfpb and we are working with all of them. >> you think the cfpb is a necessary thing. >> again, it's created by congress and we agreed to work with all of them and we have worked closely on this matter with them. >> okay, do you believe that the reforms, i'll let the answer speak for itself. we think the cfpb has done an outstanding job. what has happened at the bank, however it happened, it showed a need for it. okay. you believe the reforms that the consent agreement will allow wells to go back on a path of protecting customers interests
6:44 am
and putting consumers first. >> yes, we have a lot to do. >> will you work with the cfpb be to make sure that customers were negatively impacted will be made whole. >> yes. >> were you aware that the cfpb was aware of the cross-selling and looking into concerns about cross-selling as early as 2013? >> i only know what we did. >> they were on this case for your top management discovered this. >> i don't know that. >> okay well direct director will be here in just a moment so we will ask him and see if it was the case. i believe it to be the case. finally, do you believe the actions taken by the cfpb will lead to other financial institutions to reevaluate and
6:45 am
reconsider their own cross-selling practices? >> i have no idea. >> i think they well. >> i think the cf pb has had a very large impact and i hope you come around to the view that it's a necessary part of our system of banking and governing. >> thank you. >> mr. chairman, if i could just make one comment, thank you senator schumer for your questions. you made a comment that i am on the human resources and compensation committee. i am not. i just want to make sure that is part of the record. >> okay i would still urge you, is that the committee in charge of the bonuses. >> that's the one that makes the recommendation to the board in those decisions. >> i would urge you to urge everybody on the community to do just what we had asked. >> okay thank you. >> thank you. >> thank you, mr. chairman, i want to say thank you very much for being so responsive to us, for holding this hearing and
6:46 am
thank you for being so generous as you know some of us sent you a letter about the plans from senior executives who were responsible for overseeing this scam. wells fargo provided us with a response yesterday. although we sent a letter to you every came from somebody else in the company which is another example of holding him accountable. i want to focus on the mysterious circumstances around her retirement heard she ran the banking division where the scam occurred for the entire term. she was in charge of all of the
6:47 am
5300 employees that were fired and she oversaw the creation of 2 million fake accounts. in july of this year, before the facts became public, she retired at age 56. you indicated in the letter that she walks away with over $90 million in stocks, stock option and awards. forbes magazine says it's actually about 125 million. here's the key part, according to fortune, if she had been fired instead of retiring, she would have had to forfeit as much as $45 million of that award. the response to our letter confirms that you knew of the scandal before she retired. it said, in this is from your letter, and your management and board were aware of the pending
6:48 am
litigation, investigation and discussion with our regulators related to sales practices when she indicated her decision to retire. is that accurate? what this letter says? were you personally aware that the massive problem had occurred on her watch in july when she announced her retirement? >> i was aware that we were involved in discussions with the city attorney, the occ occ and the cfpb, yes. >> so use had some indication there was a massive problem. >> we had some indication we had 1% of our people who were doing the wrong thing. >> also known as a massive problem. if you knew this, did you consider firing her before she retired? >> at the time she was reporting to our president and chief operating officer -- >> it's a simple question. you knew there was a problem, did you consider firing her -
6:49 am
no. >> seriously? you found out one of your division had created 2 million fake accounts, had fired thousands of employees for improper behavior and had cheated thousands of your own customers and you didn't even wants consider firing her ahead of her retirement? >> in fact, when i looked at at her full body of work, when i looked at the customer loyalty improvement and the customer service -- >> are you sure those were not fake. >> all the work that was done, she chose retirement. i'd also like to make one other comment that you -- >> you never considered firing her. so now, she has apparently retired but is also staying with the firm through the end of the year. in the response to our letter, you say or the person writing it states, she is eligible to be considered for a 2016 annual
6:50 am
incentive award. an incentive award for doing a great job in 2016? that is unbelievable. you are the chairman of the board and the ceo. in those roles, do you think it would be appropriate for her to get another bonus on top of the millions that she has already gotten as a reward for her role in this massive scam. >> the board will consider that. i don't want to prejudice the board -- >> i don't understand the answer. you no, you and your board have already made changes. you've made changes to the compensation scheme for thousands of employees. you have sat here today and talked about that. you have removed sales quotas, i think you told us. you reformed incentives. why cannot be done quick as a wink across the entire bank but
6:51 am
a question about cutting compensation for a highly placed executive who oversaw a massive fraud takes long deliberation. why is that? >> because there is a blurred governance process and we want that to work properly. whether carey was retired or fired, there would be no difference with respect to how the board can deal with that. >> i'm sorry, if she was fired, it is my understanding she would not be entitled to large parts of her compensation. there's a clawback issue. she wouldn't have them to begin with if she got fired but you let her walk out the door with retirement. i don't quite understand. how do you explain this to your own shareholders? >> there is a process that the board goes through and they will do that. they have already met and we will give that -- >> i don't under you act as if
6:52 am
these are strangers. you are able to make changes. why can't you make a change here? >> i am not on the human resources committee of the board. they have their own governance and structure. we want that to proceed in the process in which we have. >> alright so will do this your way. our letter asked a number of questions of clawbacks that other executives pay including your spirit wells fargo's answer to our letter was basically you cut it and the decision would be up to the board. you're the chairman of the board. let me ask it this way. will you personally support clawing back all or part of her pay? >> i am not going to, in any way, way, try to influence or prejudice the board as they
6:53 am
would do their deliberations. >> you have apsley no opinion on the. >> i am not going to -- >> you not going to, juergen is a get out there and lie cheat or steal. >> i have never said and we would never say that our company would go out and do any of those things. we try to do the right thing. >> if you do them you can count on not to stand up and say you shouldn't get your bonus. >> the board has a process -- >> i think you started this by saying tell me what your actions are. they do this and you're not to take a single step to stay shut it. i guess i can ask this again. do you personally support clawing back any or all of the pay to the person in charge of compliance? someone we haven't talked about much today. the person who was supposed to be responsible to make sure that the bank is following the law.
6:54 am
do you have any recommendation about that person? >> i will have the board to their process. >> you will have no recommendation at all, ever, at any point in this process. >> whatever the board accepts, whatever they do, i will accept and support. >> you are not passive here. if you have nothing to do them what are you doing serving as chairman of the board. if you have no opinions on the most massive fraud that has hit this bank since the beginning of time, how can it be that you actually get to continue to collect the paycheck for being chairman of the board. >> first of all i disagree with this being a massive fraud, but secondly the board will do their work and i'm not going to prejudice their work. i will accept whatever they come up with and i will be supportive. >> you accepted all along, as this fraud builds up, this massive fraud, you accepted all of the performance based on the
6:55 am
cross-selling that is at the heart of this. you watch to your own stock go up by more than $200 million based in part on exactly this massive fraud. you got out and pumped it to wall street. you said to wall street, hey, we, we are doing such a great job cross-selling here at wells fargo, you should tell everybody to buy our stock and now you turn around and say i shall remain passive and simply accept what wells fargo wants to do. in 2008 wall street promise changed but it looks like it is business as usual. a giant bank the little guy and the executives line their own pockets. you make it clear, wall street street won't change until we make a change. thank you. >> thank you for appearing today. we have some questions for the record. we have another panel
6:56 am
covering a hearing by local jurisdictions. officials from local law enforcement agencies, including new york city's deputy commissioner for intelligence and counterterrorism, testify before the house homeland security committee at 10:00 a.m. eastern live on c-span3. you can also watch it live on c-span.org or listen live on the c-span radio app. between 2007 and 2015, the price for mylan incorporated ethic and anaphylaxis medication rose by $56 tomated 461% from $317. during the same time, the ceo's conversation rose from approximately $2 million to 19 million dollars.
6:57 am
today she testifies before the house oversight and government reform committee live at 2:00 p.m. eastern live on c-span3. you can also watch it live on c-span.org or listen to it on the c-span radio app. the debate between hillary clinton and donald trump, we will look at cap has presidential debates saturdays on c-span at 8:00 p.m. eastern. the 1976 debate between gerald ford and former georgia governor jimmy carter. >> we were faced with heavy inflation, over 12%. we were faced with potential unemployment. but in the last 24 months, we're turn the economy around. 500,000 americans out of jobs today that were out of work three month's ago. increase in50%
6:58 am
unemployment. >> the 1980 debate with ronald reagan and president jimmy carter. >> when i made my decision to as aall trade with iran result of the taking of our hostages, i announced then and have consistently maintained since then that if the hostages are released safely, that we would make delivery on those items which iran owns. adequate warning there was a threat to our embassy, and we could have done what other embassies did -- either strengthen our security there or remove our personnel. before the kidnap and takeover took place. >> and the debate between former texas governor george w. bush an incumbent vice president al gore. >> i will balance the budget every year. i will pay down the national debt. i will put medicare and social security in a lockbox and protect it. >> i want to take one half of the surplus and dedicate it to
6:59 am
social security, one quarter of the surplus for projects, and send one quarter of the surplus back to people who pay the bills. >> watch has presidential debates saturday night at 8:00 p.m. eastern on c-span. >> today on c-span, "washington journal" is next. a 10 a clock a.m., the house returns for morning speeches. at noon, legislation including a bill to delay the effect of some regulations and another to require the treasury department to report to congress on the total assets of senior iranian political and military leaders. coming up in 45 minutes, congressman becerra, democratic caucus chair on bills before congress, and campaign 2016.
7:00 am
outside should be focused on more real-world problems instead of just increasing knowledge. ♪ "washington journal" for september 21. raising $88 million in august. his total amount of campaign spending available dust bankeo of wells fargo received harsh criticism from senators due to the bank opening fake accounts to meet sales quotas.

17 Views

info Stream Only

Uploaded by TV Archive on