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tv   CEO John Stumpf Testifies on Unauthorized Wells Fargo Accounts  CSPAN  October 2, 2016 1:25pm-5:36pm EDT

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prongs of the reasonable suspicion for the stop and reasonable suspicion they're armed. if those two criteria and conditions are met you have to balance the situation by protecting, according some protection to the safety and life of an individual officer. what the supreme court, it seems to me, didn't want to happen is what i worry will happen with your argument because you've all -- you've given, i don't know how something like this, would ever be taught at the police academy because we want them to obey our decisions and in turn, we've got to give them something that can actually be communicated to them. what you've given is just put the ball back in the air. that seems to me to require an officer whose life could be on the line to make a very fine shaven totality of the
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circumstances before he can even take a step that may very well save a life. and an innocent life at that. and it seems to me there's a danger, or just knocking the supreme court decisions and what they've tried to accomplish, what they tried to balance is knocking it completely off the tracks with your views. >> i think your honor has described it as three pronged, the prong to stop, the prong of armed and the prong of the dangers. that's not what the government is suggesting. the government is suggesting that we have the first prong and second prong and we can just stop. >> let me say this. back to the question that judge duncan asked, followed by judge king -- keenan, armed but dangerous you said the supreme
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court didn't say that, but he just read it to you. mr. compton: it may be the sentence or two preer to that, they use the phrase armed and presently dangerous. they use the conjunctive there i don't think that because they use the term thus in that -- >> over here, can i ask a question. you're conceding, aren't you, that in a nonconcealed carry jurisdiction, whether it's illegal to carry a concealed gun in public if the police say someone -- see someone with a gun, they're dangerous because they're illegally carrying a gun. people who illegally carry guns do so for a nefarious reason. >> that's correct. >> it was correct above the mason dixon line at the time mimms was decided in 19677 wasn't it? mr. compton: yes, your honor. it was. i think that was start of the point that i was not
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articulately making originally was that what judge harris, you've described, would be these illegal activities taking place with the gun and it could be the illegal activity could be the illegal possession of the gun. that's not what we have here under the facts and circumstances of this case and it's not what we have in west virginia in 2016. or 2014 when -- >> guns are illegal, only guns -- only criminals will have guns. that's why mimms was a different case. mr. compton: i agree. i have five seconds left. >> are you complaining? all right work that, we'll ask the clerk of the court to bring them down. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2016]
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red mass wasnnual held in the cathedral of saint matthew the apostle here in washington, d.c. today. it's traditionally held the sunday before the start of the new term u.s. supreme court. it brings together some of the members and other public for blessing, guidance in the administration of justice. here's a look at some who came in this morning.
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♪ ♪ washington journal live every day with news and policy issues that impact you. coming up monday morning, supreme court correspondent laura turley talks about upcoming cases for the new term.
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he will talk about president obama's nominee and his legacy of lower federal courts. david daughter of the natural resources defense council on the recent fourth circuit court hearing on the clean power plant. he will talk about the candidate's position on climate change policy. also national review's david french joins us from nashville to talk about donald trump and hillary clinton's strategies on lifting the work -- winning the white house. live at 7:00 a.m. eastern on monday morning. join the discussion. now democratic and republican strategists on the presidential race and the performances of hillary clinton at donald trump in the first debate. this discussion was part of the annual washington ideas for a cohosted by the atlantic magazine and aspen institute. >> hey guys. this will be a lightning round. we will be doing 13 i think.
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who saw the last debate? ok. it is going to watch the next debate? that is what we're here to talk about. hillary, alex, great to have both of you. what is going to happen? >> day kind of sucks. where the last one between then and lunch. >> they are here because they want to know what we all know. in debate one we saw donald trump talking about hannity and the 400 pound hacker and he was all over the place. --s hillary see this benghazi didn't come up, e-mails didn't come up. i'm interested. you know important people. what you think each side has to do? is he going to beat hillary ? >> i they can -- they can be
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just as dull and uninteresting as the first debate. what is yet to do ? i thought hillary's debate strategy was very sharp, very smart. these are two candidates with 75% unfavorable ratings. they are working to get them up to about 150% unfavorable ratings. however the debate is about is losing. hillary let the debate be about donald trump. i think donald trump let the debate be about donald trump. it is much better if the debate is about the american people in the future. one a debate is about the future, guess what happens. it drives change. the desire for change. 70% think the country is on the wrong track. what does donald trump have to do? make the debate about where hillary clinton would take this country and why that is more of the same and why we can't afford that and why eight more years i
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take the country in the wrong direction. that i think is a debate strategy. hime: what would you say to to get his act together? alex: i don't think you can apply for that job. >> yeah. when you look at donald trump platform, he positions himself as a populist. he has a very traditional republican doctrinaire platform. it is tax cuts for the wealthy, to eliminate the estate tax, ban immigration, anti-choice, anti-lgbt writes, climate change is a hoax. he has had trouble consolidating the republican base because he happens -- has been focused on those sorts of things.
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i think from hillary's perspective, people are talking possibly too much about her personality, her issues and the like. when you pull the american people on the issues, like the ones i just named, you get 60% agreement with hillary's positions than trump's positions. whether or not it ends up being about issues is beyond, but when you think it might be -- for the last two days we've been talking about donald trump's treatment of women and if he is fat shaming girls. i have a 17-year-old daughter and i'm horrified by this conversation. donald trump must have a man mirror. i look fantastic today. [laughter] that is a man mirror. i would rather talk about it in hillary clinton other talk about, actually, the affordable care act equalized health care
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for women. childcare is an issue. instead we talk about whether girls are too fat. it is appalling. steve: are you surprised the moderator, lester holt, did you expect e-mails, goldman sachs in benghazi to come up in future rounds? how do you think that will -- hilary: i am sure they will. he objectively lost every opportunity to push on her. that't think goldman sachs he can attack her for her wealth, i don't think so. [laughter] e-mails, i thought her answer was great. it was short and sweet. he did not hit much beyond that. problems, and i would be cure on alex's view, and i can't believe this guys helping trump. i love him so much. close friends for a long time.
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steve: do you remain friends? alex: we will see about another few weeks. hilary: with donald trump there are 1000 things to go at. with hillary there is sort of one. alex: i have a longer list. hilary: we had one issue with e-mails playing over a thousand times. we have a thousand issues playing once. imagine the -- steve: let me get alex a chance to talk about the targets of hillary. you wrote a great line. i want to ask a you square all this. we're all friends. you wrote, if you're angry and alone you are more likely to be a trump odor. if you have to declare your support at your child's third-grade class picnic if becoming embarrassing. you know embracing donald trump and overcoming that difficulty and embarrassment. tell us about the journey and
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about the target you think hillary represents. alex: isn't that inconvenient when you write something, it last forever. you have evolved. alex: my candidates lost in the primary. donald trump won. as republicans we need to learn something from that. at the end of the day i have a binary choice. if someone can tell me this election is not urgent, that it does not matter, that we can let the country continued to drift along in the same direction for four or eight more years, i might consider other options. there are a lot of republicans willing to let this election pass. i don't think we can do that because i do think it matters. i do think that $20 trillion debt, a world that seems to be dissolving, the center does not threathe metastasizing
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coming to our shores increasingly. and we seem to be unable to do that. a weaker country, the less optimistic country. we are losing faith in the future and i don't become europe. ison't want to become -- it too far down the road to turn back. my great hope and belief is that donald trump will be the -- not necessarily the future of the republican party as and this is the beginning of a new direction, but i do hope is the turnaround ceo who comes in here, cleans up the books, fires the people who need to be fired, and he is good at that. then stopped our competitors from kicking sand in our face. steve: i have to go a little deeper on that one. alex: i think the idea of bringing a lot of business people in the government and
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cleaning out the establishment in both parties -- i think it's a good idea. [laughter] alex: i work for the super pac. hilary: do you think once donald trump is controlling the government people pay taxes to it? alex: i think anyone to bring up -- [applause] alex: i am sure you pay more taxes than you have to. hilary: i'm sure i pay more taxes than donald trump. alex: i don't think you do. -- that's audience great idea to pay more taxes than you are required to by law. since we are going to talk about corruption, why do we talk about the corrupt empire of the clinton foundation, the clinton global initiative, speeches? form, what with the targets the of hillary clinton's? hillary said there was one. i think --
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alex: loading on more negatives onto hillary clinton about our dishonesty, which the american people have made judgment about and rightly so, about her lack of character in that sense. the self-serving aspect of her quest for political power. i don't think you can burn down the same house twice. if you keep pouring -- making those arguments, you may hold her where she is but i don't think that necessarily locks the election. she is more of the same. nothing will change. don't we deserve something a little better than this? should we take a shot at opening up this economy, not closing it? america'se economy -- economy instead of washington's? steve: i would ask you one the question each. one of the things i have been hearing more and more is that because of bernie sanders the challenge, the things that come
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up, the terrain in the country seems to have changed. a lot of people think they know hillary clinton. can hillary be hillary if she wins? will she be able to maintain the level of international engagement? what has happened with bernie sanders challenge and whatnot changed that? i'm interested if hillary can be hillary. years sher 15 or 20 was one of the top two or three most admired women in the world. it was only when she actually sought political power for no,elf that all of a sudden no, go away. we don't like you anymore. [applause] she hasn't changed. i do think the perception of whether or not it is ok for her to be unapologetically and a pantsuit seeking power -- let me finish.
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then you can trash me. has a kind of broad-based optimistic view of our engagement in the world. alex said the country is feeling dismal. the most optimistic population in the country are 50-30-year-olds. -- 15-30-year-olds. if they want to measure ourselves by the way the children feel, we should feel we are on the right track. that doesn't mean there isn't a lot to fix whether or there aren't a lot of people left behind, but there is a significant number of people -- opportunities that hillary has thought about engaging in and doing that will be useful. the other interesting thing is -- alex: you two should have a show together. hilary: most of mainstream republicans don't like donald trump, and hillary clinton was
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pretty well-liked by republicans which he served in the senate. i think you will find in president clinton somebody that republicans want to work with, want to get things done -- alex: is bill coming back? steve: last question for you. we have paul ryan open this morning and speaker ryan was here. a lot of policy details when on and you cannot help but think, wow, their strategy is just a hold out. is the republican party, say it loses under donald trump, or let's say it wins, can you imagine republican party being something paul ryan might be able to ride in four years or will it break up? what is going to happen in your party? alex: in many ways we are healthier than the democratic party. we just -- the party establishment to stick a wonderful shellacking. we got our brains beat out. we put up 16 of our best and
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brightest, and an outsider like donald trump mows us down like a weed wacker. that is how hollow empty our party was. when you to learn something from that. you are seeing a new generation my paul ryan come in and talk about freedom and republican principles in a different way. and offering different arguments. should we keep doing things the old way? or should we open up this economy for everybody? should we grow the economy naturally, bottom-up, organically? should we grow it top-down, politically and artificially from washington? should be open of education or keep it closed the way it is? do we want two great parents down the street being barack and michelle obama. why don't we give every american that choice? democrats can go there. they are the top down, closed party.
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there is a better republican party coming. i think he will be working with and will surround and support him. neither way this election we are going to need a republican party that actually can express its police have been the country in a better place. democrats have nothing but the old-time argument, the old closed system, factory-like government. hilary: newt gingrich will be in charge. rudy giuliani and newt gingrich.
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>> president making appointments to the supreme court of the united states will be president donald trump. >> with hillary clinton in the white house, the rest of the world will never forget why they have looked up to the united states of america. >> c-span's campaign 2016 continues on the road to the white house with a vice presidential debate between republican governor mike pence and democratic senator tim kaine tuesday night, live from longwood university in virginia.
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beginning at 7:30 p.m. eastern with a preview of the debate. then at 8:30, the briefing for the audience. at 9:00 p.m., live coverage of the debate followed by the viewer reaction. the 2016 vice presidential debate. watch live on c-span, watch live anytime on-demand at c-span.org, and listen live on the free c-span radio lab. --app. >> on thursday wells fargo's ceo and share john stumpf testified. he apologized for the sales practices of his company, which involved the creation of an estimated 2 million fraudulent accounts without customer's permission. he provided an update on new actions being taken by his company to correct the situation. this is just over four hours. [indistinct chatter]
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[gavel] chairman hensarling: the meeting will come to order. without objection the chair will call a recess of the committee at any time. the hearing is entitled holding wall street accountable. investigating wells fargo opening of unauthorized customer accounts. i now recognize myself for 5 minutes to give an opening statement. we're here today because millions of americans were ripped off by their bank in seemingly let down by their government. fraud is fraud. theft is theft. what happened at wells fargo over the course of many years cannot be described any other way. in fact, a whole host of federal laws were potentially violated. including the truth in savings act, the fair credit reporting act, the truth in lending act, the electronic funds transfer act, the securities and exchange act of 1933, the securities exchange act of 1934. and the sarbanes-oxley act of 2002. all charges must be thoroughly investigated and all culpable
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individuals must be held accountable. while the fine wells fargo will pay, roughly 3% of the bank's second quarterly profits, is tiny by wall street standards, the harm caused to consumers and employees is not. to the factory worker who just had her credit score dinged because of the fraud wells fargo perpetrated, the cost is big. to the waiter at the local diner living paycheck to paycheck who had to pay fees associated with fraudulent account, the cost is big. to the wells fargo employee with kids to support, who lost their job because she refused to participate in the scheme, the cost is big. we will make sure those who are betrayed by wells fargo are not forgotten. it is on their behalf that our committee has launched an in-depth investigation. mr. stumpf of your bank's activities. let me be clear, today's hearing is just the beginning of our investigation.
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it is not the end. as i speak our committee is gathering thousands of pages of records and documents on both wells fargo and the relevant federal regulators. in the coming weeks we will be questioning wells fargo executives. if necessary, i will not hesitate to issue subpoenas because we will do what is necessary to get to the bottom of the matter. mr. stumpf, we don't yet know what you knew when you knew it and what you chose to do about it. but we know it happened on your watch and we hold you accountable for the answers to why this happened. at last week's senate hearing you were uncertain of many matters. in the intervening days we trust that you have had a chance to refresh your recollection to review your records, therefore we hope and expect you'll provide more complete answers today. we need to know exactly when and how you and other executives at
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wells fargo found out about this endemic fraud. we need to know today what you directed others to do about it when you found out. we need to know today who in management is being held accountable. we already know that as far back as 2009 former wells fargo employees started filing wrongful termination lawsuits alleging fraudulent accounts and improper sales tactics were taking place. approximately 5,300 wells fargo employees were fired over a five-year period for these improper sales practices, and perhaps as many as two million unauthorized accounts were fraudulently opened. based on these facts, we will also be asking serious questions of our regulators in the course of this investigation. if o.c.c. had examiners on site at wells fargo during the time when these fraudulent accounts were opened, and the cfpb was conducting regular examinations
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why did it seemingly take the , l.a. times to expose the fraud? once exposed why did it take almost 18 months for the cfpb to initiate a supervisory review? today i don't know the answers to the questions. perhaps our federal regulators deserve a pat on the back, but perhaps they deserve a swift kick on the backside. we'll find out which. we launched this investigation ultimately because it is both our job to hold wall street and washington accountable and protect consumers from the excesses of both. true consumer protection is the preservation of competitive, innovative free markets that are vigorously policed for fraud and deception. mr. stumpf, i know that wells fargo represents an iconic brand. i know that your bank has a very rich and proud heritage. i also know that you have hundreds of thousands of good employees who had nothing to do
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with this sordid affair. who do good work in building their communities. but this sordid affair does remind me why i trust markets and i do not trust individual companies. mr. stumpf, i regrettably have a mortgage with your bank. i wish i didn't. if i was in the position to pay it off, i would. because you have broken my trust and you have broken the trust of millions of others and it will be a long, long time to earn that trust back. i now recognize the ranking member for 5 minutes. ms. waters: thank you very much, mr. chairman. i thank you for agreeing to hold this hearing so that we can examine the fraudulent activity that occurred at wells fargo. mr. stumpf, the word games stop today. borrowing a customer's money without permission is not a sales practice violation, it's stealing. using customer social security
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numbers to open credit cards without their consent is not wrongful sales behavior, it is identity theft. let's call it what it really is. some of the most egregious fraud we have seen since the foreclosure crisis. for at least five years wells fargo pushed aggressive sales goals for low-wage employees that were so unrealistic and so unattainable that some felt pressured to commit crimes just to keep their jobs. it may have happened over two million times. two million times. in fact, we have two former wells fargo workers, julie miller and ruth landranverde today in the audience. they have borne the brunt of your choices. meanwhile, your senior management, board of directors encouraged, even bragged about behavior amounting to widespread fraud.
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today i hope you came prepared to explain both how and why. while you personally told me you were prepared to take full responsibility, we have seen your testimony in front of the senate banking committee and there are still answers that need to be given. the testimony that we have witnessed in the senate trying to explain what happened is not satisfactory. and we still do not have all of the information we need to understand how this happened, when the sales culture turned, and who knew about it and when. despite your statements to the contrary, any legitimate investigation shows that executives at wells fargo knew, either knew or should have known much earlier than 2013 that these practices were taking place. i think that executive conduct at wells fargo deserves a thorough investigation by the department of justice.
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someone is responsible for the broken culture that led to this behavior needs to be held responsible. not the lower-level employees that have been left to bear the weight of the mistakes that have been made. this issue is personal for me. the size of wells fargo's footprint in california means that many if not most of the employees and customers were victimized by this are my constituents and neighbors. they don't deserve to have their trust violated by wells fargo. no one did. i'm still receiving calls in my office complaining about wells fargo now and one caller described how he went into the bank, complained about excessive accounts that he knew nothing about, the employees called the police on him and he was arrested. and yet violating the public's trust to drive up profits is
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exactly what wells fargo did. in the senate hearing, it was revealed that even you benefit mr. stumpf, your own bank account benefit interested that deception. i know that you said you take responsibility for these practices. and that you're conducting your own investigation. and that you and other managers are forgoing some of your compensation. that is welcomed. let me be clear. that's not enough. unfortunately, this is not the first time we have seen abusive practices at wells fargo. we thought that you were working on these practices six years ago. your mortgage executives said right here in this very chair, reassuring my subcommittee that you were committed to fixing wells fargo's forgery of mortgage documents. yet we haven't seen problem fixed. we have just seen it migrate to another part of your bank. i hope today we can hear from you, mr. stumpf, because the
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american public deserves to know what happened at wells fargo and why customers are ripped off so blatantly and repeatedly. you can also rest assured that this is just the beginning and that they will be demanding more information until we get to the bottom of this. of course i urge your cooperation and i must tell you that i have known you for a while. i have communicated with you. at times you have been very helpful to my constituents. so i'm very disappointed. we must get to the bottom of this. and i want to be able to receive the documents and information that we requested from you. i'm told they have been refused. i think it is your best interest to come forward with those documents. mr. chairman, i yield back the balance of my time. chairman hensarling: the gentlelady yields back. today we'll receive the testimony of mr. john stumpf, who is the chairman and c.e.o. of wells fargo and company. mr. stumpf has held a number of senior management positions at wells and its predecessors where
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he has worked for 34 years. mr. stumpf, would you please rise and raise your right hand. do you solemnly swear or affirm that the testimony you are about to give will be the truth, the whole truth, and nothing but the truth? thank you, please be seated. let the record reflect that the witness has answered in the affirmative. without objection, the witness' written statement will be made part of the record. mr. stumpf, you are now recognized for 5 minutes to give an oral presentation of your testimony. mr. stumpf: chairman hensarling, ranking member waters, members of the committee, thank you for inviting me to be with you today. i'm the chairman and chief executive officer of wells fargo, where i have worked for nearly 35 years. it is my privilege to lead this company which was founded over 164 years ago and played a vital role in the financial history and development of our country.
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i am deeply sorry that we failed to fulfill our responsibility to our customers, to our team members, and to the american public. i am fully accountable for all unethical sales practices in our retail banking business, and i'm fully committed to fixing this issue, strengthening our culture, and taking the necessary steps and actions to restore our customer's trust. we should have done more sooner. but we will not stop working until we get this right. this morning i will update you on a number of steps taken to address our retail bank sales practices problem and make things right for customers who may have been harmed. at wells fargo we have new leadership in our retail banking business focused on ensuring that all team members in our retail bank provide the best service to our customers.
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secondly, we recently announced the elimination of product sales goals for everyone in retail banking effective january 1. today i am announcing that we're accelerating this process and ending all product sales goals effective at the end of this week. we want to make sure nothing gets in the way of doing what is right for our customers. also, we now send out to all customers a confirmation email approximately one hour after opening a saving or checking account and an acknowledgement letter after a customer applies for a credit card. we're also making it right for customers. we have begun contacting the customers with open credit cards identified by pricewaterhousecoopers to determine whether they wanted these credit cards. it's early in the process, but so far we have reached more than
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20,000 of these customers and talked to them about their credit card accounts. fewer than 25% have told us they either did not apply for their card or they cannot recall whether they applied or not for the card. for those customers who want the card, the card will remain open. for any customer who does not want their card, we're closing the account and informing the credit bureaus. any fees these customers may have paid already has been refunded and we're developing a process to deal with any other forms of harm. for deposit customers, we have refunded fees and are contacting every single one of them across the country to ensure that we have a full understanding of every customer affected by this problem. in addition, we're voluntarily expanding the scope of the reviews we have done to go back in time to 2010 and 2009.
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while these issues we will discuss today are deeply disappointing, and will take time to repair, they do not represent the true culture and nature of wells fargo. some have suggested the problem was cross selling. but that is not the case. at its core cross selling is all about deepening customer household relationships with products they want, they use, and they value. it is not about improper sales practices used to create unwanted accounts. that's not good for our customers and not good for wells fargo. if we take care of our customers, they will deepen their relationships with us and trust us more with their business. that is good for customers who benefit from lower costs we pass on, and that is cross selling done the right way. in closing, i'd like to talk about my commitment to accountability. when i say i am accountable, i am referring to the actions our
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board took at my recommendation to forfeit the stock awards that are the largest part of my compensation for the past 3 years and any bonus this year, as well as my agreement to work without salary until the board completes its investigation. i respect and accept the board's decision. when i when i say i'm accountable, i also mean accountable for leading wells fargo as the company restores the trust of customers, team members, and investors. thank you for this opportunity to testify today. chairman hensarling: the chair now yields himself five minutes for questions. mr. stumpf, to the american people this kind of feels like deja vu all over again. some institution is found engaging in terrible activities. there is a headline, a fine, and yet no one seems to be held accountable. i mean let's face it, the fine that's been assessed to you is probably a rounding error,
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again, in your quarterly earnings report. so my question is, you know, with almost perhaps as many as two million fraudulent accounts over the course of five years, 5,000 dismissed employees, it's just beyond credibility that somebody up the food chain didn't either order this, condone it, or turn a blind eye to it. my question to you is who is the highest ranking official at wells, who is the highest person in the management team who has been dismissed because of these activities? mr. stumpf: thank you, mr. chairman, for that question. as you know within, or maybe you don't know, within the 5,300, there were managers and managers and managers. we're doing a full review, chairman hensarling: were these branch managers? mr. stumpf: yes, about 10% or more. chairman hensarling: nobody above the branch manager level? mr. stumpf: there was managers of the branch manager, and
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manager of those within the line of business. but we're doing a full review of other control functions within the company. that process has already begun. the board is going to be involved. management will be involved. as i mentioned, chairman chairman hensarling: will your own internal investigation be complete to hold management accountable? mr. stumpf: i can't give you a specific time frame, mr. chairman, but i will tell you, we're moving in that correctly -- directly and we're going to get to the bottom of this. chairman hensarling: anybody at the bank holding company level being held accountable? mr. stumpf: people will be reviewed across the board at holding company, activities, corporate activities. anybody who is involved in promoting or supporting this behavior -- chairman hensarling: isn't it true, mr. stumpf, in the settlement agreement wells entered into with the l.a. city's attorneys office, o.c.c.,
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no individual admits guilt, is that correct? is that part of the settlement agreement? mr. stumpf: i believe we either did not admit or deny. so the facts there are the facts that we agreed to. chairman hensarling: mr. stumpf, let's go back to 2011, which i think is the first year we know for a fact that these fraudulent activities were taking place. the records that i believe your bank has shared with us show that 939 employees were terminated from the retail banking sector for improper sales practice in that year. does that comport with your memory? mr. stumpf: yes, it does, mr. chairman. chairman hensarling: in 2011, isn't it true that wells fargo entered into a consent order with the federal reserve that required wells to cease and desist from certain practices in the mortgage lending department? and that you paid an $85 million
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civil penalty. is that true? mr. stumpf: mr. chairman, that's true. that was in a different business area but that is a true statement. chairman hensarling: in a different business area, but i will read from the consent order. "wells fargo's internal controls were not adequate to protect and prevent instances in order to meet sales performance standards and receive competitive compensation altered or falsified income documents, and inflated perspective borrowers' income to qualify them for loans they would not otherwise have been qualified to receive." this sounds eerily like the retail banking division. also as i understand it the fed required wells fargo to submit a plan to investigate and to change policies and procedures. so, i think you testified on the senate side that you were not personally aware of the problems in the retail banking division until 2013.
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surely you are aware of the problems in the mortgage lending division in 2011, correct? mr. stumpf: that is correct. chairman, mr. chairman, we shut that division down. that was even shut down -- chairman hensarling: if you saw the problem in one area of the business, why didn't you thoroughly investigate in the other? mr. stumpf: there is no question, mr. chairman, we should have done more sooner. chairman hensarling: it just seems, mr. stumpf, five years later your bank is being fined for exactly the same transaction. again, it just feels like deja vu all over again. and i hope and trust, but please tell me that these fines are not simply a cost of doing business for wells. mr. stumpf: mr. chairman, it's not a cost of doing business. this is a serious trust issue with our customer. but i also want to say there's 268,000 people who came to work this morning at wells fargo.
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trying to do their very best to serve customers and they do a wonderful every day. and i don't want our culture to be defined by these mistakes. we take accountability. chairman hensarling: i understand that, mr. stumpf. but it appears to be a little late and particularly when you get caught doing it five years ago, you get caught doing it once again, somebody has to be held accountable. i now yield to the ranking member. ms. waters: thank you very much. mr. stumpf, you said repeatedly you were not aware of this widespread fraud in your bank until late in 2013. and it appears that there were activities going on that indicates you may have known much earlier than that. for example, in 2007, just months after you became c.e.o., the sales quality manual for the community banking division was updated with your executive
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guidance. as the manual states, "that sales guide reminded employees of what should have been obvious, that they needed to obtain a customer's consent before opening an account." and so am i to understand that you discovered that there was something going on and there was a need for you to do this? that manual also said that sales practices that showed, "questionable activity" would be sent via high priority to bank executives. so it appears that you knew something in 2007. that unauthorized accounts were a big enough problem that you had to correct your employee manual. and as early as 2008, i have documents from court filings showing your employees were contacting your ethics hotline reporting bank fraud and complaining to managers over unauthorized accounts. so it looks as if you certainly
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knew in 2008. what's more, i have here a consent order with the fed from 2011 that puts your company on watch for sales quotas and compensation schemes that pushed employees to break the law. does this sound familiar? mr. stumpf: ranking member, i acknowledge that we had a 2011 order from the federal reserve. and i think we have always known any sales organization you are going to have to be diligent because not every team member will do everything right every day. so we have controls built in. we have ethics lines. and i knew and i still know you put people to work every day and mistakes will happen. it was not until 2013 when i learned that this problem had been growing. it had been more prevalent. and a certain part of the country which happens to be in
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the wonderful part of california which you live. so these are things we have been working on. all of our strategies around training team members, which get two weeks of classroom training before they go out into a branch, is about doing things right, about ethics. i would also want to remind the committee that there are the vast majority of our people who had the same opportunities, the same training, the same goals who did it right every day for our customers. in fact, our customer loyalty scores now are the highest they have ever been in our company's history. ms. waters: let me just point out some other activities that should sound familiar to you. while you were under the consent order for the mortgage arm of wells fargo, this fraud was surging in the retail arm of wells fargo.
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but you didn't connect the dots on these high-level trends across the bank. do you or didn't you know in 2011 that perhaps your sales incentives were driving this fraud? mr. stumpf: congresswoman, i knew that, at least i know today, that we should have done more sooner, but maybe, not only maybe, some of our people, again it's 1%, but that's a big number for a big organization. any time we have 100,000 people in our branch network, and if 800 people for whatever reason either misunderstood or used this as a way to be break our code of ethics and do something wrong for our customer and something wrong for us, that's why we're removing sales goals. they'll be gone as of this weekend. we don't even think they are an important requirement for us to continue to grow.
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ms. waters: some people assume that you changed your customer agreement to add force arbitration clauses for checking accounts and these clauses proved to be incredibly helpful when you use them to dismiss multiple customer lawsuits. is that true? mr. stumpf: that's not true. i think arbitration does make sense. but in this case for any customer that might have been harmed in this situation we're also paying for a mediation process so they have a mediator. ms. waters: thank you very much. my time is up. i'll get to this later on. if i can, thank you. yield back. chairman hensarling: time of the gentlelady has expired. the chair now recognizes the gentleman from texas, mr. neugebauer, chairman of our financial institution subcommittee. mr. neugebauer: thank you, mr. chairman. you serve as both the chairman and the c.e.o. of the wells
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fargo, is that correct? mr. stumpf: that is correct. mr. neugebauer: section 972 of dodd-frank requires securities, why the issuer has chosen the same person to serve as the board chairman and c.e.o. this year wells states that your dual role is the result of your extensive experience and knowledge regarding the company and provides the most efficient leadership of the board and the company. mr. stumpf, do you think it's a good idea for the chairman and to be the chairman of the board and ceo? mr. stumpf: thank you for that question. in our company we have 14 outside directors. we have a lead director. all directors are new york stock exchange, independent by their standards. i'm not a member of any standing committee of that board.
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the independent directors and the lead director help set the agenda for the boards. they always have meetings that are executive session without me. and as you probably read about what happened this weekend because we filed an 8-k yesterday about actions that they took as an independent board and i was not part of that. so the board acts quite independently. mr. neugebauer: in these current situation is is that you, you're recused yourself from the board decisions on this situation? mr. stumpf: congressman, you're right. i have either recused or not been invited. i'm not part of that. and i serve at the pleasure of the board. mr. neugebauer: give me a good idea of how your board's structure, but the original question was, do you think that's a good idea for the c.e.o. to be also the chairman? the board and stock
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shareholders, customers be better served if there was some separation in that area? mr. stumpf: thank you. for our company i believe we have the right structure. but again i serve at the will of the board and the board can make a decision on that. mr. neugebauer: mr. stumpf, you testified that you learned of these violations some time in 2013. when did you inform the board that this was an issue? mr. stumpf: the board had high level ethics, line, comments or questions, or high level kinds of activities around people who left the company involuntarily. terminations. really through the 2011 through 2013 time frame. after we learned -
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mr. neugebauer: the board was having discussions as early as 2011 about this? mr. stumpf: i was saying the board from 2011 to 2013 would get reports at a committee level , at a high level about ethics lines, requests, or information at maybe at the company level. mr. stumpf: you didn't find out about it until 2013? mr. stumpf: in 2013, i became aware there was an issue in the southwestern part of the country and by 2014, then, this was late in the year, by 2014, we started to provide more information to more committees of the board. by 2015 the board had a -- the board had a complete report on that issue. mr. neugebauer: as chairman of the board, c.e.o., when did you tell the board we have a problem? mr. stumpf: it was in 2015 that
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we had a full report. again, as i said in my testimony to the senate and here today, 2014 we were starting to get more granular information that this was a risk area for the company to focus on. mr. neugebauer: did you ever disclose this issue on a 10-k filing? mr. stumpf: we have -- our 10-k, all of our k or q filings are facts and circumstances what we knew at the time. as recently as our second quarter q this year, when we use our disclosure teams and compliance teams to look at this issue, the facts and circumstances, we believe, were not material. mr. neugebauer: i'm not for congress setting the corporate structure, but i do, setting the corporate structure, but do i think in this particular situation whether the company
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would have been better served with those roles being separated. i yield back. chairman hensarling: the chair now recognizes the gentlelady from new york, miss maloney, ranking member of our capital markets subcommittee. mrs. maloney: mr. stumpf, we know now that whistle blowers first contacted the consumer financial control board about the fraud at wells fargo in mid 2013. and you said in your senate hearings last week that you first found out about the fake accounts in late 2013. and the l.a. times article about the scandal was published in december, 21, 2013. i have right here your form for filing which i'd like to submit to the record. chairman hensarling: without objection. mrs. maloney: that shows on october 30, 2013, you sold $13
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million worth of wells fargo stock on the open market. that is by far the largest open market sale of wells fargo stock that you made in your 9 years as c.e.o. so my question is, did you dump $13 million of wells fargo stock, which you did through your family trust, right after you found out that your bank had been fraudulently opening hundreds of thousands of scam accounts ripping off your customers? mr. stumpf: thank you for the question. first of all, the vast majority of our people go to work every day - mrs. maloney: that's not my question. excuse me. my question was did you dump the stock after you found out about the fraudulent accounts?
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because it seems that the timing is very, very suspicious and it raises serious questions. mr. stumpf: i did not sell shares at the time because anything related to - mrs. maloney: the form 4 said you sold the shares. mr. stumpf: today i hold 4 times as many shares as i'm required. mrs. maloney: did you sell the shares or not? mr. stumpf: i sold the shares and sold them with proper approvals with no view about anything that was going on with sales practices or anything else. mrs. maloney: it seems very, very suspicious that your largest sale was right after your $1.8 trillion bank was turned into a school for scoundrels. you acknowledge that your bank fired over 5,300 people who got caught willfully defrauding your customers. and a recent lawsuit allegation you fired even more people because they refused to willfully defraud customers. and then you blame the low-level
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people. you fire them. you make profits. then you dump the stock. i just have to say that it seems that when you found out about the fake accounts, instead of helping your customers, you first helped yourself. so moving right along to the next question. mr. stumpf, you said that wells fargo is conducting a review of all accounts going back to 2009 in order to identify any scam accounts. but last week in the senate hearings you were asked if you would extend the review period to before 2009. and you refused to commit to extending the review period back to even earlier. so if you were presented with
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hardcore evidence that wells was engaged in some of these practices, these illegal scams prior to 2009, would you change your mind about extending the review? mr. stumpf: thank you for that question. we have agreed with our regulators to go back to 2011. we voluntarily said last week that we'll go back to 2010 and 2009. i told our team to leave no stone unturned. and if we find a situation where a customer is harmed that goes back prior to that, we will make it right for that customer. mrs. maloney: thank you. because i have the evidence right here. and i'd like to submit for the record a court case in montana in which six wells fargo employees were fired. among other things, ordering debit cards for customers without their permission, which is clearly illegal. and according to the court documents, these illegal sales
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go back to 2007. chairman hensarling: without objection. mrs. maloney: now we have evidence of illegal sales practices going back to 2007. will you agree to extend the review period back to 2007 to cover this evidence that we're submitting today? mr. stumpf: again, congresswoman, we're going to go back to 2009. if we can find -- we're going to contact every customer. mrs. maloney: this is evidence that it went back to 2007. my question is, we thank you for going back to 2009. my question is we have clear evidence that it goes back to 2007. will you live up to your commitment of helping your customers that were defrauded with clear evidence back to 2007? mr. stumpf: we will go back. if we find any evidence of any customer that was harmed to 2007 through our review through 2009, we will take care of each customer. chairman hensarling: the time of the gentlelady has expired. the chair now recognizes the
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gentleman from north carolina, mr. mchenry, vice chairman of our committee. mr. mchenry: thank you, mr. chairman. i have the honor of representing the suburbs of charlotte, north carolina. north carolina had an incredible banking culture over decades. yet in charlotte, first union, homegrown bank, great reputation, went through challenging times in the economic crisis as you well know. before that time, they teamed up with a bank based in winston-salem, wachovia. and as you know in acquiring what was then called wachovia, which is first union and wachovia, the pitch was that your culture from california was very similar to this north carolina culture. banking culture. as you well know, john grimes
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midland, a great chairman of wachovia, imbued in wachovia this culture that a banker is a civil servant as well. there is this obligation to society they have in their community. community. you eulegized him. pay tribute to that culture. i want to think about that culture. because what is so sad to me is that pitch of culture doesn't conform with my experience with my constituents in north carolina. it doesn't conform what i know about first union. because what is so sad to me is that pitch of culture doesn't conform with my experience with my constituents in north carolina. it doesn't conform what i know about first union. what i know about wachovia. and the cultural pitch that you had in acquiring them. what's sad to me is the impact of this on them and those employees you have in north carolina. i wanted to look at your code of conduct. let's look at your code of ethics and business conduct.
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you said in your message as c.e.o., we're all responsible for maintaining the highest possible ethical standards and how we conduct our business and serve our customers. the code of ethics says, our code applies to all team members, including officers, directors of wells fargo and company and its subsidiaries. it also says we're all accountable for complying with the code as well as all company policies and applicable laws. finally, critical that all team members have a solid understanding of our code of ethics and business conduct and understanding that noncompliance with the policy may result in disciplinary action up to and including termination of employment. you clearly have failed.
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you clearly failed in your own ethical standards internally. you have broken and your company's broken long-standing law. you have broken long-standing ethical standards that you have within your company. this has nothing to do with the debate about dodd-frank or anything else. you have broken a long-standing law and you have defrauded your customers. how can you rebuild trust? how can you rebuild trust? and how can you get through this
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thing? what standards are you holding yourself to that sends a message to the rest of these folks in your organization that look to you for leadership and guidance? what are you doing to restore that? mr. stumpf: thank you, congressman. the culture of the company is strong. i don't -- i know -- mr. mchenry: it's really hard to say that when you are before congress the second time and behind you was all the settlements you had for problematic relationships you had with your customers by taking their money. right. counter to the law, counter to your ethical standards. it's great to say you have a strong culture, but why are we here today? how are you addressing it? mr. stumpf: with respect to culture, we have 268,000 people who have made their life's work and careers out of helping customers. there's people today who are -- mr. mchenry: that's why i raise this the way i do. by severe disappointment. severe disappointment. that's all. you broke the law. we make the law in congress. this is not new stuff that all of a sudden congress changed some rules. and you can't have your employees create fake accounts and take fees from customers unknowingly, unwittingly. that is -- there is never in human history when that has been an ethical ok. the culture's ok, this seems to me that you're just tone deaf to this. the final thing you need to think about and your board of directors need to think about is
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this. the impact you have is not simply on your institution but the wider conversation on how my consumers can access credit. and the implications on what you have done and your leadership has done has this broader societal impact that is very negative. chairman hensarling: time of the gentleman has expired. the chair now recognizes the gentlelady from new york, ms. velazquez. ms. velazquez: thank you, mr. chairman. mr. stumpf, now that you were on the senate side and you testified and the senators asked you whether or not the 5,300 wells fargo employees that were fired for their misconduct, how many of them were fired because they failed to meet sales quotas? at that time you didn't know. now that a week has passed and you have had a chance to consult your records and speak to your staff, are you prepared to tell us how many employees were fired
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for failing to meet their sales roles? mr. stumpf: thank you, congresswoman. of the 5,300, which is about 1,000 people per year out of our team, and i don't want to minimize it, it was 1%, about 100,000 people in our branch at any one time, all of those through our investigation were terminated because of their unethical behaviors.
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we found them. we decided we can't have them here. they are not consistent with our culture and ethics. ms. velazquez: out of that 5,300 employees, were there any employee that was fired because they didn't meet their sales quota? mr. stumpf: my understanding -- ms. velazquez: not the 5,300. outside of that. mr. stumpf: my understanding is that people should not be fired, terminated, for missing sales goals. i'm not saying it didn't happen. ms. velazquez: how should i trust that is the case? mr. stumpf: we're doing a review of whatever, whoever might have been terminated for that. ms. velazquez: if your review shows that there were employees
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that were fired because they didn't meet their sales quota, would you be rehiring those individuals? mr. stumpf: first of all, we don't have sales quotas, we have goals. and there's other goals that our people also have as part of their performance management. we're reviewing that. we're going to try to make it right for every team member. ms. velazquez: mr. stumpf, i am sure you are aware that wells fargo is the most active s.b.a. 7-a lender in the country. mr. stumpf: correct.
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ms. velazquez: as ranking member of the house small business committee, i am very concerned that illegal practices under covered by the cfpb on the consumer side may have spread to the small business side. where your frontline employees under similar pressure to cross sale products through the bank's s.b.a. 7-a clients? mr. stumpf: first of all, thank you, congresswoman. we're the nation's largest small
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business lender. i am very proud that we do a lot of work helping men and women across this country start businesses and so forth. that's a very different business. and i don't know of any product sales goals which, again, we have eliminated in our retail bank, in that business. a very different business. ms. velazquez: the 7-a program is just a fraction of your overall small business lending portfolio. can you provide us today with assurances that these illegal practices not affect any of your small business clients at wells fargo? mr. stumpf: i don't have that information in front of me. i'm happy to work with my staff, team, get back to your staff. as best i can. ms. velazquez: given the fact that you lack the leadership to give us assurances that this was not the case, i'll be writing to the s.b.a. administrator so that they could review all the 7-a portfolio to make sure that we protected small businesses as well as taxpayers.
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my next question to you is, now that you have decided to end product sales goals and financial rewards, have you considered raising the salaries of your retail banking employees in order to make up for this loss in compensation? mr. stumpf: yes. we're working on a new incentive program. they'll be out by the first of the year. and we want to make sure that our team members are totally aligned with our customers. we want to make sure that compensation for our team, again, through the vast majority do it right, are not hurt in this process. ms. velazquez: it's very difficult for any person in this country to live with a $25,000 salary. chairman hensarling: the time of the gentlelady has expired. the chair now recognizes the gentleman from new jersey, mr. garrett, chairman of our capital markets subcommittee. mr. garrett: thank you, mr. chairman. mr. stumpf, let me start by making a few observations then i'll end with a couple questions. first, foremost, i find it as we all do extraordinarily troubling that as i look through the
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history, timeline of the scandal, time line that stretches over years. you see as has already been testified to, 5,000 wells fargo employees were dismissed for their involvement in opening unauthorized accounts. was also interesting and troubling is the firings did not happen at one time. my understanding as we have heard already today that roughly 1,000 employees per year. 11, 12, 13, 14, 15. extraordinary how wells fargo did not manage to actively move to stop those activities after the first 100 or 500. 750, or 1,000 employees were fired is beyond me. the fact that it was allowed to go on and on and on for years is apparently a failure of corporate governance and a failure, quite candidly, of your management. your management to do what is foremost and that is to protect the customers who have trust in you. what concerns me moreover, it appears most of the 5,000 employ years that were fired were low level or mid level employees. the chairman just found out the highest level was a branch manager. and it doesn't even include those that resign due to culture at wells fargo. meanwhile, to the best of my knowledge, senior executives
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have been held accountable in the same manner that the lower level employees were. i would not be surprised in a number of those people end up losing their homes or going into massive debt after they were dismissed. no, aim not defending their actions just making a point we have a problem in this country where it would seem, as we have seen previously, that the well connected, well connected on wall street, the well connected here in washington, the elite, if you will, in washington and wall street, seem to play by a different set of rules.
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while everyone else has to play by another. i know you just lost reportedly i hear $41 million of your salary. but if i understand that correctly that's only a quarter of your pay over the last decade or so. so you will forgive all of us if we don't really feel that sorry. second point i'd like to make is that under dodd-frank, wells fargo remains fully eligible for taxpayer bailout going forward under title 2 of the law should be run into trouble going forward. taxpayers have already spent a
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lot of money bailing out poorly run wall street firms over the last decade. mr. stumpf, i hope you are aware that anger now directed at you, my constituents and others around the country, isn't just over the actions of the employees, the fact that they seem forever on the hook to underwrite whatever kind of risky or fraudulent activities wells or other large banks engage in. fortunately earlier this month, we passed a bill out of committee, the choice act, which will ensure if wells fargo does run into trouble again, it's on its shareholders and management that pay the consequences and
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the taxpayers will no longer be on the hook. third and final point, i know they are not here, once again the financial regulators apparently, more than apparently, were completely asleep at the wheel as this massive fraud was occurring. if you look at one of those, the cfpb, one job, only one job in the regulatory framework and they completely blew it. it took a reporter from the l.a. times to undercover what was going on at wells fargo. so i hope my friends on the other side of the aisle will keep that in mind as they may pat the cfpb on the back for a
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job well-done. in the time remaining, get to the securities question. securities exchange act require public company to keep disclosure in place. require the c.e.o. and c.f.o. to attest to financial statements. you refer to some of that. are you saying that all those
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reports you were filing that the information you had in 11, 12, 13, 14 none of that material was -- none of that information was material? mr. stumpf: at the time through the facts and circumstances we filed accurate reports and we did not believe it was material. mr. garrett: when you got the pricewaterhousecoopers analysis, when was that? mr. stumpf: that was late in 2015. mr. garrett: as soon as you had that has that been filed as material statement? mr. stumpf: we looked at the
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facts and circumstances and we believe that not to be material. mr. garrett: it's not material. why not? mr. stumpf: remember, the p.w.c. material looked at 93 million accounts that we opened over four years. they could not rule out through a large data analytics about 1.5% of those accounts. that's still a lot because of the size of the organization. mr. garrett: that to me, mr. chairman, if that's not material, this occurring over a five-year period of time is a
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systemic problem in the organization, i don't know what is. i yield back. chairman hensarling: the gentleman's time has expired. the chair now recognizes the gentleman from california, mr. sherman. mr. sherman: mr. chairman, the american people need an assurance that this cross selling mania that has that has afflicted wells fargo is not to be found at the other behemoth banks. i would urge you to have hearings where we hear from the c.e.o.s of citi, the others, and until then i hope that you would join with me in a letter of inquiry to ask what new account opening quotas that had their for bank tellers. how many people they fired for not meeting their quotas. or how many people they fired for opening phony accounts. we have wells fargo before me, but i don't think, mr. stumpf, that you should be alone in this joyous experience.
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your colleagues should at least come forward with some assurance. we're now engaged in an important national ritual. where the c.e.o. comes before the representatives of the american people to apologize, to take full responsibility. to do so humbly. mr. stumpf, welcome to washington. what plane did you fly in on? what airline? mr. stumpf: virgin american. mr. sherman: when you came to the senate? mr. stumpf: i think it was united. one of the two. mr. sherman: it shows wall street's learned something. thank you. now, you have these forced arbitration clauses in your agreement with your customers. you say, oh, they can have mediation too. some of them want their day in court. are they going to hold them to these forced arbitration clauses and screw them again out of their day in court, or are you willing to waive those clauses and say if you're caught up in this you have a choice to have a arbitration or not? mr. stumpf: thank you, mr. congressman. i believe in arbitration. i think it's a fairway to -- mr. sherman: but your customers may want something else. are you going to deprive them of that? mr. stumpf: no. we are not. we are going to pay for a mediator. mr. sherman: when they want their day in court, will you screw them out of that? mr. stumpf: we take this very seriously.
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mr. sherman: will you let them to go to court if they want to, yes or no? mr. stumpf: no but an explanation. mr. sherman: no, but. that's a no. this sham was not an attempt to steal a few million dollars in fees from customers, although that's important. because you could say that few million dollars wasn't material. what was material is the price of your stock. you opened two million phony accounts, and then went and told -- and had to be material because you were bragging about it to the people investing in your stock that you had higher penetration rates, more accounts per customer, that the number of banking customers that had credit cards had grown from the mid 20% up to 4 %, so it had to be material. you were talking about it. the peak firings, according to your own documents, was in 2013, so you knew you had a problem then. mr. stumpf: correct.
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mr. sherman: why didn't you tell your shareholders, our penetration are phoney our new accounts are phony accounts and when we tell you we're deepening our relationship with the customers we're putting them through the ringer? what internal audit system did you have that assured you that you didn't have a material problem? mr. stumpf: congressman, i have to push back here. this is the behavior of people that we found that we did not want and the vast majority of everything we do is right by our members and customers. mr. sherman: you were firing -- according to your own documents -- the highest number of people in 2013 but bragging about your penetration rates, the number of accounts opening in 2014. so you knew it was material to shareholders and you knew it was a phony number that you fired people from -- for falsifying. mr. stumpf: congressman, may i just have a second? because we've gone back and looked. the two million accounts could not be ruled out. we don't know if those are good accounts or not good accounts because we already looked at 20,000 credit cards. mr. sherman: reclaiming my time, sir. you fired 5,300 people. you took 5,300 good americans and turned them into felons with a system you created, benefited from and drove your stock price up by bragging about your levels of new accounts. mr. stumpf: congressman, i have to disagree with that. mr. sherman: i'm not surprised.
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the two -- we have institutions that are too big to fail. in 2008 we found that they were too big not to bail. the eric holder has told us they are too big to jail saying he fears for putting them -- for bringing a criminal indictment. we now learn they're too big to manage, too big to regulate. it's time to break them up. mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from missouri, mr. luetkemeyer, chairman of our housing and insurance subcommittee. mr. luetkemeyer: thank you, mr. chairman. today we're here to confront, in my judgment, a total travesty in the financial market. consumers in this case were failed on all accounts. their financial institution, with whom they trusted their family's finances, failed them. the federal regulators who were charged with overseeing their protection failed them. the federal regulators in charge of wells fargo failed to stop the ripping off of consumers and the consumers lost. and slapping a bank with a fine isn't going to make that go away. only 5% of that fine is going to go back to the consumers who were harmed. mr. stumpf, giving back your bonus isn't going to make that go away. more rules and regulations are going to make this go away. the fact is regulators sat in that bank for years and did nothing. meanwhile, thousands of employees were being fired for these bad practices, yet nothing was changed to address the issues. the regulators need to be doing their job from day one. instead they took a whatever takes approach to meet sales targets and regulators sat idly by even after reported in the news. to top it off, regulators failed tone force their obligations after the fact. they waive their right to pursue from other violations so they don't be viewed as late to the game. wall street needs to be held accountable but so does washington. that's what we're here today for. so my question to you, mr. stumpf, is, how many regulators do you have in your bank on a daily basis? mr. stumpf: i don't have precise count. mr. luetkemeyer: roughly. mr. stumpf: i'd pick 80, for example. mr. luetkemeyer: ok. cfpb are in there as well, do
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they not? mr. stumpf: i don't know the number on that. mr. luetkemeyer: ok. just kind of curious. as a former bank regulator as well as a banker, this is a really, really disappointing situation for me. mr. stumpf: i couldn't agree more. mr. luetkemeyer: from the standpoint i tell people i'm shocked and dismayed. i'm shocked that the bank let this to happen and i'm shocked that regulators did nothing. while you're being find, which i think is appropriate, the regulators odd to be fined as well. for them to take the fine and keep it is a travesty. they need to be fined as well and let the money go back to the consumers because they were asleep at the switch. there is so much to blame it's unbelievable. a while ago you made a comment you have a good culture in your institution. that this shouldn't be happening. well, mr. stumpf, your own testimony says you're firing 1,000 people a year. 1,000 people a year. the only one way that can happen and there's a culture there that allows that to happen year after year after year. there is'' allowsy approach -- there's a lousy approach in your bank. somebody ought to call a time-out and say enough is enough. this can't continue. and yet year after year you're firing people trying to hope this goes away, and regulators are watching this and sitting on their thumbs. actions must have consequences for not only you but they need to have consequences to the regulators as well. mr. stumpf: congressman, thank you for that question because i want to tell you that we did do things. in 2011 within the business, they moved the compliance or the concern for this issue into a compliance area. by 2012, they were reducing goals and doing more ethics training. by 2013, corporate resources were brought in and we worked with the o.c.c. in 2014, more reductions in goals. in 2015, and the o.c.c. -- we did our study. this does not represent a culture. in fact, we mr. luetkemeyer: i respect to disagree with you, mr. stumpf. i've been in business like this all my life. you can't tell me when you have to fire people year after year after year that there isn't a
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problem. now, for a year or two that's one thing but four years, that's another thing. i have another question. in my examining days there was -- i examined a bank one time and found a teller skimming money out of her cash drawer. took it to the president and he said, well, you know, she's a good employee. as long as she keeps it to main mum i think we'll be ok. my jaw hit the floor. this reminds me of that situation. as long as they keep it to a minimum, i think we'll be ok. my comment to him back to that is have you reported it to your blanket bond company that has a clause on it? do you have a blanket bond or are you shelf insured? mr. stumpf: we have a fidelity bond. that's when we draw the line. when people do this -- mr. luetkemeyer: when did you report this to your blanket employees? mr. stumpf: we have a group that does that. i can ensure we have people to get back to you. mr. luetkemeyer: if you did not report that immediately when you found this going on and you allowed year after year to have a thousand people, your blanket bond company is going to be going bonkers over this. we will have a request for that and i hope you will answer that. mr. stumpf: we'll work with you. mr. hensarling: the time of the gentleman has expired.
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the chair recognizes the gentleman from new york, mr. meeks. mr. meeks: i can't believe some of what i'm hearing here. so let me understand. you've been the c.e.o. since 2007. you've been the chair of the board and c.e.o. since 2010, is that correct? mr. stumpf: that's correct, mr. congressman. mr. meeks: i've been shown you have been penalized almost systematically every year since you have been in charge. every year. $1.2 billion in april of 2016. $53 million in october of 2015. $4 million in june of 2014.
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another $2 million in january of 2015. $5 mp in september of 2014. i could go on and on. $869 million in september of 2013 while you were the c.e.o., right? and you're going to tell me there's not a culture of something wrong at wells fargo when you are the head -- you get credit? you go ahead credit as c.e.o. when you bring in all this money because that's how you get your bonuses, is that not correct? you get a bonus from your board because x amount of dollars come in. but are you telling me you don't
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have the responsibility of losing your position when you have a culture of being fined and costing the bank year after year, month after month? there's no responsibility. you can stay being chairman and c.e.o., is that what you want us to believe? mr. stumpf: congressman, that is not the case. i serve at the pleasure of the board. i'm willing -- i told -- mr. meeks: then the whole board needs to go if they are going to allow someone to be in charge when time after time -- you just talked about you fired 5,300 employees. when you found out they were doing something wrong, they were fired. of course they were doing something wrong. well, something is going wrong at this bank. and you are the head of it. so shouldn't the board then -- from your own admission, if the buck stops with you, as you came out here and said, i apologize. the buck stops with me. and you have to also admit that criminal activity was going on in your bank, then you should be
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fired because it stops with you. mr. stumpf: again, congressman, the board has that power. that's their -- and my energy rate is to lead this company forward. mr. meeks: you came out here saying i apologize, etc. if somebody walked into wells fargo tomorrow and robbed your bank or defrauded your bank and then after they are caught they say, well, i'm sorry, i'm going to take full responsibility for robbing this bank and i am sorry that i robbed this bank so please don't prosecute me because i am sorry now that i robbed this bank, would you allow the person just to walk out after robbing your bank because he is now sorry that he robbed this bank after he took the money already? mr. stumpf: congressman, i see something very different between being honest and breaking our code of ethics and taking advantage of -- mr. meeks: you didn't break code of ethics? do you realize that you have not only given -- will you admit this?
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that not only your bank has a black eye, that your bank, wells fargo, has given the entire financial service industry a black eye, your responsibility? you heard mr. sherman. he wants -- and i agree with him. he wants everybody to come in here. why? there's only one reason why. your bank, you, c.e.o., chairman, basically for me was on top of what's basically been a criminal enterprise because when i look at consistency, time after time after time and time again, you have to get fines. now, it must mean you're making a lot of money because it's easier to pay the fine because you know something else will happen to you. you pay the fine. you get away. i'm from new york. a lot of times i believe in financial institutions. that's why i'm so mad. i believe they make our country better. until they rip us off. and they ripped us off, taking advantage of customers and consumers when we had the financial crisis. i have individuals right now who are on the street, on the street, not back in their homes. they had these fraudulent mortgages. nobody said, i'm sorry that we gave you these fraudulent mortgages. we're going to put you back in your home and we're going to make sure that everything is ok. no one has done that for them. you haven't volunteered to do that. will wells fargo put people back in their homes? mr. stumpf: congressman, if i could respond for a second, please. there's no question we don't do everything right and we made
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mistakes. we're upping our game. mr. meeks: so who should pay for it? who is accountable for it? mr. stumpf: we are going to make it right for every one of our customers. mr. meeks: your institution is make over $22 billion yearly. who is paying for it? who's taking responsibility for it? don't come tell me you're sorry mr. stumpf: we're taking care -- every one of our customers who is impacted. mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from wisconsin, mr. duffy, chairman of the oversight and investigations subcommittee. mr. duffy: good morning, mr. stumpf. i want to tell you i'm a 20-year customer of wells fargo. i started out at nor west. my wife and i joined accounts. i benefit from your bank. your people treated me incredibly well. that's why i'm there. what i'm hearing today is incredibly disturbing. i want to make sure you and i are on the same page.
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how do you classify what wells fargo did with this potentially two million account holders? mr. stumpf: well, the two million account holders were accounts, was about -- the p.w.c. looked at 93 million accounts, the two million -- sorry. mr. duffy: was this fraud? was this an h.r. person, theft, how do you see this? mr. stumpf: the two million accounts could not be ruled out -- mr. duffy: i'm asking how do you classify when you took $22 to $25, from whatever the number is, maybe it's one million, maybe it's two million, how do you classify that? mr. stumpf: i think it was dishonest, it broke our code of ethics and the people who are responsible -- mr. duffy: was it theft? did you steal? mr. stumpf: our people did not do what was right. mr. duffy: that's not my question. did you steal? i want to know if you and i are on the same page. did wells fargo employees steal from a million to two million other customers, yes or no? mr. stumpf: in some cases they did. mr. duffy: they did. mr. stumpf: yes.
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mr. duffy: so as wells fargo back to 2011 is stealing from their customers and by the way, banking is based on trust -- mr. stumpf: correct. mr. duffy: i don't care if it's 10% or 1% or half a percent of the people you do business with, if you're stealing from them, in 2011, 1,000 people are fired for stealing, and what do you do? you don't fix the problem. and 1,000 people are fired in 2012 and you don't fix the problem. and in 2013, 1,200 people are fired and we still have a problem. and you're stealing from people. so how do you -- listen. i guarantee you that any bank in my community, if they were stealing from someone at the lower level, fired and fixed the problem on day one. mr. stumpf: that's what we're trying to do. mr. duffy: no.
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trying to do, we're five years on. mr. stumpf: let me say as we -- this problem, we didn't -- when somebody would open an unauthorized account, a savings account or checking account, it was not until -- and when an account gets opened and not funded, it's really important, please. when they open and not funded, it gets auto closed. we didn't believe, as we looked at that, until some time in 2015 that there could be the possibility of a zero account that could affect a customer. mr. duffy: you got to be kidding me. you have got to be kidding me. mr. stumpf: that is absolutely -- mr. duffy: you are not saying you but board members knew in 2011. they were looking at this. and if they are looking at a thousand people fired that they don't know why they're being fired, that they don't look saying, what were these people doing that caused them to be conditioned and they pull the curtain back a little bit and say, man, whether you want to call it defrauding our customers
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or stealing from our customers, wells fargo has a big problem. so you tell me it took one year, two years, three years to 2015, i don't buy it. what i think was wells fargo was making a lot of money off what you were doing and i think you were hoping you wouldn't get caught. and so it's a risk of doing business. you know what, we're willing to fire a few people so i can come in here and say, weren't we great? we fired a couple of people. we were trying to make it right. but we kept the practice in play because we were making big profits. did you win the practice? is this over? mr. stumpf: we're stopping all of our sales. let me -- mr. duffy: how could you stop it now but not in 2011 or 2012 or 2013 or 2014 or 2015? mr. stumpf: we should have done this earlier. it's important i make this point, please.
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the $2.6 million of fees that were on accounts that these two million accounts that we could not rule out, it cost us $10 million to open those accounts and close them. forget even the cost of the team member and the dismissal, this is a loser for us. it only helps when customers uses it. mr. duffy: it's a loser. mr. stumpf: it only helps when customers -- i would require they -- mr. duffy: the concern we have -- i told you i like wells fargo. i've been there 20 years. that you were turning a blind eye to your customers who were being stolen from, people who couldn't afford $24, people who couldn't afford $25, you couldn't fix that problem. in an institution that's based on trust, you didn't remedy it, that it's taken this long, shame on wells fargo. i would hopefully at one point hear you testify to home cfpb employees were embedded at wells fargo.
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hens the time of the gentleman has expired. the chair recognizes the gentleman from massachusetts, mr. capuano. mr. capuano: thank you, mr. chairman. thank you, mr. stumpf. i want to thank you, particularly, for doing something here today that no one other person has been able to do in the last four years. they have brought true bipartisanship to congress. we're all together on this. we are not happy. last -- they already started. but the last few minutes they have been running a graphic in the back and my colleague went through some of them. i think it's important to know what some of the other things you have done. what they were. they weren't just fines. you screwed student loan holders. credit unions. fannie mae. freddie mac. mortgage holders. african-americans. hispanics. health care workers. on and on and on. and by the way, i understand this isn't material.
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just five months ago, you paid $1.2 billion in a fine. this is only 15% of that. who cares? we'll pretend to be sorry. we'll fire some workers and we'll get through this. you know when i heard that before? the guys who ran enron. the guys who ran arthur anderson. said the same thing. we're not your problem. we can't criminally prosecute you. you can keep -- hell. you're your own boss. you're the c.e.o. and the chairman. hold yourself to accountability. oh, my god, you've been bad. oh, no, you haven't. that's ridiculous. your problem is coming. it's not today. you think today's tough. it's coming when the prosecutors get a hold of you, you're going to have a lot of fun. so i want to thank you for that. i want to ask you, you got the graphic up here. you know this guy? see, i'm not a real good researcher. i'm not a prosecutor. this is simple internet research. that's all i'm capable of doing. google it. wells fargo, boom. whole bunch of stuff shows up. this is mr. robert holmes who apparently robbed your bank in lancaster, pennsylvania. he did not use a weapon. he got caught. they got all the money back. he's in jail as we speak on a $750,000 bail. you on the other hand have run
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an enterprise that has a culture of corruption. you encourage insubordinates who abuse existing customers to open fake bank accounts. you charge them illegal fees, late charges and interest and send some to collection agencies because they didn't pay them. then, you fired 5,300 workers as if you care to cover everybody's tracks. in my opinion, you and your entire leadership team are clearly and unequivocally guilty of at least conspiracy to commit fraud, conspiracy to commit identity theft. clearly racketeering which is something a lot of my friends know something about. and probably a dozen other crimes. only simple question. what the heck's the difference between you and mr. holmes? why shouldn't you be in jail? he didn't use a gun. you got the money back. i understand at his arraignment he said he was sorry. what's the difference? why shouldn't you be in jail right along with mr. holmes? mr. stumpf: congressman, i think when you do something unethical or dishonest, which i've tried to exercise my duties as leader --
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mr. capuano: you have had 16 violations in five years.
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this is a minor fine. this is only the seventh largest fine that you've had. you have six others that are bigger. that's a good job? you're the one judging yourself because you are also chairman of the board. i actually think i'm the greatest congressman in the history of the world. i should be speaker, president and maybe emperor of the world. that's my judgment of myself. sound good to you? mr. stumpf: there is no question we need to improve on and we've made fines and we ought to get better. mr. capuano: if mr. holmes pays
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a little fine, a few bucks based on the amount of money he stole and the victims he had, you think he should be let out and have no criminal record? mr. stumpf: again, being dishonest and breaking the law is something very -- mr. capuano: so it's not breaking the law stealing my identity? mr. stumpf: our culture is not that. we train for that not to happen. mr. capuano: 5,300 -- mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from california, mr. royce, chairman of the house foreign affairs committee. mr. royce: thank you, mr. chairman. mr. stumpf, the idea of cross-selling target of at least eight products clearly is part of a long-term practice at wells fargo. going back at least to your predecessor because in 1998, "fortune" magazine quotes, doubling the average product
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purchase to eight as your predecessor's, quote, current obsession. you know, morphing a goal to a mandate here seems to be big part of the problem and i say mandate because if people are fired for not hitting that goal, it's a mandate. and that seems to be at the center of a toxic sales culture that you've overseen. but i'd ask you, was the goal of eight cross-sold products something understood and embraced by management and by your sales force?
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mr. stumpf: it was a rallying cry to help work together. the average consumer household has about 14 financial products. mr. royce: i understand. i'm going to ask you a question. in retrospect, you think that that target contributed in some way to the negative change in your sales culture? mr. stumpf: we never had a target of eight. again, that was aspirational. we had team members who would work with customers on a need-based selling. when they did that right, the customer won and it was good for us. mr. royce: did you read "the l.a. times" article when it came out in 2013? mr. stumpf: i am not sure. mr. royce: was that something that was discussed at the board level? mr. stumpf: we did discuss the "l.a." article. mr. royce: did information in that article give you pause of cross-selling metrics or ratios in your annual reports and quarterly reports, in the analyst conference calls that were clearly inflated here by fake accounts generated by your sales force? mr. stumpf: we love cross-sell because it helps define -- mr. royce: look, i understand your argument about that. here's the question. if you know fake accounts are going into that ratio, why would you keep reporting that ratio? because i got a copy of your
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investor day. i have a copy of what's in your quarter leers. and i turned to mr. duffy when he was asking the question, well, it isn't that material in terms of our bottom line, in terms of the fee income from these fake accounts. but what you're reporting on your products per household is a constant upswing quarter by quarter by quarter. it certainly is material in terms of the stock price. what you were doing and constantly reporting these ever-increasing numbers was driving your stock price up. and the point i'm making is you have this story in 2013 that shows how much of that was based upon fraudulent behavior. that becomes material, right? mr. stumpf: well, let me just talk about that, specifically. the cross-sell ratio, even if you include all two million
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accounts in that -- and we know we can't because we're already finding out in credit card that 75% -- less than 25% either did not order or don't remember. we looked back for all the quarters going back to -- i can't remember if it was 2010 or 2011 and it has i think 1/200 impact on the product. it's immaterial. mr. royce: look, mr. stumpf. this is a california company. you have a lot of california customers. you got people all over the people dependent on this company. you have your employees. and from what i understand a thousand of them being fired every year connected to this. i believe rebuilding the trust and righting the wrongs are going to take a course of action here that i have yet to seen you set.
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through opening unauthorized accounts or playing the shell game with a person's money, your employees and your company negatively impacted the credit of many people in this country and i just want you to think for a minute about what that meant in terms of their ability, maybe, to qualify to get that home or maybe to qualify to get that car or maybe in terms of the student loan to send that son or daughter to university. not to mention, again, working americans wrongfully terminated by your company for, what? refusing to break financial laws, refusing to break ethical laws. that's what we have to come to grips with here. and this is at the very least the result of actions over the
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last five years. that didn't happen by accident. mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from massachusetts, mr. lynch. lynch thank you, mr. chairman. i have -- mr. lynch: thank you, mr. chairman. i have a unanimous consent to submit into the record a letter sent by ranking member cummings, the gentleman from maryland, of the oversight committee to mr. stumpf requesting documents to be submitted by october 13. mr. hensarling: without objection. mr. lynch: thank you, mr. chairman. i'd also like to ask the chairman to consider doing a hearing at a later time with a number of the employees, both whistleblowers who were fired and others who were fired or retaliatory attempts to provide information on the fraudulent conduct being conducted at wells fargo. i'm aware of at least three u.s. attorneys that have also issued subpoenas in this case.
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i'm hopeful we may eventually get to the bottom of this. and while the city of l.a., the city attorney there and the cfpb and the o.c.c. have done good work in this case, the findings thus far are pathetic, really, total inadequate to try to bring wells fargo into compliance with the law and that is certainly reinforced by the way, mr. stumpf, you have diminished the offenses going on at your bank. it is really, you know, proof positive that whatever the ocpf -- excuse me -- the o.c.c. has done is not adequate to make you realize the level of your offenses here. again, 5,300 employees were fired. up to two million fraudulent accounts, and this has gone on for at least five years. and i want to point out here -- and mr. duffy hit on this. this is the banking industry. this actually it exists based on trust and what your employees did, at least -- well, as many as 565,000 fraudulent credit cards were secretly opened by your employees using the social security numbers of your customers. so they opened fake credit cards so they could charge them for that. they assigned fictitious pin numbers when the customer didn't even know that was going on. they put pin numbers. and then they assigned email addresses so they could comply and get the account open and these are your customers. now, we had credit card companies up here who have sent credit cards to noncredit worthy borrowers and seniors who didn't understand what they were getting. in this case, these are your customers. these are the people that they became victims because they did business with your bank. that is unbelievable. and i know that mr. meeks and mr. capuano before they have made comparisons to criminal activity, but i do want to note that under the racketeer influence and corruption act, you've satisfied that. you've satisfied all the elements of that.
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two of the predicate offenses under rico, number one, is fraud. and there's no question about that. mail fraud. securities fraud. you've done it all. you covered basically every aspect of fraud in your bank over the last five years. and secondly, in many cases these employees, these whistleblowers were intimidated or fired in some cases. you got an h.r. employee here who says you have a system to retaliate in your bank against whistleblowers and that's another predicate offense under rico. so let me ask you. you've satisfied all the elements of that. two of the predicate offenses under rico, number one, is fraud. and there's no question about
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that. mail fraud. securities fraud. you've done it all. you covered basically every aspect of fraud in your bank over the last five years. and secondly, in many cases these employees, these whistleblowers were intimidated or fired in some cases. you got an h.r. employee here who says you have a system to retaliate in your bank against whistleblowers and that's another predicate offense under rico. so let me ask you. as the c.e.o. and chairman of the board, you had a responsibility to file sars, suspicious activity reports. mr. stumpf: correct. mr. lynch: right. you have up to two million separate accounts being opened,
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up to 565,000 bogus credit cards being opened by your employees in secret against your customers and yet when we ask the treasury department for the suspicious activity reports that you filed, they don't match up. you're not in compliance. mr. stumpf: let me say a couple of things. we filed -- we did everything that was necessary to abide by every regulator and regulation issued. mr. lynch: you're saying you filed reports on -- mr. stumpf: i can't say on that because that's -- mr. lynch: well, that's your responsibility. let me read you the law. mr. stumpf: i know it's our responsibility. there's actually a prohibition -- i mean, i have to do what's right according to the law. mr. lynch: let me just say. this is my time. reclaiming my time. the board of directors, this is the anti-laundering statute. the board acting through senior management makes sure the bank maintain an effective bank accuracy act, including suspicious activity reporting
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and monitoring. mr. stumpf: and we do that mr. lynch: it's your responsibility. hens -- mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from oklahoma, mr. lucas. mr. lucas: thank you, mr. chairman. mr. stumpf, while my day job is that of a congressman, my farmer is by trade and my university degree is in agricultural economics and looking at your resume, about the time you were entering into the banking industry 30-some years ago, i can remember taking a class on money and banking at oklahoma state. and we had a professor who was very enthusiastic about the market economy and we discussed how the banking model we use now went back essentially 500 years to italy and the concept that under a market economy, bankers were the individuals who determined what savings were worth and pooled those and by the same token made risk
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determinations. figure out what the cost of money should be and allocated that out through loans. a glowing example. and he would compare western europe at the time, north america, much of the rest of the world how affective that was compared to the demand economy model of the old communist countries at the time. china, russia. all of those sort of places. a very glowing discussion. i don't know that i have a particular question for you about what's going on. i think between the other committee and my colleagues here, they've done an exceptional job of getting the facts and i suspect, as a number of my colleagues have discussed quite straightforwardly, this has legal implications far and beyond the activities of this committee or the other committee in the other body. but i'd say, mr. chairman, the
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most challenging things you've done, by actions of your company, by management of your company, you have a hard time for those of us who defend the market economy, have a time to drive this free market system. that's probably the most tragic thing about this. now, in those econs lectures, they used to lecture about enlightened self-interest. that's the nature of any business.
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that's the nature of any business person. but then there are the responsibilities of good corporate citizenship, about self-restraint, about not pursuing greed. i guess i just simply note to you, sir. whatever ultimately legally comes out of this process -- and clearly a number of my colleagues think it will, or whatever your stock holders determine or fellow board members, you just made it really hard, really hard for those of us who want to maintain that concept of a market economy, who want to continue to make sure that bankers, not some bureaucrat somewhere, are the arbiters of capital to effectively move this country forward. i don't know how you correct this but i suspect, sir, when you interact with your peers within the industry, you're going to have some challenges for a long time to come. because the brush with which you will be painted will stroke all of them too. and i suspect that's blatantly unfair and that's unfortunate. but then, i'm just a farmer by trade. multigeneration debtor. working hard to service my debts every year. you have to think about that. you have to think about that. what this episode has done to your industry and ultimately to me and all of my fellow
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consumers out there. it's just very unfortunate. mr. stumpf: may i make a comment? mr. lucas: please. mr. stumpf: thank you. we take this very seriously and i also come from a farm. i understand what it's like to be on a small farm. at least ours was small with large family. i know right from wrong. i know we have a lot of wrongs to right here. but i also want to tell you that wells fargo is a great corporate citizen. we employ 268,000 wonderful team members across the country.
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we have a culture based on ethics and doing what's right. not everyone does that. we made mistakes. we're one of the nation's largest taxpayers. we're one of the largest philanthropic organizations. we have a lot of work to do, there's no question about that. but i stand with the people who are doing the right thing, who honor our culture and our ethics. they are terrific people and they're out there with our customers every day. we have work to do. i understand that. mr. lucas: disservice has been done to them. with that, mr. chairman, i yield back. mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from georgia, mr. scott. mr. scott: yeah, mr. stumpf. this is one of the most outrageous acts that any banking executive has done in my lifetime that i know of. how in the world could you in good conscience set up these fraudulent accounts? what was going through your mind when you were doing this? mr. stumpf: congressman, i didn't set up any of these accounts. i -- our team worked together at the business level then at the corporate level to -- we found
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these accounts and we found these people and we said, that behavior is not -- mr. scott: mr. stumpf, you took advantage of unsuspecting loyal customers. people in almost every single district that's represented on this financial services committee. you did that. and you are the chief executive officer. you set the tone and you should be downright ashamed of yourself and you should apologize right now if you have any strain of respect for the people of the united states, for the customers that you have defrauded with
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this, for the rancid example that you're setting. and not only that. for the damage that yourself with your action has done to the entire banking industry, because you know what, all this cross-selling, now you have caused an extraordinary spotlight to be focused on every bank in this country. you have done that. and you should apologize. mr. stumpf: congressman, i have said in my opening testimony, i am sorry. i am accountable for this. i'm very sorry that we broke trust with our customers, our communities, the american people. i am deeply sorry for that. i'm going to do everything i can to repair that. mr. scott: and you know what hurts me so much? i'm one of your customers. i have an account at wells fargo in atlanta, georgia. i was on the phone with my district director about this and
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she has told me that -- and our constituent services, when it comes to the mortgage assistance, particularly with the bill that we passed here, the hardest hit bill, in which we're offering and helping those people with mortgages to be able to pay up to 24 months of free mortgages, and she says, we have no better cooperation from the staff of banks than we have from wells fargo. mr. stumpf: thank you. mr. scott: i'm your customer. mr. stumpf: thank you. mr. scott: but the example you set is just absolutely terrible. now, what i want to ask you is -- because my number one concern is, my constituents in georgia. let me ask you. could you tell us exactly how many customers in my home state of georgia had fraudulent accounts set up in their name without their consent? how many in georgia?
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mr. stumpf: i can get that for you if i have the right -- sorry. i know i'm using up your time here. mr. scott: well, maybe the chairman will give me a little extra here but it's important for us to know. mr. stumpf: in georgia we had 55,579 accounts that we could not rule out as possible. again, now, i -- mr. scott: 55,000? mr. stumpf: i need to -- if you may let me. we're finding out on the credit card side, less than 25% did not want those. here's my commitment to you, congressman. we're going to work with every one of these accounts and make it right for every customer. that is our commitment. i'm interested in results, not in process here. each account, we're going to take care of it.
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i don't care whether there was -- the biggest thing here is secondary harm. i want to make sure it was asked by another congress man or women about this issue, we take it seriously. mr. scott: my time is going down. let me ask you, do you think what you did was criminal? mr. stumpf: i am not a criminal -- mr. scott: do you think that? mr. stumpf: i led the company with courage and -- mr. scott: if another bank president had done this or chief executive officer, would you say it's criminal? mr. stumpf: i didn't break our code of ethics and i didn't do -- mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from new mexico, mr. pearce. mr. pearce: thank you, mr. chairman. thank you, sir. appreciate you being here. it's not all fun. the -- so you talked about the 5,300 that were terminated.
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how big of a percent of the people in the company that were terminated out of 268,000, you'd get more than 5,300 terminated so what percentage of the terminations did that represent? mr. stumpf: i don't have that. i could work with our team. mr. pearce: don't worry about it. that's ok. mr. stumpf: i don't have that. mr. pearce: so just looking at this from a 30,000 viewpoint and i, like mr. lucas, grew up on a small five-acre farm. dad was a share cropper before he went to work as a rouse about. we were working in oil fields in southeast new mexico. the numbers getting thrown around are a little bit big. i can't fathom somewhere in the process you got 5,300 people terminated and that doesn't come to your attention as a c.e.o. you get calls on the ethics line saying, hey, we're doing unethical stuff, 2008, according to one of the other people.
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according to your comments, people are involved in criminal acts and that doesn't come to your attention. you get $10.8 billion in settlements and that doesn't come to your attention. so what -- if i'm sitting here thinking about this stuff just coming in a clear, just quiet room, board, seeing these things, at some point somebody's going to say, houston, we got a problem. but it doesn't appear that anybody ever said, houston, we got a problem. l.a. city attorney brings charges and nobody on the board says, houston, we got a problem. what, in your assessment looking back, what was it that would
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cause all those things to go under the radar and not be recognized, not be seen? mr. stumpf: thank you for that question. as we learned more about this issue, we made investments. we made investments in training. we reduced sales goals. we brought in regulator. mr. pearce: i understand that. you've been through that. what kept you from seeing? what kept this from rising -- i'm sure that today that you probably consider the problem somewhat different than you did in 2011, 2012, 2013, 2014. why didn't you see the problems that you attribute today at any stage of the process? mr. stumpf: congressman, it's a good question. i said in my testimony -- mr. pearce: i did not see the answer. since you appear not to want to see it, i'm sitting here in a balanced scale as a business
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manager always there, do we want to clean out the well and we don't clean it out and we get a bad reputation, that's -- maybe we will. or maybe we won't. are we going to overlook the numbers of terminations? we're getting the calls, don't we really want to investigate? the stock price is doing ok. my compensation is ok. you get the balance is there. your compensation in that period of time is approximately $200 million. that would cause one to say, i think things are running ok. yeah, maybe we got that little problem over there. but another thing on the side of the scale that says, i don't want to look at this or i can't see $10 billion in settlements, it just doesn't come to my attention. 5,300 terminations doesn't come to my attention because my -- we got 260,000 employees. obviously we're doing things 99% right. forget the two million people we
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defraud. mostly we're doing ok. and so i see size and complexity being a great problem when you can't see 5,300 being terminated, when you can't see $10.8 billion in settlements, then you got a problem in size and complexity. i would say there is no community banker in this country that would not have seen people doing illegal acts. and so maybe it was your stock compensation. maybe it was the size and complexity but, sir, i think today listening to things that everyone has said, you have proved that you did not offer leadership in this. you have kind of shirked around and said the board can do anything it wants at anytime. i, sir, think you ought to submit a resignation and your board cannot hold off on action on that. thank you. i yield back. mr. stumpf: mr. chairman, can i make a comment about that? mr. hensarling: witness may comment. mr. stumpf: we did take
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accountability. we did invest in things to help reduce this. and we saw numbers coming down. mr. pearce: the problems continued, sir. the problems continue right through your actions. in 2011 you did this. 2013, did you that and the problems -- mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from texas, mr. green, ranking member of the oversight and investigations subcommittee. mr. green: thank you, mr. chairman. i thank the ranking member as well. i'm grateful that you have given us a very positive response, and we are holding this hearing. mr. chairman, with $5.6 billion in earnings in the second quarter, wells fargo is not in this because of need.
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this is about greed. it's about the same kind of greed that created credit default swaps, that created negative amortization, that created no doc loans, that created prepayment penalties that coincided with teaser rates. the same kind of greed called exotic products that created the housing bubble. this greed has caused this cross-selling to become the equivalent of an exotic product, a product that has now created a cross-selling bubble for wells fargo. the cross-selling bubble exists because you were marketing yourself as a company and a growth mode by virtue of the new
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products you were having with your customers. you had customers that were coming in and you were growing. this enticed investors. it enticed consumers to buy your stocks. when your stocks were bought, it benefited you and top level executives to the detriment of lower level entry employees. they get fired. top level executives get golden parachutes. and it's business as usual. well, mr. chairman, this will not end by simply having some lower level employees go to jail. if top level executives go free and lower level employees go to jail, it doesn't end it because there is no reason for this to cease and for top level employees to be more mindful of
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what's going on. so we've reached a point now where the public expects to see more than lower level people punished. 5,300. 5,300 working people who, by what i seem to read, were encouraged to the point of having themselves coerced to engage in this activity. these were people who were trying to make a living, not trying to make a big bonus and a big payday. these people deserve a fair day, not just an exit from your company. what do i mean by fair day? i think they deserve an opportunity to be heard in terms of what happened at wells fargo to cause them to do what they've done. i think that they ought to be
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given an opportunity to come before congress. they ought to be able to explain. and i would also add this. we have to find out how pervasive this bubble is. we have to. we do have to bring before the investigations committee, oversight investigations, other c.e.o.'s, top level executive and let them tell us. and i think we have to start with you. so tell me please, sir, how commonplace is this cross-selling in the banking industry? mr. stumpf: thank you, congressman. for our company, cross-sell is a good thing because it represents the depths of -- greene i have to intercede. i'm asking you about the industry now. mr. stumpf: i have no idea. mr. green: you have no idea how pervasive the product is? mr. stumpf: i don't know if they're using -- mr. green: are you saying you have no belief or idea that other companies are cross-selling? mr. stumpf: i don't know that. mr. green: i must say i don't believe your answer. you're telling me you have no idea as to whether or not they
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even engage in cross-selling? mr. stumpf: i don't know. mr. green: do you know they engage in it? mr. stumpf: every bank, every retailer out there has some motivation, some way to make sure they recognize their people. mr. green: do they engage in cross-selling? mr. stumpf: well, i don't know their situation. mr. green: you don't talk to your colleagues, you don't talk to other bankers, you don't know whether they engage in cross-selling? mr. stumpf: i don't know what they use. mr. green: i thank you for your answer. let me finish. because, mr. chairman, this is the evidence we need to bring the others in. we have to ask them what they're doing given that this gentleman refuses to give us what i believe to be a correct answer. mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from florida, mr. posey. mr. posey: i thank you, mr. chairman. mr. stumpf, members of this committee have already expressed outrage that we all feel that this atrocity was able to happen. it's absolutely deplorable that your customers were subject to this practice.
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and i'm sure the fine that wells fargo will pay will be insufficient to cover the customers -- more adequately compensate them. at best, at the very best, you and our federal regulators were asleep at the switch. you know, at worst, it's almost like a criminal enterprise. my biggest concern -- and i think it's the biggest concern of every member on both sides of the aisle here is that we need to ensure that it doesn't ever happen again. that means we have a shared interest in understand whag caused and what -- what caused and what perpetrated the unprecedented level of fraud, and i have just a couple of questions i think will help drives us in that direction to understand it. first, mr. stumpf, i understand wells fargo sets goals for new banking products. each employee was expected to sell daily. is that correct?
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mr. stumpf: i don't believe that's the case. i know as part of our reward system and our performance management that products was part of their performance management along with customer service, customer loyalty, doing things right. as of friday we're getting rid of those goals. mr. posey: i read that this puts it in the range of five to eight goals per day compared to the industry standard of three to five per day. briefly, i was going to ask you how those goals were determined? mr. stumpf: i don't know -- you may reference industry standard and what ours is. i wouldn't have specific. i can try to get back to you on that. mr. posey: are you aware that the expected targets is based on size, location, constituency? mr. stumpf: i believe that's the case. mr. posey: you i believe they did? mr. stumpf: i don't know when that was introduced but i
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believe in the past, you know, locations that would have more activity, we'd either have more bankers or more goals. mr. posey: thank you for the straight answer. did the bonuses associated with those goals or wells fargo use a single uniform system? mr. stumpf: again, that's a level of detail i don't know. i can try to get back to you on that. mr. posey: ok. now, so far in the investigation the bad actors, have you found any correlation between the likelihood of employees committing fraud and the demographic or socioeconomic characteristics of the people being served? mr. stumpf: first of all, i don't know, i'm not trying to be careful on words. don't know what fraud exactly -- i know what's right and know what's wrong. i don't know what the intent of these people were. but to answer your question specifically there was no -- that i understand, ethnicity difference other than what the
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communities are. we try to have people in our banks that represent the communities. mr. posey: we'll take racial and ethnicity off the table here. as someone who also represents a district heavily populated by seniors i'm worried that wells fargo may have intentionally preyed upon those they saw as vulnerable. do you believe seniors were purposely targeted for employees stretching to meet their sales goals? mr. stumpf: because we actually capture that so we can tell that. there was no disproportionate -- it did not -- in fact, younger people. not seniors. if there was any emphasis at all or any -- mr. posey: to be clear. dew point think sales goals are inherently evil. anyone who is in a business understands the need to incentivize employees to succeed. and reward their successes. unfortunately your company forgot the most important part of any business. more important than sky-high
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stock prices, year-end bonuses, or fat retirements. it's the people that you serve. i'm increasingly concerned this misguided idea of success that puts actual customers in a category of least concern is perpetrated more than just wells fargo. to the best of your knowledge was this practice of creating fake accounts exclusive to wells fargo? mr. stumpf: again. i don't know. i only know that what i know about our company -- i'd also like to make, in the few seconds left, the investment, reason people buy wells fargo, is a whole lot more about our broad product model. it's about our -- mr. posey: one quick question. can you tell me any action the cp cfpb has taken that would stop something like this from happening again? chairman hensarling: brief answer from the witness. mr. stumpf: we worked with the cfpb. we made an agreement and will
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continue 20 work with them on this issue. mr. posey: any action that would stop it from happening again? chairman hensarling: the time of the gentleman has expired. the chair now recognizes the gentleman from missouri, mr. cleaver, ranking member of our house and insurance subcommittee. mr. cleaver: thank you, mr. chairman. mr. stumpf, thank you for being here. hopefully you understand -- i have a plane to catch. i may not finish my time. i dare not get on a plane and go back to kansas city and conduct myself in a way that everything is fine and we'll all join hands and sing kumbayah and fix the
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problem. one of the reasons that everybody in this place is upset, each of us represents about 840,000 people. and probably every one of them is angry. especially those who had problems getting loans and people who were ripped off during the crisis from 2008 and 2009. and so i think many of them think that they had a preview of this garden gecko, greed is good. greed is right. greed works in the movie "wall street." i think that's one of the problems we have here. now, you have already been warned before i had my opportunity, so i'm not going to warn you, but i do need to ask you a couple of questions.
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maybe just one. there were 2.6 million in overdraft charges that incurred on linked accounts and late fees. that were thousands of consumers on fire figuratively and your bank had tubs of water but the people there decided to drink it. and let the people burn. including the people who had gotten fired. my question is how far up the chain have you been able to determine that this scheme, this fraud occurred? mr. stumpf: we know that 5,300 people broke our trust. were not honest.
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and we know that we're going to do a complete review of anybody who would have been part of this. and if they were dishonest and broke our code of ethics, they will be held accountable. we have returned that money with interest with an apology. mr. cleaver: i know. i'm trying to find how far up the chain have you determined thus far that this game wins? mr. stumpf: first of all, most of our people do it right. and i -- this was just the opposite of what we train for. just the opposite of what we talked about. it's -- again, 1% of our people i know that's a lot of people given the size of our company, but -- we'll do a full review and we'll do a review of that.
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mr. cleaver: what i'm trying to find out is how far up the chain? mr. stumpf: we're not going to let the chain impede the board's going to do a review and the company to make sure everybody is held accountable. mr. cleaver: i appreciate that. how far up the chain? mr. stumpf: so far of the people that we have found is branch managers, their manager in some cases and a manager of a manager. so that's the work we have done so far. >> the manager of manager would be what? vice president? mr. stumpf: i don't know the title, but i think it's called an area president. i think it was area president. mr. cleaver: have any of them been fired? all the vice presidents? mr. stumpf: i don't know if this person was a vice president -- i don't know what the title was. but i know it was anchor, then branch manager, manager of the
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bank managers, and area manager. mr. cleaver: no matter how high it goes, they are going to be fired. mr. stumpf: they are going to be held accountable. i can't say what -- i don't want to prejudge -- mr. cleaver: i understand. no matter how far it goes up they'll be fired? mr. stumpf: they'll be held accountable. whatever that means. chairman hensarling: the time of the gentleman has expired. the chair now recognizes the gentleman from pennsylvania, mr. fitzpatrick. mr. fitzpatrick: i thank the chairman. mr. stumpf, i want to follow up on mr. cleaver's questions. first of all i represent a district outside of philadelphia, pennsylvania. i like probably most of my colleagues here have received letters from customers, from our
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constituents, from former employees of the bank. and they have a lot of questions. which we have to help them try to answer. first i want to ask sort of a foundational question. this is a question that you have been asked many times already today, last week in the senate about when you first heard of this situation, this so-called situation with your customer accounts. you have given us approximate dates, which we appreciate. first and foundationally, if you could tell the committee, tell the american people, when you first heard about the problem where were you? who told you? what did they say to you? what did you do about it? mr. stumpf: i'll answer your question and thank you for that. i have always known as i think most americans know, that not everything does everything right every day. and we have 100,000 different people in this business. so we knew and i knew that this had to be managed. it must be managed in the business. some time later in 2013 before
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the l.a. story came out, because that did not surprise me because i had heard we were seeing an acceleration of this activity in a certain marketplace. i can't recall if my -- if chief legal counsel told me. i can't remember if it was in a meeting with the business leader at the time. or compliance. that's when i first knew that this was becoming a bigger issue. so resources were brought in to bring corporate resources in to assist the business line. and then we spent -- the business and the corporate group called core spent time working on that issue and we saw the issue come down. it was not until 2015, and we should have learned earlier. mr. fitzpatrick: when you first heard where were you? who told you about it? mr. stumpf: again i don't
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remember where i was sitting, what i was doing. where i -- i recall hearing it sometime in the summer-fall time frame of 2013. i don't remember the exact minute. mr. fitzpatrick: there have been so many people who have been hurt by what we know right now. not just your customers you're going to lose many customers. never get them back. there have been lower level and mid level employees who have been injured. you mentioned earlier in your testimony, 268,000 people went to work today at wells fargo to do the right thing. for the most part we all believe that. you also mention mentioned there were some 5,000 employees who lost their positions. as employers, we're responsible when you bring somebody young into an organization, somebody right out of high school or college, you have a special responsibility to that employee to train them, to make sure they
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are being trained in the ways of ethics in banking. how many of those lower-level employees were part of the 5,500 who lost their jobs? mr. stumpf: the vast majority -- i don't have exact numbers, but i believe about 7% or so would have been at the teller population. and the remainder, the other 93% were someplace, as i understand, were banker, senior banker, branch manager, and so forth. we do give two weeks of training to all our team members before they go out -- you're right. we have a special responsibility to help them understand our culture. they sign a code of ethics and we -- mr. fitzpatrick: were they being told in those employee trainings about the so-called goals? quotas? mr. stumpf: they are told about all the responsibility of their
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job, including i have done town halls which i do every quarter. i did one in philadelphia just a couple months ago. i have been talking every one of those in general i talk about doing the right thing. putting customers first. mr. fitzpatrick: mr. stumpf, there have been reports from multiple whistle blowers from the bank that they provided information up the chain of command and were ignored. matter of fact, some were fired. are you familiar with those cases? mr. stumpf: i have heard about those. those are regrettable. we have a nonretaliation policy on whistleblowers. mr. fitz patrick: being fired in the federal government being a whistleblower is a serious matter. hopefully you are taking it seriously? mr. stumpf: very seriously. we have a nonretaliation policy. chairman hensarling: time of the gentleman has expired. the chair now recognizes the gentlelady from wisconsin, ms. moore, ranking member of our monetary policy and trade subcommittee. ms. moore: i want to welcome our witness here today. i have learned so much here.
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i know when you go to the wells fargo website there your picture is, john g. stumpf. the vision and values of wells fargo. it features -- you say that you started with wells fargo in 1981? mr. stumpf: 1982. ms. moore: my math is not that good. and you succeeded, -- succeeded mr. chevich, were you trained and knew the culture of this company, i guess there was a merger of wells fargo and norwest. so did you receive training or do you know if the employees were -- received training on this going for great program that we have talked about here today where most of your
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customers only had five accounts in your bank and that there was an effort to get at least eight? sort of accounts. for the customers. was that part of the culture? mr. stumpf: as i mentioned before that was an aspirational goal. most of our customers had -- ms. moore: i don't have much time. so as your predecessor noted, there is just abundant growth potential in the wells fargo customer base. and that one of the axioms around that place was, hey, we inspect what we expect. were there constant monitorings to see if people were meeting these goals? we inspect what we expect. what does that statement mean? mr. stumpf: that statement means
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that we expect our people to live according to our vision and values our ethics and culture. ms. moore: i am so happy i'm going to congratulate you on draining the swamp of these 5,300 low-level employees. because they almost brought down one of the greatest companies that our country has ever known. i remember wells fargo, old wagon train days. i'm happy that you got rid of those employees. and i am sorry for your loss, your $41 million. i'm sorry for the loss of the investors whose stock dropped. but i am wondering what the relief is for one of my constituents, and i have her letter and i want to enter it into the record, she worked at wells fargo -- >> without objection. ms. moore: she started making 13 an hour and ended making $15 an hour. she was one of those whistle blowers who complained to the manager. and then they changed her
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performance numbers and pushed her out. and so she's a person that lost her job. and other stuff that happens to you when you make $13 an hour. $15 an hour, sorry. and you're pushed out by people because you don't want to -- because you don't fit in with the expectations and the culture. what is the remedy, is there a fund for these employees? the good ones, not these 5,300. what is it $12 an hour? $13 an hour employees? what is the remedy for my constituent at wells fargo? mr. stumpf: we want to know about every one. we'll review their files for anyone who had anything to do -- if they were -- ms. moore: she has a case with wisconsin equal rights division. how can she -- mr. stumpf: we have people she could talk to.
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ms. moore: the people she talked to fired her. mr. stumpf: we have corporate resources here. if you could give me that name, congresswoman, let -- ms. moore: i was very disturbed to hear about. you said the numbers weren't large enough to ride to the level of being material for security purposes. i don't understand that. would you as an investor invest in sort of the bernie madoff-type enterprises? these huge dividends, would you make this kind of investment yourself? mr. stumpf: this is not -- this is a quality company who made some mistakes, but our investment basis is all about our capital, our growth -- ms. moore: one question. you have stated previously that you think the dodd-frank overregulates. do you believe that? mr. stumpf: i never said that. ms. moore: really? mr. stumpf: i don't recall saying that. chairman hensarling: time of the gentlelady has expired.
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the chair now recognizes the gentleman from indiana, mr. stutzman. mr. stutzman: thank you, mr. chairman. mr. stumpf, i'm a first loan from norwest bank for a motorcycle when i was 20. i have been a happy customer of wells fargo for over 20 years. and i have been frustrated with wells fargo as of late because of the new website. and i have voiced that. and i think part of this, i think you need to do something about it, because the transparency on the website right now, i can't find some of my accounts. i think that there needs to be at this point a time where you can give customers confidence through the website to make sure that every account can be seen, because i got notices all of a sudden of accounts that i didn't recognize because i didn't see
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them on a daily basis. i found them after i called wells fargo and talked to them. but what my question is to you -- your story is remarkable. you came from a dairy farm in minnesota. if you had taken a different choice. i grew up on a dairy farm. still part of our family farming operation. i'm curious to know what you would do today if you had taken a different path and be a dairy farmer in minnesota and you had been trying to buy land and trying to buy more cows and you realize your credit score, something's wrong with t and you have not been able to get your credit score up and you found out maybe your credit score was dinked because your bank was opening accounts. when accounts are opened, it dings your credit score, correct? mr. stumpf: that is correct. mr. stutzman: two million people potentially had their credit score dinged because someone else was opening accounts in their name, is that correct? mr. stumpf: that is not correct.
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there is about 5,65,000 credit cards which we have contacted 20,000 of those. and less than 25% saying -- i don't want to minimize the numbers. these are still big numbers. one is too many. but we're going to go back and my instruction is make it right for every one of those customers. mr. stutzman: here's what i was surprised to watch a little bit ago when mr. cleaver was asking you what was the highest level officer at wells fargo to be fired. you didn't really know. you said area manager. mr. stumpf: i know the title. i know the functional title. i don't know if that person is a vice president, a senior vice president. i just don't know that. i do know that that's -- it's a branch manager's, manager's manager and we're also not done with our investigation. mr. stutzman: i understand. this broke for the public within the past month. you apparently knew about it 2012? 2013?
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mr. stumpf: we knew that not everyone does it right. it was sometime in 2015 we did our pwc study, those results came in in 2016. mr. stutzman: you are the c.e.o., when 935 employees were fired. in -- all you have to do is stand up for your company and say this is going to stop. and it should be stopping. i'm curious to hear from employees who are fired what their experience was. i hope we do a hearing with some of those. but let me ask you this. wells fargo is a huge company. is it too big to manage? mr. stumpf: no, it is not. this was a focus problem. we do a lot of areas really well. like model risk and market risk and capital liquidity. we know we have work to do in operational and risk. we should have invested more today.
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i told our folks no stone unturned, no dollar unspent. get this right. we'll get rid of sales goals. mr. stutzman: where was the outrage from you a couple years ago when you first heard about it? there's outrage on this committee and rightly so. i'm outraged about it. but i don't sense the same outrage from you when you have -- when we're seeing your the lady here, she's walking away with millions of dollars. the american people and your customers are going to be very upset when they see exactly what happens here. final question i hope that you will -- i didn't hear the question from this committee, but will you get the number to this committee of cfpb regulators embedded at wells fargo bank? mr. stumpf: i can talk to our team and we'll be as cooperative as we as we can. i don't know whether that's covered under confidential -- i'll be as helpful as i can be.
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mr. stutzman: please do. not only have you and wells fargo let customers down and so have cfpb. people are mad at both. chairman hensarling: the chair now recognizes the gentleman from minnesota, mr. ellison. mr. ellison: i ask unanimous consent to enter into the record a report entitled banking on the hard sell. low wages and aggressive sales metrics. put bank workers in customers at risk. i'd like to enter into the record. chairman hensarling: without objection. mr. ellison: i also like to enter a record an op-ed i wrote in the daily beast the other day entitled john stumpf's wells fargo racket shows why bank workers need a union. chairman hensarling: without objection. mr. ellison: i would like to note for my colleagues, progressive caucus held a june 10 briefing listening to the workers that we have been talking about today. we would be happy to do another one. but on june 10 we had workers
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come in and testify to the very thing that was -- that we have been talking about today. which is these high pressure sales techniques. mr. stumpf, if you are a work at wells fargo and you are expected to seek out and reach sales goals, you mentioned that, right? mr. stumpf: we had sales goals. mr. ellison: yes or no, sir. i don't have a lot of time. i'm not trying to be unkind but don't waste my time. yes or no. mr. stumpf: yes. mr. ellison: could you tell me, do you-all have something known as prospecting calls that were expected for bankers to make? mr. stumpf: i don't know that level. mr. ellison: you don't know. do you deny there were prospecting calls? mr. stumpf: i do not know that level of detail. mr. ellison: were you aware each banker was expected to make 100 prospecting calls a day? mr. stumpf: that's the first time i ever heard that. mr. ellison: mr. c.e.o.
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chairman, are you aware that there were weekly meetings held by -- morning huddles to talk about these sales goals, are you aware of that? mr. stumpf: i know that -- mr. ellison: you got to answer yes or no. mr. stumpf: with an explanation. mr. ellison: morning huddles or not? mr. stumpf: yes with an explanation. mr. ellison: at these morning huddles, were there questions asked of workers how are they going to sell more credit cards? and were they given goals for specifically selling a number of credit cards? mr. stumpf: i don't know that everyone holds -- i have to give you an explanation. mr. ellison: were they given goals -- mr. stumpf: i don't know that. don't know every branch held a morning huddle. i know our team works together. mr. ellison: were there
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publishing of charts on who sold how many products in your bank? mr. stumpf: i do not know that. mr. ellison: were they publishing charts who did not make sales goals? mr. stumpf: i don't know that level. mr. ellison: workers say there were. if a worker did not reach their sales goals, were they put on initial written warnings? mr. stumpf: i don't know the process. mr. ellison: if workers did not meet again were they given a second warning? mr. stumpf: i don't know that level of detail. mr. ellison: if they were not reach second warnings were they written up, admonishments for making sales goals? mr. stumpf: asking me a question i can't answer. mr. ellison: were they given performance improvement plans if they did not make the goals? mr. stumpf: i don't know that level of detail. mr. ellison: how did you generate these lists for workers to have to make calls? how were the lists generated? mr. stumpf: i didn't know if
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there were lists. i don't know that level -- mr. ellison: you don't foe if there were prospecting lists to make cold calls on? mr. stumpf: i don't know that level of detail. mr. ellison: if sales weren't important, were workers given credit card and home equity loan goals to meet? mr. stumpf: don't know what their goals were. mr. ellison: why were workers encouraged to open numerous accounts for customers? mr. stumpf: our team members are encouraged to talk about -- mr. ellison: if a worker got a person to open up an account, isn't it true that that account, let's say a debit account, there has to be a certain minimum balance in that account and there is a fee to hold that account if there is not the minimum balance met, am i right? mr. stumpf: i don't believe you are. mr. ellison: if there is an
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account, does there have to be a certain number of uses of that debit account per month? mr. stumpf: i believe that's one way -- mr. ellison: if it's not met is there a fee? what is the minimum balance fee? mr. stumpf: i don't know what those numbers are. chairman hensarling: time of the gentleman has expired. the chair now recognizes the gentleman from south carolina, mr. mulvaney. mr. mulvaney: i thank the chairman. i can't tell you how disappointed i am to even have to be here today. as one of the many members of this committee who every single day in here defend a banking system. defend capitalism. defend free markets. to sit here and have to watch you essentially validate everything that the other side has said about you and your business and industry for the last three or four generations is extraordinarily disappointing to me. the damage that you have done to
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the market, to your industry, far exceed the damage you have done to your own business. but again there is nothing i can do about that. i want to ask you one question. i know a little bit about business, not nearly as much as you. what little i do know i learned from my dad who was actually raised very similar to you. he was from minnesota, went on to university. little older than you, but not much. i remember him telling me one time when i was first getting into business, you know what, you can learn a lot about an enterprise, about an organization, by looking at the leader. and that the organization will take on the personality of the leader. or the owner, or the person in charge. if you walk in to somebody -- you walk into a lobby and you receive nicely by the young man sitting there answering phones, it's probably a good indication the lady that owns the place is a good person. conversely if you walk in and get treated like crap and disdain, it probably says a lot
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about the people at the top of the chain. i think the folks that work with me in my office reflect that. you come to my office you get treated well because that's important to me. the place that you ran, mr. stumpf, i don't know that much about wells. i know a little bit about wachovia and wells being first union because of where i grew up. you-all are rotten. we have heard stories today everybody's heard about. i'm looking at the story from 2009 about the lawsuit that got filed that says wells fargo, saw the black community's fertile ground for subprime mortgages as working class breaks were part of the homegrown mania. in an after date she stated that employees referred to blacks as mud people. and to subprime lending as ghetto loans. i can't tell you how hard it is for me to even say that. targeted black churches.
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i'm not going to defend that. that doesn't even deserve defense. i'm going to ask you one question. is this organization -- does this organization reflect you? mr. stumpf: i am deeply sorry and i read that article you just said. and that has no place in our culture. no place in what we have done. and we're, today, the largest lender to low and moderate income people in housing. we make more loans to african-americans. latinos, persons of color. we're proud of that. and that place -- that kind of language and that kind of behavior is not who i am. i have learned my life lessons also from my parents. my dad is 94. and he's still a wonderful guy and big influence on my life. so is my mother. i try to lead with courage and
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conviction. our company is based on those values of ethics, of doing what's right. and the company, of course we have made mistakes. not everybody lives up to our vision and values. but the vision and values are 268,000 people aspire to and do every day is consistent with what i want to live my life and what our cultures of our company. mr. mulvaney: i appreciate that. i want to say something to my democrat colleagues. i know we'll see this. and believe me if the role was reversed i might see this as an opportunity to push a political initiative, agenda, to bang the drums for more heavy regulation. everything that we're talking about here today, including what i just read, which i won't read again, happened in cfpb and dodd-frank. it happened after we supposedly fixed all of this with regulation. and maybe i would suggest this.
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you can't fully regulate bad actors. i'm not here in a position to say if there stumpf is a bad person or not. try not to be in the position of judging other people. that's for his board. i know how i would vote if i were the board. he wouldn't be here if i were on the board of that company. but you're never going to be able to fully regulate bad actors and i hope we look at this with a certain levelheadedness as we move forward. thank you. chairman hensarling: the time of the gentleman has expired. the chair now recognizes the gentleman from colorado, mr. perlmutter. mr. perlmutter: first, mr. chair, i'd like to introduce into the record the report, community banking reports may 24, 2016 from wells fargo. chairman hensarling: without objection. mr. perlmutter: and report from may 20, 2014. chairman hensarling: without objection. mr. perlmutter: mr. stumpf, about eight years ago you were before this committee and i was so proud of you and proud of wells fargo. and the fact that i thought,
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operated as a bank. and really looked after me, customer, somebody who's been with the bank. all these young guys. i have been with one of the predecessor banks for 40 years. and i represented some of the predecessors. first interstate, security pacific, united. the culture is what i want to talk about because that really is you and it is your board of directors. and i have heard terms today that i don't really align with the banking business. if you will. i look at banks as something different. we came in with $800 billion to save the banking system when it was collapsing. because it's something different. but i hear you use words today, and this is where i think the root of this problem is, sales organization. retail sales.
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stores. i never, ever in my life referred to my branch, bank, in applewood, colorado, as a store. you don't sell veggie matics. you don't sell grapefruit. you take people's money, you save guard it. and you lend it out to people who may need it for interest. maybe me. and to get in -- this is where mr. green was going with the products. i don't know how many products you got. i looked at my account. i do like the online banking by the way because i can look at all my accounts. i turn out, as mr. royce says, i have eight accounts, personal accounts with you. how i have eight, grade eight, don't know. but i do. so talk to me about why you're calling these things stores. why you use words like retail sales and cross selling. you're a bank.
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mr. stumpf: we're a bank. and the idea here is that we want to make sure our team members when you come into a bank or any one of our customers do that we treat them with respect and that we provide products and service that is help them. when they do more with us, we give them a better deal. they get more value. it helps them and it helps us. and whether we call them a store or a branch or a location, it's what -- it's the hearts and mind of our people inside there. mr. perlmutter: i'll accept that. but i still think you are a bank. and we treat banks differently than grocery stores because you are the heart of the financial system. here's where i want to go. i go into my bank and there's been some turnover there. they always treat me well. they are always very nice young
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people. sometimes they are saying do you need this or that, i generally am saying no. when you talk about these goals that are established, why are you even setting goals? the goals should be if your customer needs something try to help them. mr. stumpf: correct. we're getting rid of product sales goals. mr. perlmutter: why did you have the goals in the first place? mr. stumpf: it was an idea for people to make sure that they use the right way of sitting down so they have a conversation with a customer. i don't want people in our branches or banks to be apathetic and not care. i want them to sit down and have a conversation with about where that customer is in their financial journey so they can meet a need with a product. what works well and deepens relationships, everyone wins. whatever the goals are, no one should be forcing a product or saying why don't you do this. why don't you buy this. it doesn't -- that's not the way we train. that's not the way we innocent for. even today we have taken that
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off the table because we're learning that customers grow with us when they are happy. when they are satisfied. when -- and our satisfaction scores and loyalty scores have never been higher. that's a better way of doing business. mr. perlmutter: look, i'm just up here as a member of congress who has worked with banks before. i'm just telling you you got to stop -- our stores, our stores generate more deposits than our competitors. you got denver up here on your chart. that creates the wrong culture. and i yield back. chairman hensarling: the gentleman's time has expired. the chair recognizes the gentleman from north carolina, mr. pittenger. mr. pittenger: thank you, mr. chairman. mr. stumpf, good afternoon. i'm from charlotte. mr. stumpf: we love charlotte. mr. pittenger: there are some 23,600 employees there.
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they are my constituents. i do have deep respect and appreciation for the corporate citizenship that you-all have been in charlotte, you have been exemplary in terms of what you have done in our community. you take active roles, your employees do, and many nonprofit organizations. that leadership is commended. of course we cherish the wells fargo golf tournament. so you have a major presence in our community. and that's why today is such a sad day. i know it is for you. i am sure as you look back on these 35 years and where you are today you think, what if? what if i had done this? what differences could i have made? where ways blind-sided? what mistakes, where did i err? so i think i'm asking you to
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look as if you were sitting in our seat. we represent these people. as was said earlier, some 750 to 800,000-plus people. you heard a lot of outrage. a lot of a lot of righteous indignation because we haven't seen what we expected. in the south part wells fargo facility that you have, there is written behind the teller station, counter, statement by mr. wells. came from 1864. do you recall that statement? it's very prominent. perhaps it is in other wells fargo. it seems to be the motto of your bank. mr. stumpf: are you asking me a question? mr. pittenger: made a lot of statements. mr. stumpf: treat every customer with respect. mr. pittenger: we have a
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possible rule. concentrated one word, courtesy. as you look at all -- i think that's the challenge we have today. what could have been done different? certainly the regulators were there. yet this is reported by a news agency. what would you have done different today? as you look back and the changes and mistakes that were made as the c.e.o., what happened in that corporate culture that did not allow that information to come to you in a more timely fashion? that would have caused you to take even greater direction and leadership. mr. stumpf: it's a good question. i probably ask myself that a thousand times, a million times. mr. stumpf: it's a good question. i have probably asked myself
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that a thousand times, a million times. and while i want to defend our culture and our people, i recognize that we could have done more earlier. i don't know if there is any one point, but surely we should have realized earlier that product sales goals could elicit behavior that's inconsistent with our culture. even if it happened like in this case with 1% of our team, it's way too much. it's simply not worth it. and frankly, it's not even consistent with where we're going, given the business today. i don't know if i can be clearer than that. there is a lot of people doing a lot of introspection within the company today to make sure that we never, ever put a customer or a team member -- we want all these customers to be foremost
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at what we do. if courtesy is the right word, we think of relationship. we love long-term, mutually beneficial relationships with our owners, our team members, and most importantly our customers. mr. pittenger: yes, sir. i think those of us who understand free markets, i was on a bank board, small bank, but we understood the customer. we understood the importance of the financial industry and what it does to facilitate economic growth. and that is why we are so challenged today, because there has been a strangling of regulations on financial industry. yet with that, we're having to deal with you and with this bank and with this problem that's going to have ripple effects. and the messaging is going to be there that there needs to be even more oppressive regulations. chairman hensarling: the time of the gentleman has expired. the chair now recognizes the
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gentleman from connecticut, mr. himes. mr. himes: thank you, mr. chairman. mr. stumpf, we focused a lot today on accountability. i want to go back to something that congressman lucas' concerns troubles me. the focus on culture and the materiality of what happened here. there is notg that a problem with the culture, and you are hearing a lot of disagreement up here. we're hearing in the senate hearing that this wasn't material. and i guess if you sort of exquisitely finely define materiality. maybe the sec defines it, maybe $185 million in fines is not material. but this is about much more than a legal definition of materiality. we need to hear you say that you understand the magnitude of what has occured here. it's more than $185 million. it is about the trust and faith and belief in the system. it's not about the ups and downs of one company, it's about people's faith in the banking system, faith in the market economy. it's about whether competition
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is perceived as a good thing by the american public or a bad thing. it is really about people's phaseand organizations -- inphase -- faith organizations like yours and like the one that you're testifying in front of today. let me start with the numbers quickly. what matters to an investor is the value of the company they own. your shareholders have paid out $185 million, including the state of connecticut's pension funds. mr. stumpf, do you know what the market cap, value of your company is today? mr. stumpf: i didn't look this morning, but i think it's $220 -- mr. himes: $228 billion on september 7. when this started it was $253 billion. there has been no other material impact. just this event has cut $25 billion off the value of wells fargo. that is a big number. do you know what the value of ford motor company is, mr. stumpf? mr. stumpf: i do not. mr. himes: $50 billion. just since the 7th, you have and your organization and the culture have obliterated a full
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half of a ford motor company. that has to be material, doesn't it? mr. stumpf: congressman, i take this as much more than $185 million. i don't want to diminish this. i'm deeply sorry we didn't do the right thing. i understand that re-earning the trust of our customer and the american people is going to be our biggest challenge. mr. himes: i do want to get away from the numbers. i'm troubled by the culture thing. do you think that you can fully measure wells fargo's value with the hard assets, dollars and cents, numbers of the accounts. let me ask you it another way. our intangible things, like wells fargo's reputation and brand, an important part of the company's value? mr. stumpf: no question. mr. himes: do you believe that wells fargo -- mr. stumpf: with an explanation. i think frankly what is in the hearts and minds of our people and the trust with our customer is by far the most important thing. they make all the rest happened
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happen.- mr. himes: do you think that wells fargo's reputation has been damaged in a material way by this? mr. stumpf: i think there's been damage, yes. mr. himes: what i worry about is bigger than wells fargo. it's the fact that the system comes apart if people don't have faith and trust. mr. stumpf, can you see what i'm holding up right here? it is a one dollar bill. the all mighty dollar. a piece of paper with green ink on it. does this thing have any intrinsic value? can i eat it if i'm hungry? can i use it to cut would? -- wood? does it have any intrinsic value at all? mr. stumpf: no. it represents a promise. mr. himes: it's a promise. it relies on the faith and the belief in the american people that this has some value, otherwise it's a piece of paper with green ink on it. mr. stumpf: i totally agree. mr. himes: can i expand that point to the banking system? if americans started getting anxious about the fact you don't have enough money in your banks on any given day to cover their deposits, we would have a problem. mr. stumpf: no question. mr. himes: the only thing
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standing between us and this being meaningless, and between them believing that the banking system doesn't work is trust and faith in the fact that it does. mr. stumpf: congressman, you are absolutely right. trust is the absolute critical element here and we have a lot of work to do to work on that. mr. himes: so your investors are equity investors. they accept risk, including the possibility that something like this could happen. if you don't want this kind of risk, you buy bonds or treasuries or whatever it is. i would implore you as somebody who i think understands that the market economy is important and that the financial services industry is important, i would implore you to please don't continue to focus on this idea that this is not material. i think we're now agreeing it is material. mr. stumpf: i never said -- mr. himes: please work with your colleagues to repair some of the damage that has been done to the faith and the trust that we both here today have acknowledged is the only underpinning of the system that has done so well by you, sir. mr. stumpf: thank you for your
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comments. i couldn't agree more. this is bigger than the 185. in fact, i don't even think in those terms. regaining trust. mr. himes: yield back. chairman hensarling: the time of the gentleman has expired. the chair now recognizes the gentlelady from missouri, mrs. wagner. mrs. wagner: thank you, mr. chairman. mr. stumpf, you have come before this committee today to answer for the appalling actions taken by your company, wells fargo. i have a number of questions, but i want to start by expressing my outrage. outrage that your company was taking advantage of your customers, our constituents, for years and years and years. i don't understand how your employees could create millions of unauthorized accounts without someone raising a red flag. and if that happened, how you failed to act on that knowledge.
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responsibility to your customers and you failed, big-time. wealth one's money and in the custody of an organization like wells fargo is one of the biggest displays of -- what are we talking about? public trust. and you, sir, and your company, have betrayed that trust. and taken advantage of consumers in order to meet sales performance goals and fraudulently improve earnings and share prices. this is wrong. this is immoral. and this may even be criminal. as you stated, sir, the buck stops with you. not only did wells fargo and your employees fail these customers, but our regulators failed as well. they neither identified nor prevented this malpractice from
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occurring in the first place. it wasn't the occ or the cfpb that first uncovered these deceptive failed practices that that were taking place, but it was in fact the "l.a. times," the media, that first brought your company's shameful practices to light. and while it is the regulator's job to prosecute the banking institutions that break the law, it is our job as members of congress to prosecute the regulators who are in fact asleep at the wheel. from what we know, and there is a lot we don't know, sir, this widespread abuse was occurring as long ago as 2011, some have said maybe back as far as 2007, with 1000 employees being terminated every year for creating fraudulent accounts. yet this behavior persisted for years without management intervening. and even when regulators began to investigate, wells fargo did nothing to notify customers and shareholders. your company abused its
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customers. while you have apologized, that apology carries no weight with me, sir. you still have a lot to explain to this committee, and frankly, to my constituents. how many of your customers have been impacted by your fraudulent activities? mr. stumpf: i don't know. i know what the pwc numbers showed. mrs. wagner: what is that number? mr. stumpf: two million accounts. -- accounts that they could not rule out. now we're going back and contacting those customers. within our credit card business, as i mentioned, we have already talked to 20,000 of them. mrs. wagner: how many in missouri? mr. stumpf: i can get you that. mrs. wagner: quickly as you can, please. how many customers have been abused in my home state of missouri? mr. stumpf: there were 1,191 accounts. mrs. wagner: what portion of these customers were defrauded after you became aware of the
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fraudulent activities? mr. stumpf: i don't know what -- i don't have a time line on that. i just have it broken out by credit card -- mrs. wagner: over 2 million customers, you are going back to find out if there were more juried -- more juried and -- more. and you don't have a timeline. you have a timeline for the employees that you fired year after year after year, but you have no time line of the number of fraudulent accounts? mr. stumpf: i can work on that and get that to you. i don't happen to have it in my book right now. mrs. wagner: you keep saying, sir, you are going to make it right. those are your words. you are going to make it right. i'd like to know -- when? when will these customers be made whole, mr. stumpf? when will we know and when will they know whether their credit scores have been affected? when? mr. stumpf: we are starting to work on that right now, and we already talked to 20,000 of our customers. and we're hearing that 75% -- less than 25% either didn't want
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the card or didn't know they had the card. and -- mrs. wagner: 20,000 out of two million-plus customers? you are just getting started now? sir, just toyears, identify and begin rectifying the problem and wells fargo only just announced their sales incentives will eliminate in october. customers, will they have to wait five years or longer to get relief? mr. stumpf: the 20,000 we talked to so far is out of the 565,000. other ones did not have, from my understanding, a bureau involved. but we are going to talk to all of our customers. chairman hensarling: the time of the gentlelady has expired. the chair now recognizes the gentleman from delaware, mr. carney. mr. carney: stumpf, i represent the whole state of delaware, over 900,000 people. one of the bigger district here in the congress. juried asking center you may know, we don't have a huge wells fargo presents juried -- presence juried -- presence.
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could you look in your book and find out how many fraudulent accounts were attributed to people who live in the state of delaware so i know what we're talking about? mr. stumpf: i can tell you how many accounts that the pwc analysis could not rule out. these aren't -- mr. carney: your commitment is to make right each of these accounts? mr. stumpf: right. delaware, let me see if i have this number right. 4,255 accounts. mr. carney: my responsibility is to make sure and your commitment is to make sure that each of those accounts will be -- you will make right by those people. mr. stumpf: we're going to contact every deposit account. we are going to contact every credit card customer that we can make contact with. we'll try to contact all 565 in your district, or in your state, looks like there's 1,793 cards. again and i don't know how many , of those won't be wanted
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versus wanted. we are going to look for the secondary harm. mr. carney: thank you very much. part of our responsibility as members of congress in this hearing is to figure out what went wrong, whether people are being held accountable. most importantly what we should be doing going forward. the thing that i'm struggling with is how long this went on before you were able to stop it. and you have heard that question on and on again. it does for me, as mr. stutzman asked from the other side of the aisle -- by the way, i agree with mr. capuano, there are very few issues in the six years i have been here where both sides of the aisle are on the same page. mr. meeks and mr. capuano and mr. posey and mr. duffy are outraged on the same subject, you know that something is going on here. so, what about that question about whether this is an institution that's too big to manage? mr. stumpf: again, as i mentioned to another -- mr. carney: mr. stutzman asked the question. mr. stumpf: i think this is a
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focus problem. we can get our arms around this and we will. mr. carney: how can you manage such a large organization with 260-whatever thousand employees and not be able to answer the questions that mr. ellison posed to you about things happening on the frontlines? how do you control that activity which was really what was going on here? mr. stumpf: again, we have leaders in those businesses that could answer those questions. i don't have that level of detail. i can surely get that. mr. carney: i would appreciate it. one of the things i have worked here, and i'm not going to be here after this next election. one of the things i worked here since coming is on mortgage finance reform. entered into the record by mr. meeks was a list of wells fargo settlements for state and federal regulators. there is a whole list, $5 billion plus, related to mortgage fraud, if you will. could you explain to me how your chain of control got out of hand with respect to these violations?
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mr. stumpf: let me -- regarding the mortgage -- mr. carney: much more impactful on the economy than these fraudulent accounts. although these fraudulent accounts are really important. mr. stumpf: i don't want to minimize any of our mortgage settlements. but we're by far the largest mortgage originator. mr. carney: which is why i asked the question. if you have the level of fraud going on with fannie mae and freddie mac. mr. stumpf: we have made settlements with a number of agencies, as other companies in our industry have. our settlements have been -- we have had far fewer issues, even though they are the largest -- i'd like to make this point. mr. carney: the settlements were representations made to fannie and freddie which indicated that the mortgages are -- were what you said they were, correct? mr. stumpf: i believe what you're referring to is an fha issue that we settled in the last six months. mr. carney: that was $1.2 billion. no, the fannie and freddie settlements were $869 million to freddie and $591 million to fannie mae.
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essentially as i understand these settlements, they are over information that was misrepresented to the gse's. mr. stumpf: i don't have that level of detail right now, but i know this. since 2009, we have made 11 million mortgages in america to help people get lower rates or by homes. that has been very important to our customers. mr. carney: with an institution that large and that difficult to manage, how do you make sure these kinds of things don't happen on the mortgage side as well? mr. stumpf: we have a terrific team on the mortgage side. we have done a lot of work to improve their. we have great leaders in those businesses. i would like to have some additional information if you could provide it. my time has run out on the basis of these settlements. mr. stumpf: i will do whatever i can. >> i share my colleagues outrage over the unethical and illegal
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sales practices at wells fargo which opened up over 1.5 million fake bank credit card and web services accounts in the names of real customers, costing those consumers millions of dollars in fraudulent overdraft and inactivity fees and potentially hurting their credit scores, through no fault of their own. does not havergo a major retail presence in kentucky, it is very likely that many of our constituents -- my constituents in the sixth congressional district in kentucky were defrauded through wells fargo credit card programs. if you could reference your materials again and identify the number of my constituents may have been impacted. mr. stumpf: while i'm getting that, i would like to make clear that the 1.5 million deposit accounts, very few if any had any credit for it we did not report that to the credit bureau. potentially, the
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accounts in kentucky? mr. stumpf: there were 600 finite accounts that could not be ruled out. mr. barr: for those 600 of my potential constituents, you have testified today that what happened in your institution was not consistent with your culture and ethics. but i have to think about those 600 kentuckians. my constituents, who may have had an account opened without their knowledge, without their consent -- middle income, hard-working kentuckians. that may have resulted in overdraft fees, activity fees, and could very well damage their credit score. no fault of theirs. you have said that you want to make this right. i would say, my constituents have been damaged by your conduct would say that that culture allow that to happen. that is a rotten culture. my question to you is, let's not lose focus on the victims. let's not lose focus on those defrauded wells fargo customers.
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you said your bank will make this right for your customers, and this committee's job is to hold you accountable to make this right. when you commit to me -- we all have caseworkers, and it will not surprise me at all if we get a call from a customer who has been wronged. will you commit to me and your government relations team commit to me on the record that will you will you work with us in our constituents to make this right for them? mr. stumpf: the answer is yes, with an expiration. we are committed to make it right for every single one of our customers. in fact, we are working with -- we're going to have a consultant that the cfb has to approve. we are going to have mediation, we are going to go back. i'm interested in results. i will have our team work with your team. i appreciate that, because clearly, there is a lot that went on wrong with your bank. no one did enough to fix it. tell you i want to
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about who i think about in addition to those constituents who have been harmed. i think about the community banks and credit unions in my district. i've talked to many people who work for small institutions in rural kentucky who are your competitors. and the fact that this scandal has painted a bad picture for the entire banking sector and, frankly, the institutions and my district, all those community banks and credit unions, they don't have their culture. but now, they have a tarnished reputation because they have been swept into this with you. we have been fighting for regulatory relief for the small community tanks and these credit unions, that frankly represent competition to big banks like you. what i worry about are these small committee banks and credit unions that are now going to
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have to deal with the ramifications of the bad acts of your institution. can you comment on their that are colleagues now going to have to live with this regulatory onslaught that is going to sweep them into this, when they are not at fault? frankly, they do not have a culture like beers. -- like yours. mr. stumpf: again, i'm sorry for what we did, i sorry that we cannot move fast enough. the vast majority of our people, even the regional bank did exactly what is right. they followed our culture. this is about people who did not do the right thing or behaving not right. i except responsibly for that. i'm sorry about what happened. mr. barr: one final question is that you testified today that you should have known sooner that product sales goals would have elicited bad behavior. was it your policy at the time that all this was going on to notify customers when an account was opened? mr. stumpf: when an account was funded, we was not
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had automatically within 60 or 90 days removed from the account file. it was not until 2015 that we finally put it together that there could be a fee during this. that is when we did the full-blown study back to 2011. mr. barr: i would think the best practice should have been to notify a customer when you open an account. mr. stumpf: in fact, we do that today. within one hour of an account being opened, they get a notice that the account has been opened to read we will -- opened. we will not even pulled the credit bureau unless you have received a signature. >> it looks like wells fargo has one somewhat of a deep dive the 1.5 million checking accounts and half a million credit cards. can you tell me with any specificity what demographic was
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most affected? i represent alabama. could you tell many how many folks in the state of alabama were affected? mr. stumpf: it was more in the west than the southwest, but let me get to my numbers here. while you are looking, i want to know whether or not you have identified any commonality between those folks that were affected, either geographical, demographics, race, ethnicity, income level. have you isolated as to who was most affected by the fraudulent actions? mr. stumpf: that is a good question. of the 2 million accounts that we could not identify, we cannot -- could not rule them out. in fact, the deposit side skewed to younger people, not older people. racee don't use rates --
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only age is what we capture. ms. sewell: what about income? when people open up credit cards, they have to say what range of income. any identifiable commonalities? mr. stumpf: on the deposit side, i don't think we do that. on the credit card side, i don't have that information, but i can surely get back to you on that, or at least have our team talk to you about that. ms. sewell: and you were looking up the state of alabama to see how many customers were affected. mr. stumpf: alabama had 22,795 accounts, not necessarily customer accounts, that they could not rule out. i don't know how many of those are going to be -- ms. sewell: i can assume from all your testimony repeatedly or today -- repeatedly here today that the customers in my state will be made whole or made right, as you like to say. mr. stumpf: that is our goal for every customer. ms. sewell: my real question is
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this. being made right includes more than just been made whole for the damage that was done personally to the customer. the reality is that you violated the public trust, and it seems to me that being made whole should go to all the bonuses that were received off of fraudulent information over the time period identified. how much money have you made 2er the five years of 2009 2015 in just bonuses? i'm not talking about compensation, just bonuses. mr. stumpf: i don't recall exactly. ms. sewell: it may surprise you to know it was at least 12 million and bonuses for the last three years. mr. stumpf: i don't recall the exact number. ms. sewell: my frustration is that being made right is not just about the personal damage
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done to the customer, it is really about the public trust. that to me goes to every level of your company being unjustly enriched by fraudulent schemes such as this. i would like to know what your thoughts are on how wells fargo plans to make right to the public on such a magnitude. mr. stumpf: thank you for that. first of all, i think it's important to note that fraudulent or unused accounts hurt customers and they hurt us. in fact, the $2.6 million of fees that we found for this for -- four years cost us $10 million to produce. that is a losing operation. people invest in our company for a whole lot of reasons, and one is about the relationships of customers who use products. product isd unused just -- ms. sewell: with all due
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respect, i understand that it hurts you, but the customer base and the folks in alabama are much more egregiously hurt then you. mr. stumpf: there is no question, i agree with you. ms. sewell: i want to go back to the comments of my colleagues, mr. ellison, who was really trying to capture bad business practices of your sales force. do you still have that line of business? is that still part of the portfolio of wells fargo? mr. stumpf: we have a great retail banking business, we love it, and we are getting rid of sales goals. ms. sewell: what else are you doing to make sure this doesn't happen again? mr. stumpf: for any credit card or deposit account opened, there has to be a signature today. if there is not a signature from the customer, it cannot get opened. we are also doing mystery shopping. ms. sewell: what is to stop a fraudulent signature? mr. stumpf: you have to put in your pen, only the customer knows that.
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>> we now recognize the gentleman from pennsylvania. from wellsarges fargo violate any legal or ethical standard. we know that wells fargo employees for years opened 2 million accounts for customers without organization,. to hit sales targets, thank employees falsified accounts and engaged in egregious practices. this was theft, plain and simple. the employees did what they did in a systematic way representing a gross violation of trust. when i first heard about this, my first thought was it falls into the you have got to be kidding me category. i was left thinking, how does this happen? over the course of the last five years, wells fargo was firing 1000 lower-level employees each year. we learned last week that it was not until 2014 that various committees'and wells fargos board were informed.
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it is incredible this did not rise to the attention of the board immediately. incredible that it did not end sooner. these actions were wrong. people, perhaps more, lied and stole from customers who they thought would trust them. how many people in pennsylvania were affected? mr. stumpf: as i'm looking for that, i have a couple of comments. over 10% or 15% of these people were bank managers, these were not all lower-level people. levels ofs: how many the organization chart at wells fargo are there? mr. stumpf: it depends on the operating business. ms. rothfus: 10 layers? mr. stumpf: it could be eight or nine or 10. ms. rothfus: so a third level employee wouldn't be considered a lower-level? how many people in pennsylvania? 79,918 accounts he cannot exclude. -- we could not
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exclude. only orredit card, not 25% could not remember or did not order. ms. rothfus: how many branches does wells fargo have across the country? mr. stumpf: 6200. ms. rothfus: how many are identified involved in the scandal? mr. stumpf: i don't have that number. ms. rothfus: is this a coast-to-coast scandal? mr. stumpf: it is behavior we did not want, and i don't know if it affected every state or region. ms. rothfus: in the last five years, from the branches have you visited personally? mr. stumpf: i don't keep account number, but to pick a maybe 1000. ms. rothfus: do make it a practice to go behind the counter and work as a teller -- mr. stumpf: to work as one? ms. rothfus: ever see the show undercover boss, where the ceo
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comes in and does the frontline work? mr. stumpf: i am not trained or allowed to do that, but i walked behind the teller line and meet our people. i talk with our bankers. ms. rothfus: you would not have waited on a customer and maybe stood in the shoes of a frontline employee and tried the cross-selling practice. mr. stumpf: i have talked with them, and the vast majority of our people are excited. we have engagement scores. every year, we do about 93%, 94% of people participate in the regional bank and a gallup score that brings into account, are you happy in your job, are you 14arded, and our people are to 1, 15 to one, engaged, with the highest scores in the industries. ms. rothfus: how many whistleblowers are there? mr. stumpf: i do not have that number. ms. rothfus: do appreciate the kind of courage that it takes to
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be a whistleblower? mr. stumpf: absolutely. our people can call and ethics line -- ms. rothfus: you have no idea how many whistleblowers. cnn is reporting dozens. do you think that is accurate? mr. stumpf: i don't know. every name that we get, we are going to work on. ms. rothfus: you know how many of these people are no longer employed at wells fargo? mr. stumpf: i don't have the number. ms. rothfus: any idea how many may have been demoted, if any? mr. stumpf: i don't have the number for you. ms. rothfus: i would suggest that that -- even encourage it takes for somebody to spot ,omething like this to speak and the historic protections that should be attributed to whistleblowers, that this will be a top priority. how many people at wells fargo are now working on the whistleblower issue? mr. stumpf: i don't know that issue. i can have my teamwork with your staff and tell you.
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ms. rothfus: you have any idea how many honest employees may have lost out in a race with moby fraudsters? mr. stumpf: i don't have an answer for you. we have got 260,000 terrific team members. >> the chair now recognizes the gentleman from illinois. >> thank you for holding this hearing so we can examine the abusive and fraudulent practices that were so pervasive at wells fargo. i would like to start by reiterating what many of my colleagues have said, that this corporate malfeasance is exactly why we need a strong and independently funded the fpb. as the director testified in the senate last week, the cfp be learned about the fraud through its whistleblower line. it is my understanding that he offered to be here today, but it appears his testimony was not needed to understand the role that his agency played in bringing the fraud to light. i suppose that we don't need his
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testimony because the cfbp has returned billions of dollars to americans, and this case as to that record. did not-- thecfpb learn about this fraud because wells fargo self-reported. in fact, the record suggests that you are informed about their fraudulent accounts anywhere between 2-4 years before self reporting. in the wake of this egregious conduct, he has now come to washington to say sorry. but that does not address the core problems in the culture of the institution and the governance roles that allowed it to develop your develop -- develop. as someone who started a manufacturing business, i understand that culture starts at the top and permeates the entire organization. that the grosss misconduct that drove results you prided yourself on has been underwhelming to say the least.
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it is clear that the simple motivations of keeping the trust of customers, of shareholders, and the jobs of 5300 frontline employees has not been enough incentive to drive a culture of compliance among management here at -- management. my first question, given this situation, which should be a case study for corporate mismanagement -- what specific governance roles should have been in place that would have prevented these abusive practices? mr. stumpf: thank you for your question. i acknowledged before that we should have done more earlier. we should have brought our corporate resources in earlier. we should have obviously got rid of sales goals earlier, because were misunderstood or misrepresented by some of our team members. that would have been good governance. ms. foster: i think i would like to focus on specific proposals. i think we have all been list ofd by this
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settlements and penalties that have been imposed on wells since the financial crisis. without objection, i would like to enter that into the record. one specific proposal that has been made is that regulators penalties for illegal practices should be paid first out of the bonus pool for top executives, so that you and everyone of your top executives would have your bonuses at risk for any malfeasance in any corner of the organization, rather than having the regulatory fines being taken largely out of the highs of shareholders. -- hides of shareholders. my question to you is, if everybody knew that he finds would be paid out of the bonus pool, with that helped change the culture that led to the abuses? mr. stumpf: i can't speculate on that. the board is independent and the board took my recommendation and passed that.
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i'm going to do all i can to lead this company going forward. ms. foster: we can all speculate on what fraction of that compensation clawback would have happened without the intention of the press in congress on this. for example, if you knew that the bonus pool would take a hit for any regulatory fines, wouldn't that create an incentive not to develop a bank that was effectively too big to manage? mr. stumpf: first of all, i disagree that we are too big to manage. we need to focus more on this issue, on operational issues and compliance issues, but we do many areas really well. and i am sorry that we didn't get everything right along the way. we have made settlements, we have had to make it right for customers. i recognize we do a lot of really good things. we are a great corporate citizen. 268,000 team members try to get it right every day for all of our customers. ms. foster: as we look for bipartisan solutions to try to
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prevent this sort of thing from happening again, i find that a very interesting suggestion. a last question. many of the actions that were taken here her to the credit scores, which made it difficult for them to buy mortgages. are you specifically looking to find out if any of your customers have been denied mortgages? mr. stumpf: we are going to dig into that and make a right. chairman hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from new hampshire. >> thank you for being here. in the frustration, the anger, and the displeasure of my colleagues on both sides of the aisle relative to this issue. i have listened over the course of your testimony, and there are a number of what i would consider inconsistencies, either based on what you have said today, what was in your oral
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testimony, or what you stated in the senate hearing last week. i want to clarify a few things. in your oral statement, you said you made a recommendation to the board to take certain actions regarding your salary and other pay. mr. stumpf: that is my testimony and that is accurate. ms. guinta: when did you make that recommendation? thursday,: today is it was some time before the independent board met without me. i don't recall -- it might have been -- it was before or during the board meeting. but i referred, i made comments about that to our lead director that i wanted to do that. mr. guinta: we are talking about last week were this month? mr. stumpf: last week. mr. guinta: before or after the 20th? the 20th is tuesday, today is the 29th. mr. stumpf: it was sometime after -- a sometime on the
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weekend i believe, to the best of my recollection. mr. guinta: so it was after the senate hearing. before, you had said to the senate banking committee that you did not want to prejudice the compensation committee with the board process. since the 20th, you did exactly that. what has changed from the 20th today? mr. stumpf: i felt that it would not prejudice them. and they can do more if they want to. they have all the rights and responsibilities. mr. guinta: i understand that. what i don't understand is that on the 20th, you said to the senate you did not want to prejudice them, and then four days later, the 24th, which is the saturday of the weekend, you did a reverse course. what happened between the 20th and the 24th be to change her mind on the issue? mr. stumpf: i decided this was a startay to show a step, a to show my level of commitment.
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mr. guinta: why wasn't that important before the 20th? mr. stumpf: i was preparing for other things, and it did not cross my mind at that time. i developed that thinking sometime over the weekend. mr. guinta: this is a pretty big compensation head, right? mr. stumpf: again, it is what i thought was right for me to do to recommend to the board at that time. and they can do more, they have all the independence. i did not believe -- i thought that was the right thing for me to do. mr. guinta: what about the clawback of ms. tolstedt pay? when did you make that recommendation? mr. stumpf: she does not report to me. that recommendation was made by her boss. mr. guinta: when were you aware? mr. stumpf: it was sometime over the weekend also, i believe. i don't recall the exact days. mr. guinta: both were after the 20th. mr. stumpf: yes. mr. guinta: to a different issue, do you currently have
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sales goals at wells fargo today? mr. stumpf: the end at our regional bank tomorrow. the reason we didn't take them out before -- the vast majority of our people do the exact right thing. we don't want to hurt them from a compensation perspective, and we thought we could do this and other goals,nd put like customer loyalty and other things that customers really appreciate by january 1. we now know we can do it by october 1. we don't want to hurt them, and we want to make sure our customers get treated well. mr. guinta: let me move on to the cfpb. you have been asked several times how many employees there weren't headed -- were embedded at wells fargo. you said he would do your best to work with us, you did not say clearly whether he would provide us with that number. i'm curious, will you provide us with that number when you get it? mr. stumpf: again, i don't know
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that answer. i will work with our team. the best i can do is that i will consult -- mr. guinta: when you work with your team, will you venture with congress? -- you share it with congress? mr. stumpf: i don't know if that is a confidential information. mr. guinta: they are public employees. mr. stumpf: i don't want to make a promise i can't keep i will -- keep. i will take a look at it. mr. guinta: you will speak with your leadership and try to provide something in writing whether you can provide us with that. the chairensarling: now recognizes the gentleman from maryland, mr. delaney. >> thank you, mr. chairman. a lot of focus has been on your cross sales or your cross cell culture at the institution. is something the institution has been very proud of. when you acquired what cobia, your former chairman, who i
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think was probably the architect of your cross sale program, said we are combining the industry's number one ranked customer service culture of what cobia -- a witht cobia -- wachovi the industry's number one sales and cross-selling culture of wells fargo. this was 2008. reports over the last decade talked about the cross cell culture of wells fargo. pointed out there was risk inherent and this might be undermining the customer experience, including a well-known banking analyst who says that wells fargo suggests a successful bank is one who keeps seeking new customers and selling as aggressively as possible more products to them and not getting bogged down in customer service. the question i have is your
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board of directors. when you have a very large enterprise, the governance process is incredibly important. did the board of directors ever discussed at the board level whether the cross cell culture had gotten out of control at the bank? you were clearly outperforming your peers and you were proud of that and you bragged about it and you have a swagger about it. the law of large numbers leads us all to believe that it is hard to outperform your peers theythey are very day and are sophisticated operators like your competitors are. did your board ever talk about this issue? did they ever sit around and examine whether this culture had gotten out of control, particularly after four or five years of having to let go so many people? mr. stumpf: i don't know all of the things that our board talks about, because i'm not in all the meetings. i will say this. cross sell is our shorthand for depth of relationship.
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we love that. when customers do more, they get more value. mr. delaney: you also make more money when you cross cell. it is either really good for you or really good for the customer, depending upon whether they actually needed the product or not. i'm getting at the board's responsibility, because the board is responsible to make sure you are setting the right tone at the top. you are also responsible for that. of the board is responsible for actually examining the business practices of the bank. you are the chairman of your board. they have an executive session where they may ask you to leave, you are not there when the discuss her compensation, but for most of the meetings, you are there, you set the agenda. i chaired a public company board for many years. did the board ever talk about whether the culture in the retail banking business and all of the accolades you were receiving for your cross cell
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success and the fact that several analysts have focused on the fact that you are aggressive with respect to this, did they ever actually asked the question, should we look into this? did they ever exercise their fiduciary responsibilities around this issue, in other words insuring that your customers were getting an appropriate service, which they obviously weren't. mr. stumpf: the answer is yes. mr. delaney: you can get us evidence that the board has examined this issue over the last several years. mr. stumpf: yes, i can do that. mr. delaney: did you ever give speeches where you said it is important -- as important to make sure we are putting our customer's interests first as it is to achieve our cross-sell objectives. mr. stumpf: i don't remember, i give lots of speeches. i try to talk about the fact that what is good for customers is good for us. you are asking some really good questions here. the idea that somehow having
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customers have more products that they don't use helps us.is absolutely wrong it only helps if they use them. mr. delaney: if a pay for them, it helps you -- if they pay for them, it helps you. can you find any evidence and share with us where you actually said, it is as important to make sure we put our customers' interest first as it is to achieve our sales goals? mr. stumpf: i can't recall all my words, but i do know this. every time i talk come of about customers and putting them first. your largest shareholder has a famous expression where he says, it takes your whole life to build your reputation, and you can lose it in five minutes. do you think you and your institution have permitted lost this reputation? mr. stumpf: we have a lot of work to do to build it back, and i'm committed to do all i can to make it happen. chairman hensarling: time has expired.
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the chair now recognizes the gentleman from texas, mr. williams. many hard-working americans and members of this committee, i am really angry. i also am a customer of your bank. i am amazed at what you do not know about your business. i am really amazed, and i have heard more i don't knows from a ceo that i think i've ever heard in my life. i came to congress to deregulate , and because of your actions, it is really making it it's really difficult for me to advocate for main street or community banks. i have got one civil question for you. -- simple question for you. when are you going to resign? mr. stumpf: i serve at the pleasure of the board. mr. williams: you can resign without the board telling you. i just wanted to know the answer. because, by ay large number of wells fargo employees who opened accounts for existing customers without
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their knowledge, which is just wrong. i am angry because wells fargo agreed to pay $190 million in collective fines and restitution. they do not even have to admit wrongdoing. i have got news for you. people don't care about your hurt. they care about their hurt. i'm tired of hearing about that today. i'm angry because under the dodd frank act, wells fargo would still be eligible for taxpayer-funded bailout. i am a strong supporter of banks both big and small. today, you really make it hard. what you have done has hurt main street. finally, i'm angry because i own a business. i'm am a borrower. i've been in debt more than i've been out of debt in my life. for 44 years, i have owned my business, and it sickens me to think that you took advantage of customers in the manner that you have done. customers are important. they don't make that many customers. mr. chairman, if i have learned
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anything over the last 44 years, it is two things. the customer is always right. to teach us your business today. we don't need to hear that. reputation is all you have when you go to bed at night. when you lose your reputation, you have got nothing. frankly, it is going to take wells fargo a long time before they can restore customer confidence and that reputation we are talking about. let me start off with this. ofthe past, i have been part a banking board, like many have been here. big banks, small banks. so i understand what that entails. i certainly understand the charge that is given to that board to make the bank successful, but ultimately, you answer to the shareholders. as we heard you discuss with the senate banking committee, top executives knew about the fraud under your watch in 2013, so again, as someone who has sat on the board, i find it troubling
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that no action would be taken at all. we have established that no action was taken by you or your board in 2013. but what about your outside auditors, which we have talked about? can you tell this committee again who they were and if you advised them of this 2-year-old is systemic fraud? mr. stumpf: i will get to your question. our outside auditor is kpmg. they do a wonderful job. this is on us. we should have done more earlier. there's no question about that. i don't in any way want to minimize whatever portion of the 2 million accounts were unauthorized. we take that seriously. they are the ones we put first. mr. williams: let me move on. as ceo and chairman of the board of wells fargo, how often did you meet with the board of directors? mr. stumpf: we have eight board meetings a year. mr. williams: did anyone tell
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you to stop the incentive program, that they didn't think it was good? mr. stumpf: there is a committee of the board that is human resources and compensation, and that is not shared by me, i am not a member of that committee. mr. williams: so you don't know. mr. stumpf: i do know that we have incentive programs and we have controls and so forth. and i don't -- that is what i know about that committee and about our business. mr. williams: did anyone on the board raise any concerns about the incentive program? mr. stumpf: as we start to understand this issue, the board took direct action to make sure that, along with management, we understood where the customer harm was and to make sure that the sales process -- that we did not have unethical behavior going on. mr. williams: i'm from texas. how many people in texas were affected by your mismanagement? mr. stumpf: there were --
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were 149,857 accounts. -- accounts that we could not rule out as a possibility of being unauthorized. chairman hensarling: time of the gentleman has expired. pursuant to clause d4 of committee rule three, the gentleman from washington will be recognized for an additional five minutes upon the conclusion of the time allotted to him under the five-minute world. gent -- five-minute rule. >> thank you, mr. chairman. awaytumpf, my take frankly, sir, is that you are in denial. i say that because i can't reconcile much of what you have said with the known fact pattern. you have said, i didn't know, in essence. you have said a very small percentage of our dedicated workforce was actually engaged in this behavior.
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you have said you are sorry, in fact, you are very sorry. you have said we are going to fix it. but the facts are that 5300 of your employees were fired for inappropriate behavior. and they were fired because they , in effect, misappropriated millions of dollars in fees without the agreement of the customers. an act which you yourself agreed with congressman duffy constituted stealing. all of this and the publicity surrounding it led to a $25 billion reduction in the market capitalization of your company. i cannot reconcile what you said with those facts, and therefore, i can only conclude you are in denial. some here have said you should resign. frankly, i don't personally see how you survive. but i, too, this,
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have been on a board of directors, and it is virtually inconceivable to me that your board of directors would see fit to clawback $40 billion in bonus and incentive pay without also concluding you are no longer at the correct person to be -- to lead this organization. the truth is, it is not your survival that i'm concerned about. i'm concerned about your company, your bank, your institution, the 268,000 people that you employ. more importantly, the millions and millions of depositors. i'm more concerned about the trust level in wells fargo and in the financial sector. banks and credit unions. it is in fact vital and the heartbeat of a market-based and capitalist economy. and i'm very concerned about what you and the company have done in the way of damage to that. i am not going to just -- suggest that you resign. i don't think it would do any
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good, because i think you are in denial. but i am going to remind you of some things that you have said. i know right from wrong. i tried to lead with courage .i . i am going to make it right. you also said that you feel privileged to lead wells fargo. on that, sir, i'm going to take you at your word. my hope, my request, and this is not a question. in fact, i would to just is beyond a hope, it is a prayer. that in the quiet and solitude of your home and discussions with your family, you ask yourself, what's in the best interest of wells fargo? is in the best interest of wells fargo, sir? not you.
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>> i think other people have noted that you are repeating some mistakes in the facts of this case, falsified applications, consumers being pushed into products they do not want. it is almost identical to your practices that lead to a record fine against you in 2011. in 2012, you paid violations for violating the service member civil relief act, for foreclosure of homes in violation of federal law. i am privileged beyond measure to represent 20,000 uniformed personnel. you are under investigation again, sir, for violating the service members civil relief act for foreclosing on cars, also prohibited. we don't want men and women in uniform wearing about that when there -- worrying about that when they are putting their life and harm's way. i predict you are going to play
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-- pay another fine. rather than ask the question, i would just say, this pattern just keeps repeating itself. you pay a fine, you promise to fix it, and then a few years later, we are back at it, the same thing again. chair, i would like to yield the balance of my time to the ranking member from california. >> thank you very much for yielding this time to meet. as you know, as the ranking member, i have the responsibility for some kind of leadership here, and i'm very pleased that i was able to work with the chair of this committee to get this hearing. recognizingt here, the size of wells fargo. assets, with in over 6200 branches.
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>> i am concerned about the length of time it took you to know what is going on. i am concerned that maybe you do not have a handle on your management and what the reporting process is that would make you aware of what is going on. you praise her management of the division, even though she had fired 1000 employees in 2011, and yet supposedly it took you two years to know about what had happened. she did not tell you. she withheld the information.
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you indicated in a glowing retirement that she had done a great job. i am very concerned about whether or not, in fact, you understand that we have been sitting here fighting to implement. frank and work out some of the problems that have been identified with d odd-frank. there is an advocacy group for the bank industry that is worked to defund the sbc and removes its ability to remove abusive practices. now i want to know what you think now that wells fargo has been caught for all of this fraud, and i wonder if you denounce the financial services roundtable actions. , while we have been sitting there, i have learned
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that maybe not only wells fargo huge to manage, but maybe some of the reason you do not know all of the details is because you sit on a number of boards. board of target corporation for $272,000 in total compensation per year. you have the responsibility to that,and in addition to during the hearing, bloomberg sent out an alert that said you will be facing a $20 million penalty for improperly repossessing cars of members from the military. it appears that the company cannot even make it through this congressional hearing without us learning more and more information about what is going on at wells fargo.
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i have come to the conclusion that wells fargo should be broken up. you know, i served on the conference committee for dodd- frank and we talked a lot about the living wills and how to learn about how these banks are put together and how they operate. of course, the five largest banks in this country have failed the living wills test, including wells fargo. ism looking at living wills the inability to pass the test. , at thising at size particular fraud that has gone on, and i am worried for the that theking community public will not continue to trust our banks.
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economy tod in this do the business to make the economy work and run, but they are looking at us and they are saying for all of you, in particular those of you that serve on the financial services committee, you are letting us down, you are not protecting us. with that, mr. chairman, i am going to be talking with you and the members of this committee who show their outrage and it move forward to break up wells fargo. may i respond to that? >> we will give the witness a chance to respond. said before, i'm sorry we did not get this right. we will fix this. we will do a lot of things really great. california is our home state. we have been there for 164 years, and major employer, and major philanthropic and we are privileged to serve

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