Wells Fargo Updates: CEO John Stumpf ‘Failed to Disprove … A Massive Fraud’

Under aggressive questioning by Sen. Elizabeth Warren (D-Mass.), Wells Fargo chief John Stumpf would not commit to pushing for the bank to rescind some of the approximately $100 million in compensation received by the executive who oversaw the employees who opened unauthorized customer accounts.

Stumpf also said he never considered firing the executive, Carrie Tolstedt, who announced her retirement in July, effective at the end of the year.

“Seriously?” Warren responded during today’s Senate Banking Committee hearing. “You didn’t even once consider firing her ahead of her retirement?”

When Stumpf started to list some of Tolstedt’s accomplishments during her 27 years at the bank, Warren interjected, “Are you sure that those are not fake?”

Warren and four other Democrats on the committee wrote to Stumpf last week asking him to rescind — or claw back — the pay of some top executives because of the scandal.

Wells Fargo’s response to the letter said Tolstedt received more than $90 million in stock options and other compensation during her career at Wells Fargo and that she would be eligible for a 2016 annual incentive award because she will stay in her job until the end of the year, Warren said.

Warren told Stumpf today that it was “unbelievable” Tolstedt could receive an “incentive award for doing a great job.”

When Warren asked Stumpf if it was appropriate for Tolstedt to receive another bonus, Stumpf said the board of directors’ human resources committee would consider that.

“I don’t want to prejudice the board,” said Stumpf, who is the board chairman but doesn’t sit on its independent committee, which handles compensation issues.

Then Warren asked, “Will you personally support clawing back all or part of Ms. Tolstedt’s pay?”

Stumpf responded, “I’m not going to in any way try to influence or prejudice the board.”

He also wouldn’t commit to personally support any claw-back for the bank executive in charge of compliance.

Given Stumpf’s role as board chairman, Warren expressed incredulity.

“You keep saying, ‘The board, the board,’ as if they’re strangers you met in a dark alley,” she said.

“You are not passive here,” Warren continued. “If you have nothing to do, then what are you doing serving as chairman of the board? If you have no opinion on the most massive fraud to hit this bank since the beginning of time, how do you get to continue getting a check as chairman of the board?”

Stumpf said that he didn’t “accept that it’s a massive fraud.”

Warren shot back that Wells Fargo’s actions showed the need for tougher regulations, saying large banks haven’t adequately changed their behavior since the 2008 financial crisis.

“In 2008, Wall Street promised change, but it looks like it’s business as usual. A giant bank cheats the little guys and yet the executives line their own pockets,” Warren said. “You make it clear Wall Street won’t change until we make it change.”

Source: www.latimes.com www.latimes.com

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