Lawmakers suggest Wells Fargo chief should face criminal charges

The head of Wells Fargo took a brutal drubbing before a House panel Thursday as members of both parties called for his job and suggested he should face criminal charges.

John Stumpf, the CEO and chairman of the board at the bank, was roundly criticized for over four hours before the House Financial Services Committee as he sought to apologize and explain how his company spent years creating potentially up to 2 million fake accounts to meet sales goals.

{mosads}But clear from the hearing was that Stumpf would find no quarter from either party, as lawmakers repeatedly painted his bank as having violated the public trust. Several described it as a “criminal enterprise.” On a committee that is usually strictly divided along partisan lines, there was broad unity in anger toward Stumpf and his bank.

“Fraud is fraud, and theft is theft, and what happened at Wells Fargo over several years cannot be described any differently,” said Chairman Jeb Hensarling (R-Texas).

“Let’s call it really what it is: some of the most egregious fraud we’ve seen since the foreclosure crisis,” said Rep. Maxine Waters (Calif.), the top Democrat on the panel. “Executive conduct at Wells Fargo deserves a thorough investigation.”

Waters even went so far as to say she now wants to break up Wells Fargo, calling it too large to effectively manage.

Stumpf expressed regret at the bank’s actions, which led to $185 million in fines and a Justice Department investigation, but said they came from a subset of branch employees. Roughly 5,300 employees were fired over the tactics, which included opening deposit accounts and credit card accounts for customers without their knowledge.

“This is a focused problem. We can get our arms around this, and we will,” he said.

But that argument found little purchase among lawmakers, who refused to believe that years of fraudulent activity somehow escaped the attention of top executives.

In fact, several lawmakers openly suggested that the bank had blatantly violated the law, with some going so far as to assert that Stumpf himself would be facing criminal charges in the near future.

“You think today is tough? It’s coming. When prosecutors get a hold of you, you’re going to have a lot of fun,” said Rep. Michael Capuano (D-Mass.).

“I have one simple question for you: When are you going to resign?” asked Rep. Roger Williams (R-Texas).

Several members said they have bank accounts with Wells Fargo and are furious about how the bank had treated its customers.

“I regrettably have a mortgage with your bank. I wish I didn’t,” Hensarling said. “If I could pay it off, I would.”

Rather than crediting the bank for cleaning house with its layoffs, several lawmakers expressed indignation, believing that the bank fired low-level employees struggling under aggressive sales targets to cover up for higher-level executives.

Lawmakers singled out Stumpf, accusing him  of being either complicit in the activity or woefully unaware of what was happening at the bank he ran.

Rep. Keith Ellison (D-Minn.), who had previously explored the bank’s treatment of lower-level employees, quizzed Stumpf on how those workers went about making sales.

Several times, Stumpf said he was unaware of what happened to workers who did not meet sales goals as Ellison recounted tales of written admonishments, performance improvement plans and weekly meetings to discuss targets.

“Congressman, you’re asking me questions I cannot answer,” Stumpf said.

Rep. Carolyn Maloney (D-N.Y.) questioned why Stumpf personally sold $13 million in company stock roughly around the same time he said he first learned of problems at his bank. Stumpf said he currently held four times the level of stock required of him but acknowledged selling off those shares.

“The timing is very, very suspicious,” Maloney said.

Several members in both parties said Wells Fargo’s actions threatened to undercut the trust at the heart of the banking system in the U.S.

Some Republicans argued that regulators should have sniffed out the problems at the bank sooner. Other conservative who typically advocate for a light regulatory touch said their case was made significantly tougher by Stumpf’s bank.

“I came to Congress to deregulate, and because of your actions that’s been made very difficult,” Williams said.

Throughout it all, Stumpf said he regretted what happened while isolating blame to a portion of the bank’s 200,000 employees nationwide.

When asked about his own personal future with the company, he deferred to either the bank’s board — which he chairs — or other actors.

Rep. David Scott (D-Ga.) directly asked Stumpf at one point if he broke the law.

“I’m not a criminal lawyer,” he said. “I led the company with courage.”