Stumpf's Days May Be Numbered At Wells Fargo
Things aren’t getting any better for Wells Fargo and the pressure continues to build for CEO John Stumpf. Yesterday, Stumpf was grilled by the House Financial Services Committee and took heat from both sides of the aisle. Democrat Mike Capuano asked, “What’s the difference between you and a bank robber?” while Republican Jeb Hensarling inquired whether Stumpf considered the more than $10 billion in fines the bank has paid over the last few years as simply “the cost of doing business”.
And, even as Stumpf was getting grilled, the OCC announced Wells Fargo would be fined $20 million for violating rules on lending to military servicemen, including ignoring the rate cap for members on active duty. Separately, Wells announced an agreement with the Justice Department that would require a $4 million payment due to improperly seizing vehicles owned by servicemen who fell behind on their auto loans. As Democrat Maxine Waters noted, “It appears the company can’t make it through even this congressional hearing without us learning more and more information about what is going on at Wells Fargo.” It’s never a good idea to be caught ripping off active service members. And the company’s bland statement on these settlements won’t do much to reduce the anger toward the bank. “In those instances where some service members did not receive the appropriate benefits and protections, we did not live up to our commitment and we apologize,” the company said.
Even more troubling for Stumpf was the announcement by the California’s state treasurer that the state will cease using the bank as a broker, will not use the bank as an underwriter, and will not invest in the bank’s securities for a period of one year. The California state treasurer is also on the board of the state’s huge pension funds, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, and will push those funds to enforce their preference for the companies they invest in to separate the CEO and Chairman of the Board positions. Stumpf holds both positions at Wells. The pressure on him to resign is only increasing as his plan for damage control in the wake of the massive fraud at the bank is clearly not working. Eventually, it seems, he will have to fall on his sword.