Wells Fargo CEO Still Can't Accept Responsibility For Fraud

Wells Fargo CEO John Stumpf is getting hammered by both Republicans and Democrats in the Senate Banking Committee hearing today. Elizabeth Warren led the way, criticizing Stumpf for mercilessly squeezing employees to cross-sell products in order increase fees, drive up the stock price, and, correspondingly, Stumpf’s compensation. She then ripped him for blaming low-level employees for the fraud that involved opening up millions of bogus accounts, saying, “It’s gutless leadership.” Stumpf still almost seems incapable of admitting any executive responsibility for the problem. He was finally forced to admit that no senior executive has been held accountable in any way for what happened. But he still insisted that it was only about 1% of the Wells Fargo workforce that committed the fraud. But as both Democrat John Tester and Republican David Vitter both pointed out that all that does is raise the question of  “Why isn’t this crystal clear proof that an entity as big as Wells is too big to fail, too big to manage, too big to regulate?” as Vitter put it.

Let’s just run down a list of Wells Fargo’s recent abuses. In 2012, they had to pay $184 million in restitution to compensate qualified African-American and Hispanic mortgage borrowers that the bank had charged higher fees simply due to racial discrimination by the bank from 2004 to 2009. In 2014, the bank agreed to a $62.5 million settlement in a case brought by retirement funds who were misled about the risks the bank was taking in what was called a “conservative” investment plan. In this year alone, the bank has paid a $1.2 billion settlement related to misclassifying loans in order to get them approved by the FHA; the SEC charged a unit at the bank with fraud involving not releasing vital information on a bond offering that subsequently went south; the American Seminoles filed a suit accusing the bank of fraudulently milking their trust with $100 million in secret fees; the bank reached a $4.1 million settlement to resolve a complaint that it charged illegal fees to some student loan borrowers.

The real question is why Stumpf still has a job. As Warren pointed out, “The only way Wall Street will change will be if executives face jail time” for criminal behavior.