NEW BRUNSWICK, NJ—Wells Fargo & Company’s, chief executive, John Stumpf, spoke to U.S. Senators on September 20, saying that he takes “full responsibility” for the unethical activity at his company.
Wells Fargo, the third-largest bank in the U.S. as measured by its holdings, is caught up in an embarrassing scandal over its employees opening some 2 billion fictitious bank accounts or unauthorized credit cards.
The CEO was asked to testify before the Senate Banking Committee hearing after the news of the unauthorized accounts and credit cards.
The New York Times obtained and released a copy of his prepared apology.
Although Wells reportedly knew of wrong doings as early as 2011, it took until this year to credit customers who incurred service fees or other costs.
Civil lawsuits have already been filed as the bank fights to save its long-term reputation, something that can be critical in banking.
Just how deep the problems were, and who should be held accountable for them, is a question the committee seeks to answer.
Wells Fargo has fired 5,300 employees in the past several years over the crisis, it says. Changes in its retail banking business are slated for January 1, 2017, when the bank will eliminate all product sales goals for employees.
“Our objective has always been and continues to be to meet our customers’ financial needs and drive customer satisfaction,” said Stumpf on September 13, in a news release.
“We are eliminating product sales goals because we want to make certain our customers have full confidence that our retail bankers are always focused on the best interests of customers.”
“I’m deeply sorry that we have not lived up to our values in this way,” said Stumpf at the hearing.
Stumpf said the bank learned of the wrong doings “at the corporate level” “sometime in 2013,” but before that he said, it was dealt with by a compliance unit.
“I became aware we were not making enough progress later in 2013,” said Stumpf in the testimony.
What’s happened to the banking system, asked a senator. Do you believe you’ve violated that trust? There is no question we did.
Not every team member will do right every minute, said Stumpf. We are “going back to 2009 and 2010” to see if customers were harmed.
“We did not get it right — we should have completely eliminated retail bank sales goals,” sooner said Stumpf.
“It was early in 2015 when we finally connected a dot, said Stumpf.
“It never dawned on us, and again no excuses, we were wrong, that a 30-day cycle” could have triggered a fee for customers said Stumpf while answering questions about the timing of the fraud and whether management should have stepped in sooner.
Stumpf was asked later at the hearing if he would acknowledge that the employees were committing fraud.
“[Our employees] broke our code of ethics and were dishonest,” Stump said.
Dave is an award-winning business reporter who has authored over 200 articles for New Brunswick Today.