Heat rises on Wells Fargo CEO after lawmaker grilling

Wed Sep 21, 2016 11:58am EDT
 
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By Dan Freed

NEW YORK (Reuters) - Wells Fargo & Co Chief Executive John Stumpf prides himself on being a banker who understands the little guy's financial problems. He has spoken publicly about growing up poor on a Minnesota farm, starting his career as a low-level repo man and being underwater on his own mortgage years ago.

But when called before U.S. lawmakers on Tuesday to answer questions about a scandal at his bank involving 2 million fake accounts that thousands of employees set up in customers' names, Stumpf's answers fell flat.

The white-haired, 63-year-old CEO repeatedly told a congressional panel that he had to check with staff, lacked information or was not an "expert" on a range of topics including executive compensation, credit scores and contracts that must be signed to open an account.

Throughout the hearing, Stumpf was polite, responding to senators' often aggressive questions with a calm, earthy twang. His hand was bandaged and in a splint after "roughhousing" with his grandkids, Wells Fargo spokeswoman Jennifer Dunn said.

"He talks about the team, he talks about the good people ... He smiles, and he's sweet and he's in no way responsible," said Robert Monks, chairman of ValueEdge Advisors, which advises investors on corporate governance issues.

"His response to questions remind me of Muhammad Ali's rope a dope defense – he gets up against the ropes, he puts up his hands."

Earlier this month, the lender agreed to pay $190 million in penalties and customer payouts to settle the case involving the creation of credit, savings and other accounts without customers' knowledge. About $5 million will directly go to customers, many of whom might have paid a small fee on the unwanted accounts.

His responses gave plenty of ammunition to critics who point to the scandal as the latest example that some banks are still too big to manage and executives should serve jail time.   Continued...

 
Wells Fargo CEO John Stumpf testifies before a Senate Banking Committee hearing on the firm's sales practices on Capitol Hill in Washington, U.S., September 20, 2016.   REUTERS/Gary Cameron