U.S. House panel lambastes Wells Fargo boss over phantom accounts

Thu Sep 29, 2016 6:14pm EDT
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By Patrick Rucker and Dan Freed

WASHINGTON/NEW YORK (Reuters) - U.S. lawmakers called on Thursday for Wells Fargo & Co chief John Stumpf to resign and a top House Democrat demanded the bank be broken up because it is too big to manage.

Stumpf's second trip to Capitol Hill on Thursday went no better than his first as lawmakers from both parties rebuked his handling of sales abuses and said the bank had damaged customer trust as well as the broader banking system.

Wells Fargo staff opened checking, savings and credit card accounts without customer say-so for years to satisfy managers' demand for new business, according to a $190 million settlement with regulators reached early this month.

U.S. Representative Maxine Waters, the committee's senior Democrat, faulted the bank for identity theft in the fraud and called for Wells Fargo to be dismantled because it was too big to manage.

She called the sales abuses "some of the most egregious fraud we have seen since the foreclosure crisis." After the hearing, the California lawmaker told reporters she would introduce legislation to break up Wells Fargo.

The bank has said as many as 2 million accounts may have been wrongly opened and Stumpf promised to undo any harm to customers.

The chief executive said, however, that Wells Fargo did not expect to see disgruntled bank customers in court.

Wells Fargo is offering arbitration for its unhappy clients, Stumpf said. Pushed about whether he would waive that mandatory arbitration rule and allow customers to sue, Stumpf said: "No."   Continued...

Wells Fargo CEO John Stumpf testifies before the House Financial Services Committee on Capitol Hill  in Washington, DC, U.S. September 29, 2016. REUTERS/Gary Cameron