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House to Stumpf: Investigation is Only Beginning

All eyes fell again on Wells Fargo Chairman and CEO John Stumpf during the House Financial Services Committee hearing on Thursday examining the opening of 2 million unauthorized customer accounts at Wells Fargo.

Stumpf testified before the Senate Banking Committee one week earlier and apologized profusely for his bank’s sales practices that drew a $185 million penalty from regulators on September 8, saying that he was “deeply sorry” that the bank failed to fulfill its responsibility to its team members, customers, and to the American public.

On Thursday, it was the House Financial Services Committee’s turn to question Stumpf. In his opening remarks, Committee Chairman Jeb Hensarling (R-Texas) noted that the hearing “is just the beginning of our investigation, not the end.”

Reps. Maxine Waters (D-California), Ranking Member of the Committee, and Al Green (D-Texas), Ranking Member of the Subcommittee on Oversight and Investigations, requested Thursday’s hearing to investigate Wells Fargo’s practices. It is the first time Hensarling has brought a financial executive before the Committee to testify for misconduct.

“In the coming weeks, we will be questioning Wells Fargo executives,” said Hensarling. “If necessary, I will not hesitate to issue subpoenas because we will do what is necessary to get to the bottom of this.”

Hensarling did say that Wells Fargo was not the only one on the hot seat for this situation, citing that the OCC and CFPB should also be held accountable for conducting regular examinations but not exposing the issue until now. The allegations of the unauthorized accounts are documented in wrongful termination lawsuits filed by Wells Fargo employees as far back as 2009, according to Hensarling, and over a five-year period, 5,300 Wells Fargo employees were fired over the unauthorized accounts.

“Based on these facts we will also be asking serious questions of our regulators,” Hensarling said. “If OCC had examiners on site at Wells Fargo during the time when these fraudulent accounts were opened and the CFPB was conducting regular examinations, why did it take the LA Times to expose it? And once exposed, why did it take almost 18 months for the CFPB to initiate a ‘supervisory review?’”

In her opening statement, Waters urged Stumpf to tell the truth about the bank’s activity and take full responsibility for what occurred.

“We still do not have the information we need to understand how this happened, when the sales culture turned toxic, and who knew about it and when,” Waters said.

John Stumpf

Waters called for a thorough investigation by the Justice Department into executive conduct. “Someone who is responsible for the broken culture that led to this behavior needs to be held responsible,” she said. “Not the lower-level employees that have been left to bear the weight of the mistakes that have been made.”

Stumpf then gave a brief statement before questioning began. Like his testimony before the Senate Banking Committee a week earlier, he accepted full responsibility and shared with the Committee updated information about what work Wells Fargo is doing to rectify the issue at hand.

During the opening statements and subsequent questioning, déjà vu kept coming to into play as Hensarling and Waters, among others, noted that this investigation had a marked resemblance to the mortgage document controversy Wells Fargo was investigated for over six years ago.

“Unfortunately, this is not the first time we have seen abusive practices at Wells Fargo,” said Waters. “We thought you were working on these practices six years ago, your mortgage executive sat in that very chair, reassuring my Subcommittee that you were committed to fixing Wells Fargo’s forgery of mortgage documents. And yet, we haven’t seen the problem fixed, we’ve just seen it migrate to another part of your bank.”

Earlier this week, Stumpf agreed to forfeit most of his 2016 salary along with his bonus and $41 million in stock options due to increased pressure from lawmakers and other stakeholders, according to CNNMoney. Additionally, Wells Fargo’s board of directors said this week it will launch its own investigation of the bank’s retail sales practices.

“Your problem is not today. It's coming,” Rep. Michael Capuano (D-Massachusetts) told Stumpf during Thursday's hearing. “When the prosecutors get a hold of you, you're going to have a lot of fun.”

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.
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