Rep McHenry (NC-10) questions Wells Fargo CEO Stumpf on fraudulent activity (092916)

Coming from North Carolina, Mr. McHenry, Vice Chairman of our committee. I thank you, Mr. Chairman. So I have the honor of representing the suburbs of Charlotte, North Carolina. North Carolina has an incredible banking culture over decades. Yet in Charlotte, First Union, a homegrown bank with a great reputation, went through challenging times, the economic crisis as you well know. But before that time, they teamed up with a bank based in Winston-Salem, Wachovia. And as you know, in acquiring what was then called Wachovia, which is really First Union and Wachovia, the pitch was that your culture from California was very similar to this North Carolina banking culture. But you know, and as you well know, John Medlin was a great chairman of Wachovia. He imbued in Wachovia this culture that a banker is a civil servant as well. There's this obligation to society they have in their community. You eulogized, yes, they paid tribute to that culture. Yes. So I want to think about that culture because what is so sad to me is that pitch of culture doesn't conform with my experience with my constituents in North Carolina. It doesn't conform with what I know about First Union, what I know about Wachovia, and this cultural pitch that you had in acquiring them in a financial crisis. I know you have a huge headcount in North Carolina, we're grateful for it, but what's sad to me is the impact of this on them and those employees you have in North Carolina. So I want to look at your code of conduct. So let's look at your Code of Ethics and Business Conduct. You said in your message as CEO, 'We are all responsible for maintaining the highest possible ethical standards in how we conduct our business and serve our customers.' The Code of Ethics and Conduct, in fact, says our code applies to all team members, including officers as well as directors of Wells Fargo and Company and its subsidiaries. It also says we are all accountable for complying with the code as well as all company policies and applicable laws. And finally, it's critical that all team members have a solid understanding of our company's Code of Ethics and Business Conduct, and understanding that non-compliance with the policy may result in disciplinary action up to and including termination of employment. You clearly have failed. You've clearly failed in your own ethical standards internally. You have broken long-standing law. You've broken long-standing ethical standards that you have within your company. This has nothing to do with this debate about Dodd-Frank or anything else. You've broken a long-standing law and you've defrauded your customers. How can you rebuild trust? How can you rebuild trust and how can you get through this thing? What standards are you holding yourself to that sends the message to the rest of these folks in your organization that look to you for leadership and guidance? What are you doing to restore that?

I know it's really hard to say that when you're before Congress for the second time and behind you was all the settlements you've had for problematic relationships you've had with your customers by taking their money, right? Counter to the law, counter to your ethical standards. So it's great you say you have a strong culture, but why are we here today? How are you addressing that?

Yeah, that's why I raised this in the way that I do, by severe disappointment. Severe disappointment. That's all. You broke the law. We make the law in Congress. This is not new stuff that all of a sudden Congress changed some rules and you can't have your employees create fake accounts and take fees from customers unknowingly, unwittingly. That is... there's never in human history when that has been an ethical okay, right? You say the culture is okay. This seems to me that you're just tone deaf to this. The final thing you need to think about, and your board of directors need to think about, is this: the impact you have is not simply on your institution but the wider conversation on how my consumers can access credit. And the implications on what you've done in your leadership has this broader societal impact that is very negative.