Merkley Questions Wells Fargo CEO John Stumpf on Illegal Accounts

Senator Merkley, thank you. Mr. Stumpf, did Wells Fargo create a pressure cooker sales culture that put personal bankers and tellers in an impossible situation between a rock and a hard place?

Let me continue. You got your answer, thank you. So, Rita Merilla, a branch manager, says regional bosses required hourly conferences on her Florida branch's progress toward daily quotas for opening accounts and selling customers extra services, such as overdraft protection, an issue that hasn't been addressed yet. Employees who lagged behind had to stay late and work weekends. Then came the threats: anyone falling short after two months would be fired. We were constantly told we'd be working for McDonald's if we did not make the sales quotas. We had to stay for after-school detention, it felt like, or report to a call session on Saturdays. Is that a pressure culture situation putting tellers and personal bankers in an impossible situation?

Eric Estrada, former Wells personal banker and business specialist, said managers coached workers on how to inflate sales numbers. Employees opened duplicate accounts, sometimes without customers' knowledge. They used a database ID of customers who had been pre-approved for credit cards and ordered them. They were coached on it. Is that a setting in which a pressure cooker culture really puts the personal bankers in an impossible situation?

Nothing you did? But bank managers were being coached on how to coach their employees on how to do this. Let's talk about a branch manager in the Pacific Northwest where I come from. She was very upset finding employees had talked a homeless woman into opening six checking accounts. She said, 'It's all manipulation. We are taught exactly how to sell multiple accounts. It sounds good, but in reality, it doesn't benefit most customers.' Or let's talk about Claira Guitron, who in 2008, after being hired for two months, found that this was happening—these false accounts are happening. She went to her trainer, then she went to her manager, and she was basically pushed very hard to shut up in all kinds of different ways. So you say, well, the employee could have gone to somebody. She did. And eventually she filed a whistleblower suit. And why did Wells Fargo say that that was not legitimate? I'll just save you the time: the answer is because Wells Fargo said we fired her because she didn't meet her quotas. So here we have a situation where employees are written up, they have to stay late, they have to come in on weekends to be coached, they're at risk of being fired. That sounds like a systemic management strategy for cross-selling. But you refuse to take any responsibility, blaming it on the personal ethics of individual employees who are at risk of losing their job if they didn't meet their daily quotas. Can you even conceivably place yourself in the position of an ordinary working person who has a child in daycare, they're told they're going to be fired if they don't meet these quotas, they're being coached on how to do it by their manager, and say that there was no culture established that caused these problems?

Sheriff Kellogg said the branch managers were always asking, 'How many solutions—that's signing up new accounts—did you sell today?' They wanted three to four a day. In my mind, that was crazy. That's not how people's financial lives work. I was always getting written up for failing to bump up my solutions numbers. Some employees would ask local business owners who they knew well to open additional accounts as favors to them. It seems as though you'd have to be willingly ignorant to believe that these goals are achievable through any other means. Cross-selling is a major pride point for the management of Wells Fargo, including your reports to annual reports to customers. It was so high because you created a culture of cross-selling that pushed everyone to the maximum. And the casualties are these folks who were going to be fired because they'd lose their jobs if they didn't meet it. And yet you can only sit here and say there was no coaching, there was no management strategy. Cross-selling was at the heart of Wells Fargo's program, and you were at the top of this for a very long time. Let's go back to 2005, 2007, 2010. You had one major position and promotion after another. Cross-selling was at the heart of it, and you just sit here and blame the little person who was pressured into an impossible situation. Isn't that really, for want of another word, a failure to accept responsibility?

We like the full responsibility for establishing a culture that put people in impossible situations would be to resign, as my colleague suggested. It would be to return your funds and help fund assistance for all these people who were fired because of the culture you established and that you personally benefited an enormous amount from. But all you say is, 'I accept responsibility,' and by the way, it's the fault of those 5,000 people who just weren't ethical enough and opened an account they shouldn't have opened. That's not accepting responsibility. This was a systemic problem that you benefited from enormously, the bank benefited from enormously, and you are scapegoating the people at the very bottom.

You signed Sarbanes-Oxley reports. Did you ever reveal the problems with this high-pressure sales strategy in terms of fraudulent credit accounts anytime in that course towards 2 million fraudulent accounts? Did you ever disclose that to your investors?

Yes or no, simple question.

I'm so glad you crossed that T and dotted that I. Did you ever disclose the systemic problem of fraudulent accounts to your investors?

So you bragged on the one end about the intensive ability to get cross-selling and how that would be beneficial, but the problems that came from that strategy—the very problems that dozens and dozens of people have shared their stories about how it was on the ground—and you can only blame them for ethical lapses. You never disclosed you had a systemic problem. Again, you signed those reports personally. That's what Sarbanes-Oxley was. Didn't you think that that was material when you're saying this is our big win, is our cross-selling strategy, not to disclose that it also had a dark side?

I'm going to close just by saying I would like to hear about the amount of slamming that went on on overdraft protection, since that's come up in a number of the employees' talk about how they were pressured into adding that. Do you have details on that?

Can you get the information for the full committee?

You don't know what overdraft protection is?

And please get the information to the full committee. Thank you. Senator Brown, you have...