CEOInterviews.AIWells Fargo CEO John Stumpf GRILLED by Congress - House Financial Services Committee Hearing 9/29/16

U

Unknown0:00

timeout and say enough is enough. This can't continue. And yet year after year you're firing people trying to hope this thing goes away. And the regulators are watching it and still sitting on their thumbs. These actions must have consequences, and for not only you, but they need to have consequences for regulators as well.

J

John Stumpf0:16

Cong, thank you for that question because I want to tell you that we did do things in 2011 within the business. They moved the compliance or the concern for this issue into a compliance area. By 2012, they were reducing goals and doing more ethics training. By 2013, corporate resources were brought in and we worked with the OCC. In 2014, more reductions in goals. In 2015, and the OCC also was in 2013, we did our study. This does not represent the culture. In fact, we do an outside company.

U

Unknown0:55

I respect, disagree with you. I've been in business like this all my life. You can't tell me that when you have to fire people year after year after year after year that there isn't a problem. Yeah, for a year or two that's one thing, but four or five years. And this, your own testimony says this. I have another question. I need to go on. One, I got to talk. In my examining days, there was a, I examined a bank one time and found a teller skimming money out of her cash drawer. Took it to the president and he said, 'Well, you know, she's a good employee. As long as she keeps it to a minimum, I think we're going to be okay.' My jaw hit the floor. This reminds me of that situation. 'As long as I keep it to a minimum, I think we're going to be okay.' My comment back to him at that point was, 'Have you reported this to your blanket bond insurance company that has a dishonesty clause on it? Do you have a blanket bond or are you self-insured?'

J

John Stumpf1:47

We have a fidelity bond and that's why we draw a very bright line. When people do the wrong thing, they cannot...

U

Unknown1:53

When did you report this action of your employees to your blanket bond company?

J

John Stumpf1:57

You know, I don't... we have a group that does that, our corporate relations with our legal team, and I can share that we can have our people get to you. But there's a very bright line.

U

Unknown2:07

This is a really, really big question because if you didn't report that immediately when you found this going on and you allowed for year after year to have a thousand people...

J

John Stumpf2:14

We do that.

U

Unknown2:16

Your blanket bond company is going to be going bonkers over this.

J

John Stumpf2:19

We will have a request for that. I hope you will answer that.

U

Unknown2:24

Okay, thank you. Mr. Chairman, time of the gentleman has expired. The chair now recognizes the gentleman from New York, Mr. Meeks.

G

Gregory Meeks2:30

I can't believe some of what I'm hearing here. So let me understand. You've been the CEO since 2007. You've been the chair of the board and the CEO since 2010. Is that correct?

J

John Stumpf2:43

That is correct, Congressman.

G

Gregory Meeks2:46

And in the time that you have been that chair, I have a chart here that shows you've been penalized almost systematically every year since you have been in charge. Every year. 1.2 billion in April of '16, 53 million in October of '15, 4 million in June of '15, another 24 million in January of '15, 5 million in September of '14. I mean, and I go on and on. 869 million in September '13 while you were the CEO. Right? And you're going to tell me that there's not a culture of something wrong at Wells Fargo? When you are the head, you get credit. You get credit as CEO when you bring in all this money because that's how you get your bonuses. Is that not correct? You get a bonus from your board because X amount of dollars come in. But yet, are you telling me that you don't have the responsibility of losing your position when you have a culture of being fine and costing the bank year after year, month after month? There's no responsibility? You can just stay to be the chairman and the CEO? Is that what you want us to believe?

J

John Stumpf4:04

Congressman, that is not the case. I serve at the pleasure of the board. I'm willing... I've told you...

G

Gregory Meeks4:12

And the whole board needs to go if they're going to allow someone to be in charge when time after time, you just talked about, you fired 5,300 employees when you found out that they were doing something wrong. They were fired because they were doing something wrong. Well, something is going wrong at this bank and you are the head of it. So shouldn't the board then, from your own admission, if the buck stops with you, as you came out here and said, 'I apologize, the buck stops with me,' and you have to also admit that criminal activity was going on in your bank, then you should be fired because it stops with you.

J

John Stumpf4:50

Well, again, Congressman, the board has that power that's there. And my energy right now is to lead this company forward. I also want to remind you, you came here, you started out by saying, 'I apologize,' etc. If somebody walked into Wells Fargo tomorrow and robbed your bank or defrauded your bank, and then after they caught, they'll say, 'Well, I'm sorry, I'm going to take full responsibility for robbing this bank and I am sorry that I robbed this bank. So please don't prosecute me because I am sorry now that I robbed this bank.' Would you allow the person just to walk out after robbing your bank because he is now sorry that he robbed his bank after he took the money already?

G

Gregory Meeks5:35

Congressman, I see something very different between being honest and breaking our code of ethics and taking advantage...

J

John Stumpf5:43

You didn't break code of ethics and...

G

Gregory Meeks5:46

Is your bank... do you realize that you have not only given... would you admit this? That not only do your bank have a black eye, that your bank, Wells Fargo, has given the entire financial service industry a black eye? Your responsibility. You heard Mr. Sherman now, he wants, and I agree with him, he wants everybody to come in here. Why? There's only one reason why your bank, you, CEO, chairman, basically, for me, was on top of what's basically has been a criminal enterprise. Because when I look at consistency, time after time after time and time again, you have to get fines. Now it must mean that you're making a lot of money because it's easier to pay the fine because you know that nothing else is going to happen to you. So you pay the fine, you get away, you make a lot of money. Now I'm upset. I'm from New York. I believe in financial institutions. That's why I'm so mad. I believe that they make our country better until they rip us off. And they ripped us off tremendously, taking advantage of customers and consumers. When we had the financial crisis, I've got individuals right now who are on the street. They're not back in their home. They had these fraudulent mortgages. Nobody has said, 'Oh, I'm sorry that we gave you these fraudulent mortgages. We're going to put you back in your home and we're going to make sure that everything is okay.' No one has done that for them. You haven't volunteered to do that.

J

John Stumpf7:14

We, Wells Fargo, put people back in their homes. Congressman, let me, if I could just respond for a second, please. There's no question we don't do everything right and we've made mistakes. We're upping our game.

G

Gregory Meeks7:26

So who should pay for it? If he doesn't do anything right, who's accountable for it?

J

John Stumpf7:29

We're going to make it right for every...

G

Gregory Meeks7:31

You made $125 million bonus package. Your institution is making over $22 billion. Who is paying for it? Who's taking responsibility for it? Don't come tell me you're sorry.

J

John Stumpf7:40

We're taking care of every one of our customers who's impacted.

U

Unknown7:44

Time of the gentleman has expired. The chair now recognizes the gentleman from Wisconsin, Mr. Duffy.

S

Sean Duffy7:49

Chairman of the Oversight and Investigations Subcommittee. Good morning, Mr. Stumpf. I want to tell you I'm a 20-year customer of Wells Fargo. I actually started at Norwest.

J

John Stumpf7:59

Oh, thank you.

S

Sean Duffy8:00

My wife was with Wells Fargo. We got married and it made it easy to join our accounts. I've had a pretty good experience with your bank. That's why I've been there for 20 years. The people I've dealt with have treated me incredibly well and that's why I'm there. But what I'm hearing today is incredibly disturbing. And so I just want to make sure you and I are on the same page. How do you classify what Wells Fargo did with this potentially 2 million account holders?

J

John Stumpf8:28

Well, the 2 million account holders were accounts... was about... we, the PWC looked at 93 million accounts. The 2 million are...

S

Sean Duffy8:41

No, I'm not... I'm sorry. This was... this was fraud. Was this just an HR problem? Was this theft? How do you see this?

J

John Stumpf8:48

Yeah, the 2 million accounts could not be ruled out...

S

Sean Duffy8:52

I'm asking about how do you classify when you took $22 to $25 from whatever the number is, maybe it's one million, maybe it's two million. How do you classify that?

J

John Stumpf9:01

Well, if you... you know, I think it was dishonest. It broke our code of ethics and the people who are responsible here...

S

Sean Duffy9:06

Pardon me. Was it theft? Did you steal?

J

John Stumpf9:09

Our people did not do what was right.

S

Sean Duffy9:12

That's not my question. Did you steal? I want to know if you and I are on the same page. Did Wells Fargo employees steal from a million to two million of their customers? Yes or no.

J

John Stumpf9:24

In some cases, they did.

S

Sean Duffy9:27

They did. Yes. And so, as well as Fargo, back to 2011, is stealing from their customers. And by the way, banking is based on trust, correct?

J

John Stumpf9:37

Right.

S

Sean Duffy9:38

So I don't care if it's 10% or 1% or a half a percent of the people that you do business with, if you're stealing from them in 2011, a thousand people are fired for stealing. And what do you do? You don't fix the problem. And a thousand people are fired in 2012 and you don't fix the problem. And in 2013, 1,200 people are fired and we still have a problem and you're stealing from people. So how do you... how... listen, I guarantee you that any bank in my community, if they were stealing from someone at the lower level, fired and fixed the problem on day one.

J

John Stumpf10:17

Well, that's what we're trying to do. In fact, I...

S

Sean Duffy10:19

No, no, no. Trying to do? We're five years on.

J

John Stumpf10:22

Well, let me just say something about as we understood this problem. We didn't... when somebody would open an unauthorized account, a savings account or a checking account, it was not until... and when an account gets opened and not funded, it's really important, please, when it gets opened and not funded, it gets auto-closed. We didn't believe as we looked at that until sometime in 2015 that there could be the possibility of a zero count that could affect a customer.

S

Sean Duffy10:51

You've got to be kidding me. And you have got to be kidding me.

J

John Stumpf10:55

No, that is absolutely... our analyst told this earlier.

S

Sean Duffy10:57

The board members, you were not saying that you knew, but board members knew in 2011. They were looking at this. And if they're looking at a thousand people fired, that they don't know why they're being fired, that they don't look in to say what were these people doing that caused them to be canned, and they look, they just pull the curtain back a little bit and they go, 'Man,' whether you want to call it defrauding our customers or stealing from our customers, Wells Fargo has a big problem. So that you tell me that it took one year, two year, three year to 2015, I don't buy it. What I think is Wells Fargo was making a lot of money off what you were doing. And I think that you were hoping that you wouldn't get caught. And so it's a risk of doing business. You know what? We're willing to fire a few people so I can come over here and go, 'Weren't we great? We fired a couple of people. We were trying to make it right.' But we kept the practice in play because we were making big profits. Did you win? The practice is this over?

J

John Stumpf11:58

And yet we're stopping all of our sales goals...

S

Sean Duffy12:01

But let me just... you stop it. How could you stop it now but not in 2011 or 2012 or 2013 or 2014 or 2015?

J

John Stumpf12:07

But we should have done more earlier. But it's really important I make this point, please. The $2.6 million of fees that were on accounts that these 2 million accounts that we could not rule out, it cost us $10 million to open those accounts and close them. Forget even the cost of the team member and the dismissal. This is a loser for us. It only helps when customers use...

S

Sean Duffy12:28

It's a loser for you? I guarantee that it only helps when customers...

J

John Stumpf12:34

I'd rather if a customer have two products to use than four. They don't... we're totally aligned with customer.

S

Sean Duffy12:37

The concern that we have, Mr. Stumpf, and I told you, I like Wells Fargo. I've been there 20 years. That you were turning a blind eye to your customers who are being stolen from. People who couldn't afford $22, people who couldn't afford $25. And that you didn't fix that problem in an institution that is based on trust with your customer. That you didn't take this seriously. That you didn't remedy it. That it has taken this long. Shame on Wells Fargo. And I didn't get to my question, but I hopefully at one point hear you testify to how many CFPB employees were embedded at Wells Fargo to watch.

U

Unknown13:13

Time of the gentleman has expired. The chair now recognizes the gentleman from Massachusetts, Mr. Capuano.

M

Michael Capuano13:16

Thank you, Mr. Chairman. Thank you, Mr. Stumpf. I want to thank you particularly for doing something here today that no other person has been able to do in the last four years. You have brought true bipartisanship to Congress. We're all together on this. We are not happy. The last few minutes, they've been running a graphic in the back and my colleague had went through some of them, but I think it's important to know what some of the other things you have done. What they were then, we just fines. You screwed student loan holders, credit unions, Fannie Mae, Freddie Mac, mortgage holders, African-Americans, Hispanics, health care workers, on and on and on. And by the way, I understand this isn't material, just five months ago you paid $1.2 billion in a fine. This is only 15% of that. Nah, who cares? We'll pretend to be sorry. We'll fire some workers and we'll get through this. You know where I heard that before? The guys who ran Enron. The guys who ran Arthur Andersen thought the same thing. We're not your problem. We can't criminally prosecute you. You can keep... hell, you're your own boss. You are the CEO and the chairman. Hold yourself to accountability. 'Oh my God, you've been bad.' Oh no, you haven't. That's ridiculous. Your problem is coming. It's not today. You think today's tough? It's coming when the prosecutors get a hold of you. You're going to have a lot of fun. So I want to thank you for that. I want to ask you... you get the graphic up here. You know this guy? See, I'm not a real good researcher. I'm not a prosecutor. This is simple internet research. That's all I'm capable of doing. Google it. Wells Fargo. Boom. Whole bunch of stuff shows up. This is Mr. Robert Holmes who apparently robbed your bank in Lancaster, Pennsylvania. He did not use a weapon. He got caught. They got all the money back. He's in jail as we speak on a $750,000 bail. You, on the other hand, have run an enterprise that has a culture of corruption. You encourage subordinates to abuse existing customers by opening fake bank accounts. You charge those victims illegal fees, interest, and late charges. And then you send some of them to collection agencies because they didn't pay them. Then you fired 5,300 workers as if you care to cover everybody's tracks. In my opinion, you and your entire leadership team are clearly and unequivocally guilty of at least conspiracy to commit fraud, conspiracy to commit identity theft, clearly racketeering, which is something a lot of my friends know something about, and probably a dozen other crimes. Only simple question: What the heck's the difference between you and Mr. Holmes? Why shouldn't you be in jail? He didn't use a gun. You got the money back. I understand that his arraignment, he said he was sorry. What's the difference? Why shouldn't you be in jail right along with Mr. Holmes?

J

John Stumpf17:18

Congressman, I think that when you do something unethical or dishonest, which I've tried to exercise my duties as leader and our senior leadership...

M

Michael Capuano17:30

You haven't done a real good job. You've had 16 violations in five years. That's a good job. This is a minor fine. You've had a lot of... this is only the seventh largest fine you've had. You've had six others that are a lot bigger. That's a good job. I guess I forgot, you're the one judging yourself because you're also the chairman of the board. I actually think I'm the greatest congressman in the history of the world. I should be speaker, president, and maybe emperor of the world. That's my judgment of myself. Sound good to you?

J

John Stumpf17:58

There's no question that we've done things that we need to improve on and we've paid fines and we're trying to get better on every one of our businesses.

M

Michael Capuano18:04

Mr. Holmes pays a little fine, you know, few bucks based on the amount of money he stole and the victims he had. You think he should be let out and have no criminal record?

J

John Stumpf18:16

Again, being dishonest and breaking the law is something very...

M

Michael Capuano18:19

So it's not breaking the law? Stealing my identity and opening an account that they didn't ask for? And our culture is about not doing that. We train for that not to happen. I don't know what kind of a culture... you have violations, 5,300 employees that you say did it.

U

Unknown18:33

Time of the gentleman has expired. The chair now recognizes the gentleman from California, Mr. Royce.

E

Ed Royce18:37

Chairman of the House Foreign Affairs Committee. Thank you, Mr. Chairman. Mr. Stumpf, the idea of a cross-selling target of at least eight products clearly is part of a long-term practice at Wells Fargo going back at least to your predecessor. Because in 1998, Fortune Magazine quotes doubling the average product purchase to eight as your predecessor's quote, 'current obsession.' You know, morphing the goal to a mandate here seems to be a big part of the problem. And I say mandate because if people are fired for not hitting that goal, it's a mandate. And that seems to be at the center of a toxic sales culture that you've overseen. But I'd ask you, was the goal of eight cross-sold products something understood and embraced by management and by your sales force?

J

John Stumpf19:38

It was a rallying cry to help work together. The average consumer household has about 14 financial products.

E

Ed Royce19:47

Okay, and I understand, but I'm going to ask you a question. In retrospect, do you think that that target contributed in some way to the negative change in your sales culture?

J

John Stumpf19:59

We never had a target of eight. Again, it was an aspirational... we had team members who would work with customers on need-based selling. And when they did that right, the customer won and it was good for us.

E

Ed Royce20:13

Did you read the LA Times article when it came out in 2013?

J

John Stumpf20:16

I don't... I'm sure I did. I just don't... I can't recall.

E

Ed Royce20:20

Was something discussed at the board level?

J

John Stumpf20:22

We did discuss the LA article.

E

Ed Royce20:26

Well, here's my question. Did the information in that article give you pause about reporting cross-selling metrics or ratios in your annual reports, in your quarterly reports, in the analyst conference calls that were clearly inflated here by fake accounts generated by your sales force?

J

John Stumpf20:47

We love cross-sell because it helps... helps define...

E

Ed Royce20:53

I understand your argument about that. Here's the question. If you know fake accounts are going into that ratio, why would you keep reporting that ratio? Because I've got a copy here of your investor day. I've got a copy of what is in your quarterly. And you know, you turn to Mr. Duffy here when he was asking the question and you were saying, 'Well, it isn't that material in terms of our bottom line in terms of the fee income from these fake accounts.' But what you're reporting on your products per household is a constant upswing quarter by quarter by quarter. It certainly is material in terms of the stock price. What you were doing in constantly reporting these ever-increasing numbers was driving your stock price up. And the point I'm making is you have this story in 2013 that shows that. How much of that was based upon fraudulent behavior that becomes material, right?

J

John Stumpf21:52

Well, let me just talk about that specifically. The cross-sell, so even if you include all 2 million accounts in that, and we know we can't because we're already finding out in credit card that 75% or less than 25% either did not order it or do not remember. We've looked back for all the quarters going back to, I can't remember, it's 2010 or '11, and it has a, I think, one, two hundredths of one product impact. It's absolutely immaterial.

E

Ed Royce22:25

Look, Mr. Stumpf, this is a California company. You've got a lot of California customers. You've got people all over the world dependent upon this company. You've got your employees, and from what I understand, a thousand of them being fired a year connected to this. I believe rebuilding the trust and righting the wrongs are going to take a course of action here that I've yet to see you set. And through opening unauthorized accounts or playing the shell game with a person's money, your employees and your company negatively impacted the credit of many people in this country. And I just want you to think for a minute about what that meant in terms of their ability, maybe to qualify to get that home, or maybe to qualify to get that car, or maybe in terms of the student loan to send that son or daughter to university. Not to mention, again, working Americans wrongfully terminated by your company for what? Refusing to break financial laws, refusing to break ethical laws. That's what we have to come to grips with here. And this is at the very least the result of actions over the last five years that didn't happen by accident.

U

Unknown23:52

Time of the gentleman has expired. The chair now recognizes the gentleman from Massachusetts, Mr. Lynch.

S

Stephen Lynch23:56

Thank you, Mr. Chairman. I have a unanimous consent request to enter into the record a letter sent by ranking member Cummings, gentleman from Maryland of the Oversight Committee, to Mr. Stumpf requesting related documents by October 13th.

U

Unknown24:12

Without objection.

S

Stephen Lynch24:14

Thank you, Mr. Chairman. I would also like to ask the chairman to consider doing a hearing at a later time with a number of the employees, both whistleblowers who were fired and others who were fired for retaliatory attempts to provide information on the fraudulent conduct being conducted at Wells Fargo. I'm aware of at least three U.S. attorneys that have also issued subpoenas in this case. So I'm hopeful that we may eventually get to the bottom of this. And while the city of LA, the city attorney there, and the CFPB and the OCC have done good work in this case, the fines thus far are pathetic, really. Totally inadequate to try to bring Wells Fargo into compliance with the law. And that is certainly reinforced by the way, Mr. Stumpf, you have diminished the offenses that have gone on at your bank. It is really, you know, proof positive that whatever the OCC has done is not adequate to make you realize the level of your offenses here. Again, the 5,300 employees were fired, up to 2 million fraudulent accounts, and this has gone on for at least five years. And I want to point out here, and Mr. Duffy has hit on this, this is the banking industry. It actually exists based on trust. And what your employees did, at least as well as many as 565,000 fraudulent credit cards were secretly opened by your employees using the social security numbers of your customers. So they open fake credit cards so they could charge them for that. They assigned fictitious PIN numbers when the customer didn't even know that was going on. They put PIN numbers and then they assigned email addresses so they could comply with it and get the bonus so that the account was open. And these are your customers. Now we've had credit card companies up here who have sent credit cards to non-creditworthy borrowers and seniors who didn't understand they were getting them. But in this case, these are your customers. These are the people that became victims because they did business with your bank. That is unbelievable. And you know, I know that Mr. Meeks and Mr. Capuano before me have made comparisons to criminal activity, but I do want to note that under the Racketeer Influenced and Corruption Act, you've satisfied all the elements of that. Two of the predicate offenses under RICO, number one is fraud, and there's no question about that. Mail fraud, securities fraud, you've done it all. You've covered basically every aspect of fraud in your bank over the last five years. And secondly, in many cases, these employees, these whistleblowers were intimidated or fired. In some cases, you got an HR employee here who says you had a system to retaliate in your bank against whistleblowers, and that's another predicate offense under RICO. So let me ask you, as the CEO and chairman of the board, you had a responsibility to file SARs, suspicious activity reports, correct?

J

John Stumpf28:14

Right.

S

Stephen Lynch28:15

You have up to 2 million separate accounts being opened, up to 565,000 bogus credit cards being opened by your employees in secret against your customers. And yet when we ask FinCEN, we ask the Treasury Department for the suspicious activity reports that you filed, they don't match up. You're not in compliance.

J

John Stumpf28:41

Well, let me just say a couple things. We filed and we did everything that was necessary to abide by every regulator and regulation issue.

S

Stephen Lynch28:51

You're saying you filed SARs on...

J

John Stumpf28:55

I can't say on that because that's...

S

Stephen Lynch28:57

Well, it's your responsibility. Let me read you the law. I'll close with this.

J

John Stumpf29:01

It's a responsibility, but there's actually a prohibition. I mean, I have to do what's right. I have to follow the law.

S

Stephen Lynch29:12

All right. Let me just explain. All right, this is my time. I'm claiming it back. The board of directors, this is under the Bank Secrecy Act and anti-money laundering statute. The board of directors acting through senior management is ultimately responsible for ensuring that the bank maintains an effective Bank Secrecy Act, AML internal control structure, including suspicious activity reporting and monitoring. Your responsibility.

J

John Stumpf29:34

And we do that.

U

Unknown29:36

The time of the gentleman has expired. The chair now recognizes the gentleman from Oklahoma, Mr. Lucas.

F

Frank Lucas29:42

Thank you, Mr. Chairman. Mr. Stumpf, while my day job is that of a congressman, I am a farmer by trade and my university degree is in agricultural economics. And looking at your resume, about the time you were entering into the banking industry, 30-some years ago, I can remember taking a class on money and banking at Oklahoma State. And we had a professor who was very enthusiastic about the market economy. And we discussed how the banking model we use now went back essentially 500 years to Italy and the concept that under a market economy, bankers were the individuals who determined what savings were worth and pulled those, and by the same token, made risk determinations, figured out what the cost of money should be, and allocated that out through loans. A glowing example, and he would compare Western Europe at the time, North America, much of the rest of the world, how effective that was compared to the demand economy model of the old communist countries at the time, China, Russia, all of those sort of places. A very glowing discussion. I don't know that I have a particular question for you about what's going on. I think between the other committee and my colleagues here, they've done an exceptional job of getting to the facts. And I suspect, as a number of my colleagues have discussed quite straightforwardly, this has legal implications far and beyond the activities of this committee or the other committee and the other body. But I'd say, Mr. Chairman, the most challenging thing you've done is by the actions of your company, by your management of the company, you've made it really hard for those of us who are defenders of the market economy to continue to maintain the system that has helped drive this successful enterprise called the United States of America and the free market system. That's probably the most tragic thing about this. Now, in those econ classes, they used to lecture us about the concepts of enlightened self-interest. That's the nature of any consumer, that's the nature of any business person. But then there are the responsibilities we used to talk about of good corporate citizenship, about self-restraint, about not pursuing greed. I guess I just simply note to you, sir, whatever ultimately legally comes out of this process, and clearly a number of my colleagues think something will, or whatever your stockholders determine or your fellow board members, you've just made it really hard, really hard for those of us who want to maintain that concept of a market economy, who want to continue to make sure that bankers, not some bureaucrat somewhere, are the arbiters of capital to effectively make this country move forward. I don't know how you correct this, but I suspect, sir, when you interact with your peers within the industry, you're going to have some challenges for a long time to come. Because the brush with which you will be painted will stroke all of them too. And I suspect that's blatantly unfair and it's unfortunate. But then, you know, I'm just a farmer by trade, multi-generation debtor, working hard to service my debts every year. But you have to think about that. You have to think about what this episode has done to your industry and ultimately to me and all of my fellow consumers out there. It's just very unfortunate.

J

John Stumpf33:44

May I make a comment, please? Thank you. And we take this very seriously. And I also come from a farm. I understand what it's like to be on a small farm, or at least ours was small, with a large family. I know right from wrong. I know we have a lot of wrongs to right here. But I also want to tell you that Wells Fargo is a great corporate citizen. We employ 268,000 wonderful team members across the country. We have a culture based on ethics and doing what's right. Not everyone does that. We've made mistakes. We're one of the nation's largest taxpayers. We're one of the largest philanthropic organizations. We're involved in our communities. And we have a lot of work to do. There's no question about that. But I stand with our people who are doing the right thing, who honor our culture and our ethics. They are terrific people and they're out there with our customers every day. And we have work to do. I understand that disservice has been done to them. With that, Mr. Chairman, I yield back.

U

Unknown34:44

Time of the gentleman has expired. The chair now recognizes gentleman from Georgia, Mr. Scott.

D

David Scott34:48

Yeah, Mr. Stumpf, this is one of the most outrageous acts that any banking executive has done in my lifetime that I know of. How in the world could you in good conscience set up these fraudulent accounts? What was going through your mind when you were doing this?

J

John Stumpf35:15

Congressman, I didn't set up any of these accounts. Our team worked together at the business level, then at the corporate level, to find these. We found these accounts and we found these people and we said that behavior is not possible.

D

David Scott35:30

Mr. Stumpf, you took advantage of unsuspecting, loyal customers. People in almost every single district that's represented on this Financial Services Committee. You did that. And you are the chief executive officer. You set the tone. And you should be downright ashamed of yourself. And you should apologize right now if you have any strain of respect for the people of the United States, for the customers that you have defrauded with this, for the rancid example that you're setting. And not only that, for the damage that you yourself with your action is being done to the entire banking industry. Because you know what? All this cross-selling now, you have caused an extraordinary spotlight to be focused on every bank in this country. You have done that, Congressman, and you should apologize.

J

John Stumpf36:53

Congressman, I have said in my opening testimony, I am sorry. I am accountable for this. I'm very sorry that we broke trust with our customers, our communities, the American people. I am deeply sorry for that. I'm doing everything I can to repair that.

D

David Scott37:10

And you know what hurts me so much? I'm one of your customers. I have an account in Wells Fargo in the bank in Atlanta, Georgia. I was on the phone with my district director about this and she has told me that our constituent services, when it comes to the mortgage assistance, particularly with the bill that we passed here, the Hardest Hit bill, in which we're offering and helping those people with mortgages to be able to pay up to 24 months of free mortgages, and she says we have no better cooperation from the staff of banks than we have from Wells Fargo. Thank you. I'm your customer and what's doing... thank you. But the example that you set is just absolutely terrible. Now what I want to ask you is, because my number one concern is my constituents in Georgia, let me ask you, could you tell us exactly how many customers of yours in my home state of Georgia had fraudulent accounts set up in their name without their consent? How many in Georgia?

J

John Stumpf38:28

I can get that for you. If I have the right... sorry, I'm...

D

David Scott38:36

No, I'm... I know I'm using up your time here. Well, maybe the chairman will give me a little extra here, but it's important for us to know. How many in Georgia?

J

John Stumpf38:46

Yes, sir. We had 55,570 accounts that we could not rule out as possible. Again, now I just...

D

David Scott39:00

55,000? I need to... I need to... if you may, let me...

J

John Stumpf39:05

We're finding out that on the credit card side, less than 25% did not want those. But here's my commitment to you, Congressman. We're going to work with every one of these accounts and make it right for every customer. That is our commitment.

D

David Scott39:22

I'm interested in results, not in process here.

J

John Stumpf39:24

Each account, we're going to take care of.

D

David Scott39:28

And I don't care whether there was... you know, I mean, and the biggest thing here is secondary harm. I want to make sure that... I think it was asked by another congressman or woman about that issue. We take this very seriously. My time is scratching down. Here's the fundamental question I want to ask you. Do you think what you did was criminal?

J

John Stumpf39:48

You know, I'm not a criminal.

D

David Scott39:50

No, but do you think... do you think that...

J

John Stumpf39:53

I led the company with courage and with...

D

David Scott39:55

If another bank president had done this or chief executive officer, would you not say it's criminal?

J

John Stumpf40:00

I didn't break our code of ethics and I didn't do anything...

U

Unknown40:05

Thank you, Chairman. Time of the gentleman has expired. The chair now recognizes the gentleman from New Mexico, Mr. Pearce.

S

Steve Pearce40:10

Thank you, Mr. Chairman. Out here, thank you, sir. Appreciate you being here. I suspect it's not all fun. So you talked about the 5,300 that were terminated. How big a percent of the people in the company that were terminated? Surely out of 268,000 people you'd get more than 5,300 terminated. So what percent of the terminations did that actually represent?

J

John Stumpf40:38

You know, I don't have that. I can work with our team and see, but it's...

S

Steve Pearce40:43

That's okay. I don't have that. So just looking at this from the 30,000-foot viewpoint, and keep in mind, I'm like Mr. Lucas, grew up on a small five-acre farm. Dad was a sharecropper before he went to work as a roustabout. We had a blue-collar company just working there in the oil fields of southeast New Mexico. So all the numbers that get thrown around here are a little bit big, but I can't fathom somewhere in the process that you get 5,300 people terminated and that doesn't come to your attention as a CEO. You get calls on the ethics line saying, 'Hey, we're doing unethical stuff,' 2008, according to one or the other people, according to your comments, people inside your company are breaking the law, they're creating criminal acts, and that doesn't come to your attention. You get $10.8 billion in settlements and that doesn't come to your attention. So what I mean, if I'm sitting here thinking about this stuff just coming in a clear, just quiet room, board seeing these things, at some point somebody's going to say, 'Houston, we got a problem.' But it doesn't appear that anybody ever said, 'Houston, we got a problem.' LA City attorney brings charges and nobody in the board says, 'Houston, we got a problem.' What, in your assessment, looking back, what was it that would cause all those things to go under the radar and not be recognized, not be seen?

J

John Stumpf42:35

Yeah, thank you for that question. As we learned more about this issue, we made investments. We made investments in training. We reduced sales goals. We brought in a regulator.

S

Steve Pearce42:52

I understand already you've been through that. What kept you from seeing... what kept this from rising to the... I'm sure that today you probably consider the problem somewhat different than you did in 2011, '12, '13, '14, '15. Why did not you see the importance that you would attribute to it today at any stage of the process?

J

John Stumpf43:14

Congressman, it's a good question. I've said in my testimony, I've said...

S

Steve Pearce43:19

I read your testimony. I did not see the answer. So since you appear not to want to see it, I'm sitting here and a balance scale as a business manager is always there. Do we want to take that job cleaning out that well? And we can't clean it out, we get a bad reputation. Well, that's worth a lot. Maybe we will or maybe we won't. Are we going to overlook the numbers of terminations we're getting, the calls? Don't we really want to investigate? The stock price is doing okay. My compensation is okay. You get the balances there. Your compensation in that period of time is approximately $200 million. That would cause one to say, 'I think things are running okay. Yeah, maybe we got that little problem over there.' But another thing on the side of the scale that says, 'I don't want to look at this or I can't see $10 billion in settlements.' It just doesn't come to my attention. 5,300 terminations doesn't come to my attention because we got 260,000 employees, obviously we're doing things 99% right. Forget the 2 million people that we defrauded, mostly we're doing okay. And so I see size and complexity being a great problem when you can't see 5,300 people being terminated, when you can't see $10.8 billion in settlements, then you've got a problem in size and complexity. And I would say that there is no community banker in this country that would not have seen people doing illegal acts. And so maybe it was your stock compensation, maybe it was the size and complexity, but sir, I think today, listening to things that everyone has said, you have proved that you did not offer leadership in this. You have kind of sheered around and said that the board can do anything it want at any time. I, sir, think you ought to submit a resignation and your board cannot hold off action on that. Thank you. I yield back.

J

John Stumpf45:21

Mr. Chairman, may I just make a comment about that? We did take accountability. We did invest in things to help reduce this and we saw the numbers coming down.

S

Steve Pearce45:36

Problems continued, sir. The problems continued right on through your actions. 2011 you did this, 2013 you did that, and the problems continued.

U

Unknown45:44

Time of the gentleman has expired. Chair now recognizes the gentleman from Texas, Mr. Green, ranking member of the Oversight and Investigations Subcommittee.

A

Al Green45:56

Thank you, Mr. Chairman. I thank the ranking member as well. I'm grateful that you have given us a very positive response and we are holding this hearing. Mr. Chairman, with $5.6 billion in earnings in the second quarter, Wells Fargo is not in this because of need. This is about greed. It's about the same kind of greed that created credit default swaps, that created negative amortization, that created no-doc loans, that created prepayment penalties that coincided with teaser rates. The same kind of greed called exotic products that created the housing bubble. This greed has caused this cross-selling to become the equivalent of an exotic product, a product that has now created a cross-selling bubble for Wells Fargo. The cross-selling bubble exists because you were marketing yourself as a company in a growth mode by virtue of the new products you were having with your customers. You had customers that were coming in and you were growing. This enticed investors. It enticed consumers to buy your stocks. When your stocks were bought, it benefited you and top-level executives to the detriment of lower-level entry employees. They get fired. Top-level executives get golden parachutes and it's business as usual. Well, Mr. Chairman, this will not end by simply having some lower-level employees go to jail if top-level executives go free. And lower-level employees go to jail, it doesn't end it because there is no reason for this to cease and for top-level employees to be more mindful of what's going on. So we've reached a point now where the public expects to see more than lower-level people punished. 5,300. 5,300 working people who, by what I seem to read, were encouraged to the point of having themselves coerced to engage in this activity. These were people who were trying to make a living, not trying to make a big bonus and a big payday. These people deserve a fair day, not just an exit from your company. And what do I mean by a fair day? I think they deserve an opportunity to be heard in terms of what happened at Wells Fargo to cause them to do what they've done. I think that they ought to be given an opportunity to come before Congress. They ought to be able to explain. And I would also add this: we have to find out how pervasive this bubble is. We do have to bring before the Investigations Committee, Oversight Investigations, other CEOs, top-level executives, and let them tell us. And I think that we have to start with you. So tell me, please, sir, how commonplace is this cross-selling in the banking industry?

J

John Stumpf49:53

Thank you, Congressman. For our company, cross-sell is a good thing because it represents the depth of...

A

Al Green50:00

I'm going to have to intercede. I have to intercede because I'm asking you about the industry now.

J

John Stumpf50:05

I have no idea what...

A

Al Green50:07

You have no idea as to how pervasive the product is?

J

John Stumpf50:09

I don't know what other companies use.

A

Al Green50:11

Are they using cross-sell? You are saying you have no belief or no idea that other companies are cross-selling?

J

John Stumpf50:15

I do not have that...

A

Al Green50:18

I must tell you, I cannot believe your answer. You're telling me that you have no idea as to whether or not they even engage in cross-selling?

J

John Stumpf50:25

I don't know their performance.

A

Al Green50:27

Do you know that they engage in it?

J

John Stumpf50:29

Every bank, every retailer out there has some motivation, some way to make sure they recognize their people.

A

Al Green50:36

Do they engage in cross-selling?

J

John Stumpf50:38

Well, I don't know. I don't know their situations. I'm honest with you.

A

Al Green50:43

You don't talk to your colleagues? You don't talk to other bankers? You have no idea as to whether they engage in cross-selling?

J

John Stumpf50:49

I don't know what they use.

A

Al Green50:51

Well, listen, I thank you for your answer. Let me finish. Because, Mr. Chairman, this is the evidence that we need to bring the others in. We have to ask them what they're doing, given that this gentleman refuses to give us what I believe to be a correct answer.

U

Unknown51:05

Time of the gentleman has expired. The chair now recognizes the gentleman from Florida, Mr. Posey.

B

Bill Posey51:09

Thank you, Mr. Chairman. Mr. Stumpf, members of this committee have already expressed outrage that we all feel that this atrocity was able to happen. It's absolutely deplorable that your customers were subject to this practice. And I'm sure the fine that Wells Fargo will pay will be insufficient to comfort the customers or adequately compensate them. At best, at the very best, you and our federal regulators were asleep at the switch. You know, at worst, it's almost if not a criminal enterprise. My biggest concern, and I think it's the biggest concern of every member on both sides of the aisle here, is that we need to ensure that it doesn't ever happen again. That means we have a shared interest in understanding what caused and what perpetrated the unprecedented level of fraud. And I have just a couple of questions that I think will help drive us in that direction to understand it. First, Mr. Stumpf, I understand that Wells Fargo sets goals for new banking products each employee was expected to sell daily. Is that correct?

J

John Stumpf52:21

I don't believe that's the case. I know as part of our reward system and our performance management, that products was part of their performance management along with customer service, customer loyalty, doing things right. But again, as of this Friday, we're getting rid of those goals.

B

Bill Posey52:42

Okay. I've read a range of reports that puts these sales...

U

Unknown52:47

Goals somewhere between eight to five new sales each day, compared to the reported industry standard of three to five per day. Briefly, I was going to ask you if you could give us an idea of how the goals were determined.

J

John Stumpf53:03

Within our business, I wasn't part of that process and I don't know if that's an industry standard. You made reference to an industry standard and what ours is. I wouldn't have specifics. I can try to get back.

U

Unknown53:14

Are you aware if the expected targets vary between bank branches of different size, location, or constituencies?

J

John Stumpf53:20

I believe that is the case, yes.

U

Unknown53:22

You think they did?

J

John Stumpf53:25

I believe that was... I don't know when that was introduced, but I believe in the past, locations that would have more activity would either have more bankers or more goals.

U

Unknown53:37

Thank you for the straight answer. Okay, as a follow-up, did the bonuses associated with those goals vary between those branches, or did Wells Fargo use a single uniform system?

J

John Stumpf53:48

Again, that's a level of detail I don't know. I can try to get back to you on that.

U

Unknown53:52

Now, so far in the investigation of bad actors you found, have you found any correlation between the likelihood of employees committing fraud and the demographic or socioeconomic characteristics of the people being served?

J

John Stumpf54:06

First of all, I don't know what fraud exactly... I know what's right and I know what's wrong, and I don't know what the intent of all these people were. But to answer your question specifically, there was no, that I understand, racial or ethnicity difference other than what the communities are, because we try to have people in our banks that represent the communities. So we take racial and ethnicity off the table here.

U

Unknown54:36

As someone who also represents a district heavily populated by seniors, I'm worried that Wells Fargo may have intentionally preyed upon those they saw as vulnerable. Do you believe seniors were purposely targeted as a result of employees stretching to meet their sales goals?

J

John Stumpf54:51

Yeah, in fact, we've looked at... because we actually capture date of birth, so we could tell that. And no, there was no disproportionate... it did not... in fact, it was younger people, not seniors, if there was any emphasis at all.

U

Unknown55:11

To be clear, I don't think sales goals are inherently evil. Anyone who's owned a business understands the need to incentivize employees to succeed and reward their successes. Unfortunately, your company forgot the most important part of any business, more important than sky-high stock prices, year-end bonuses, or fat retirements: it's the people that you serve. I'm increasingly concerned that this misguided idea of success that puts actual customers in a category of less concern... that's perpetrated more than just Wells Fargo, by the way. To the best of your knowledge, was this practice of creating fake accounts exclusive to Wells Fargo?

J

John Stumpf55:50

You know, I again, I don't know, and I only know what I know about our company. But I'd also like to make, if I just... in your few seconds left, the investment reason people buy Wells Fargo investments is a whole lot more. It's about our broad product model, it's about our distribution, United States, about our loans growth.

U

Unknown56:11

Can you tell me any action the CFPB has taken that would stop something like this from happening again? Brief answer from the witness.

J

John Stumpf56:25

We've worked with the CFPB. We made an agreement with them, and we're going to continue to work with them on this issue.

U

Unknown56:30

But any action that they've taken that would stop it from happening again?

Time of the gentleman has expired. Chair now recognizes the gentleman from Missouri, Mr. Cleaver, ranking member of our Housing and Insurance Subcommittee.

Thank you, Mr. Chairman. Mr. Stumpf, thank you for being here. I know this is not one of your better days, but hopefully you understand. I have a plane to catch. I may not finish my time. And I dare not get on a plane and go back to Kansas City and conduct myself in a way that everything is fine and we'll all join hands and sing Kumbaya and fix the problem. One of the reasons that everybody in this place is upset, we each of us represent about 840,000 people, and probably every one of them is angry, especially those who had problems getting loans and people who were ripped off during the crisis from 2008. And so I think many of them think that they had a preview of this Gordon Gekko, 'greed is good, greed is right, greed works' from the movie Wall Street. And I think that's one of the problems we have here. Now, you've already been warned before I had my opportunity, so I'm not going to warn you. But I do need to ask you a couple of questions, maybe just one. Now, there were 2.6 million in overdraft charges that incurred on linked accounts and late fees. There were thousands of consumers on fire, figuratively, and your bank had tubs of water, but the people there decided to drink it and let the people burn, including the people who got fired. My question is, how far up the chain have you been able to determine that this scheme, this fraud, occurred?

J

John Stumpf59:20

We know that 5,300 people broke our trust, were not honest, and we know that we are going to do a complete review of anybody who would have been part of this. And if they were dishonest and broke our code of ethics and took advantage of our customers, they will be held accountable. And we've returned that money with interest, with an apology.

U

Unknown59:48

Yes, I know, but I'm trying to find out how far up the chain have you determined thus far that this scheme went.

J

John Stumpf1:00:00

Well, first of all, it was... and most of our people do it right. And this was just the opposite of what we trained for, just the opposite of what we talked about. So when I say it's a scheme, I mean it's... again, 1% of our people. I know that's a lot of people given our size of our company, but... and we'll do a full review and we're going to do a review of that.

U

Unknown1:00:22

God bless you, but what I'm trying to find out is how far up the chain.

J

John Stumpf1:00:26

We're not going to let the chain impede. The board's going to do a review and the company to make sure everybody's held accountable.

U

Unknown1:00:38

Okay, thank you. I appreciate that. Now, how far up the chain?

J

John Stumpf1:00:42

So far, of the people that we have found, it is branch managers, their manager in some cases, and a manager of a manager. So that's the work we've done so far.

U

Unknown1:00:55

So the manager of manager would be what, a vice president?

J

John Stumpf1:01:00

I don't know exactly the title, but I think it's called an area president.

U

Unknown1:01:08

Okay. So have any of those folks been fired?

J

John Stumpf1:01:12

Pardon me?

U

Unknown1:01:13

Have any of them been fired?

J

John Stumpf1:01:15

Yes. All the... well, I don't know again, I don't know if this person was a vice president. I don't know what the title was, but I know it was banker, then branch manager, manager of the branch managers, I think they're called district, and then an area manager.

U

Unknown1:01:33

So no matter how high it goes, they're going to be fired?

J

John Stumpf1:01:36

They're going to be held accountable. I can't say what... I don't want to prejudge.

U

Unknown1:01:40

I understand. So no matter how far it goes up, they're going to be fired?

J

John Stumpf1:01:45

As far as it goes up, they'll be held accountable, whatever that means.

U

Unknown1:01:51

Thank you. Time of the gentleman has expired. Chair now recognizes the gentleman from Pennsylvania, Mr. Fitzpatrick.

Thank the chairman. Mr. Stumpf, I want to follow up on Mr. Cleaver's questions. First of all, I represented a district outside of Philadelphia, Pennsylvania, and I, like probably most of my colleagues here, have received letters from your customers, from our constituents, from former employees of the bank. And they have a lot of questions of their own which we have to help them try to answer. First, I want to ask sort of a foundational question. This is a question that you've been asked many times already today, last week in the Senate, about when you first heard of this situation, the so-called situation with your customer accounts. And you've given us approximate dates, which we appreciate. But first and foundationally, if you could tell the committee, tell the American people, when you first heard about the problem, where were you, who told you, what did they say to you, what did you do about it?

J

John Stumpf1:03:02

Yeah, the first moment... okay, so I'll answer your question, and thank you for that. I've always known, as I think most Americans know, that not everybody does everything right every day. And we have, you know, 100,000 different people in this business, so we knew and I knew that this had to be managed and it was being managed in the business. Sometime later in 2013, before the LA story came out, because that did not surprise me, because I had heard that we are seeing an acceleration of this activity in a certain marketplace. And I can't recall if my chief legal counsel told me, I can't remember if it was in a meeting with the business leader at the time or compliance. And that's when I first knew that this was becoming a bigger issue. So resources were brought in to bring corporate resources in to assist the business line. And then we spent, or the business and the corporate group called Core, spent time working on that issue. And we saw the issue come down. It was not until 2015, and we should have learned earlier, we should have...

U

Unknown1:04:20

Mr. Stumpf, you're not asking the question. When you first heard, where were you, who told you, and what did you do about it when you first heard?

J

John Stumpf1:04:28

Again, I don't remember where I was sitting, what I was doing, but I recall hearing at some time in the summer-fall time frame of 2013. I can't... I don't remember the exact minute or the person.

U

Unknown1:04:47

Mr. Stumpf, there have been so many people who've been hurt by what we know right now. Not just your customers, you're going to lose many customers, never get them back. There have been lower-level and mid-level employees who've been injured. You mentioned earlier in your testimony 268,000 people went to work today at Wells Fargo to do the right thing, and for the most part, we all believe that. You also mentioned there were some 5,000 employees who lost their positions. As employers, we're responsible when you bring somebody young into an organization, somebody perhaps right out of high school or right out of college, we have a special responsibility to that employee to train them, to make sure that they're being trained in the ways of ethics in banking. How many of those lower-level employees were part of the 5,500 who lost their jobs?

J

John Stumpf1:05:38

The vast majority, and I don't have exact numbers, but I believe about 7% or so would have been at the teller population, and the remainder, the other 93%, were someplace... and that's my understanding... banker, senior banker, branch manager, and so forth. And incidentally, we do give two weeks of training for all of our team members before they go out into the... because you're right, we have a special responsibility to help them understand our culture. They sign a code of ethics, and they're being told in those employee trainings about the so-called goals. They're told about all the responsibility of their job, including... I've done town halls, which I do every quarter. I did one in Philadelphia just a couple of months ago, and I've been talking in every one of those. Generally, I talk about doing the right thing, putting customers first, ethics.

U

Unknown1:06:39

Mr. Stumpf, there have been reports from multiple whistleblowers from the bank that they provided information up the chain of command and were ignored. As a matter of fact, some of them were fired. Are you familiar with those cases?

J

John Stumpf1:06:54

I've heard about those. Those are regrettable. We have a non-retaliation policy on whistleblowers.

U

Unknown1:07:01

You know, being fired in the federal government for being a whistleblower is a very serious matter. Hopefully, you're taking it as seriously as anybody else would.

J

John Stumpf1:07:08

We are. We're taking that very seriously. We have a non-retaliation policy.

U

Unknown1:07:14

Time of the gentleman has expired. The chair now recognizes the gentle lady from Wisconsin, Miss Moore, ranking member of our Monetary Policy and Trade Subcommittee.

Thank you so much, Mr. Chairman, and I want to welcome our witness here today. I've learned so much here. And I know when you go to the Wells Fargo website, there your picture is, John G. Stumpf, the vision and values of Wells Fargo. And it features you. You say that you started with Wells Fargo in 1981... 1982... '82, okay, my math is not that good. And you succeeded Mr. Kovacevich, and they had already started. So you were trained and you knew what the culture of this Norwest company... I guess that was a merger of Wells Fargo and Norwest. And so did you receive training, or do you know if the employees received training on this 'Going for Great' program that we've talked about here today, where, you know, most of your customers only had five accounts in your bank, and that there was an effort to get at least eight accounts for customers. Was that part of the culture?

J

John Stumpf1:08:40

Yeah, thank you for the question. As I mentioned before, that was an aspirational goal. Most of our customers have... most households have 14.

U

Unknown1:08:50

All right, okay, I don't have much time. And so, as your predecessor noted, there is just abundant growth potential in the Wells Fargo customer base. And that one of the sayings around that place was, 'Hey, we inspect what we expect.' So were there constant monitorings to see if people were meeting these goals? It says that we inspect what we expect. What does that statement mean?

J

John Stumpf1:09:21

Yeah, that statement means that we expect our people to live according to our vision, our values, our ethics, and our culture. They don't...

U

Unknown1:09:26

Good. I am so happy. I'm going to congratulate you on draining the swamp of these 5,300 low-level employees, because they almost brought down one of the greatest companies that our country has ever known. I remember Wells Fargo, the old wagon train days. So I'm happy that you got rid of those employees. And I am sorry for your loss, your $41 million, and I'm sorry for the loss of the investors whose stock dropped. But I am wondering what the relief is for one of my constituents, and I have her letter and I want to enter it into the record. She worked at Wells Fargo... without objection, okay, thank you. And she started making $13 an hour and she ended making $15 an hour, and she was one of those whistleblowers who complained to the manager, and then they changed her performance numbers and pushed her out. And so she's a person that kind of lost her job and other stuff that happens to you when you make $13 an hour, $15 an hour, I'm sorry, and you're pushed out by people because you don't fit in with the expectations and the culture. What is the remedy? Is there a fund for these employees, the good ones, not these 5,300, you know, $12 an hour, $13 an hour employees? What is the remedy for my constituent?

J

John Stumpf1:11:05

At Wells Fargo, I know... I'll get... we want to know about everyone, and we're going to review their files for anyone who had anything to do... if they were...

U

Unknown1:11:18

She has a case with the Wisconsin Equal Rights Division. How come she couldn't just come to you and tell you?

J

John Stumpf1:11:23

And we have people that she can talk to.

U

Unknown1:11:25

No, the people she talked to fired her.

J

John Stumpf1:11:27

If... we'll have... we have corporate resources here. If you could give me that name, Congresswoman.

U

Unknown1:11:34

I was asked a question. I have 49 seconds. I was very disturbed to hear about... you said that the numbers were just not large enough to rise to the level of being material for security law purposes. I guess I don't really understand that. Would you, as an investor, invest in sort of the Bernie Madoff-type enterprises? This seems like it was... these huge dividends... would you make this kind of investment yourself?

J

John Stumpf1:12:03

This is not any... you know, this is a quality company who made some mistakes. But our investment thesis is all about our capital, our growth.

U

Unknown1:12:13

I got nine seconds left and I just want to ask this one question. You have stated previously that you think the Dodd-Frank over... really?

J

John Stumpf1:12:25

I don't recall saying that.

U

Unknown1:12:27

Time of the gentle lady has expired. The chair now recognizes the gentleman from Indiana, Mr. Stutzman.

Thank you, Mr. Chairman. And Mr. Stumpf, I tell you, I got my first loan from Norwest Bank for a motorcycle when I was 20 years old, and I've been a happy customer of Wells Fargo for over 20 years.

J

John Stumpf1:12:49

Thank you.

U

Unknown1:12:50

And I have been frustrated with Wells Fargo as of late because of the new website, and I've voiced that. And I think part of this... I think you need to do something about it because the transparency in the website right now, I can't find some of my accounts. And I think that there needs to be, at this point, a time where you can give customers confidence through the website to make sure that every account can be seen, because I got notices all of a sudden of accounts that I didn't recognize because I didn't see them on a daily basis. I found them after I called Wells Fargo and talked to them. But what my question is to you, you know, and your story is remarkable. You came from a dairy farm, I believe, in Minnesota, correct?

J

John Stumpf1:13:38

Correct.

U

Unknown1:13:39

And if you had taken a different choice...

J

John Stumpf1:13:41

I grew up on a dairy farm, still part of our family farming operation.

U

Unknown1:13:43

You know, I'm curious to know, you know, what you would do today if you had taken a different path and been a dairy farmer in Minnesota, and you had been trying to buy land and you were trying to buy some more cows, and you realize that your credit score, something's wrong with it, and you've not been able to get your credit score up, and all of a sudden you find out that maybe your credit score was dinged because your bank was opening accounts. I mean, when accounts are opened, it dings your credit score, correct?

J

John Stumpf1:14:13

That is correct.

U

Unknown1:14:15

That's right. So two million people potentially had their credit score dinged because someone else was opening accounts in their name. Is that correct?

J

John Stumpf1:14:24

That is not correct. There's about 565,000 credit cards, which we already now have contacted 20,000 of those, and less than 25% saying... and I don't want to minimize the numbers, these are still big numbers, one is too many, but we're going to go back and my instruction is make it right for every one of those customers.

U

Unknown1:14:44

Here's what I was surprised to just watch a little bit ago when Mr. Cleaver was asking you what was the highest-level officer at Wells Fargo to be fired, and you didn't really know. You kind of said area manager. I know that...

J

John Stumpf1:14:58

Excuse me, I know the title, I know the functional title. I don't know if that person is a vice president, a senior vice president, I just don't know that. I do know that that's a... it's a branch manager's manager's manager, and we're also not done with our investigation.

U

Unknown1:15:17

I understand, but you know, this broke for the public within the past month. You apparently knew about it what, 2012, 2013?

J

John Stumpf1:15:29

We knew that not everyone does it right. It was sometime in 2015 we did our PwC study, and those results came in early in '16.

U

Unknown1:15:38

You're the CEO. When 939 employees are fired for improper sales in 2011, in 2012 another thousand, all you have to do is stand up in front of your company, and I know it's a large company, and say this is going to stop. And it should have. It should be stopping. I'm curious to hear from employees who were fired what their experience was, and I hope we do a hearing with some of those. But let me ask you this: Wells Fargo is a huge company, is it too big to manage?

J

John Stumpf1:16:07

No, it is not. This was a focus problem. We do a lot of areas really, really well, like model risk and market risk and capital liquidity. We know we have work to do in operational and compliance risk. We should have invested more. Today, I've told our folks, no stone unturned, no dollar unspent, get this right. And we're getting rid of sales goals.

U

Unknown1:16:32

I know, I know you said that today, but where was the outrage from you a couple years ago when this first... when you first heard about it? I mean, there's outrage on this committee, and rightly so. I'm outraged about it, but I don't sense the same outrage from you. When we're seeing your... the lady here, her name is Miss Tolstedt, I believe, she's walking away with millions of dollars. The American people and your customers are going to be very upset when they see exactly what happens here. Final question, and I hope that you will... I didn't hear the question from this committee, but will you get the number to this committee of CFPB regulators that were embedded at Wells Fargo Bank?

J

John Stumpf1:17:14

I can talk to our team and we'll be as cooperative as we can. I don't know whether that's covered under, you know, confidential supervisory, but I'll be as helpful as I can be on that issue.

U

Unknown1:17:27

Please do that. I think that, you know, not only have you and Wells Fargo let customers down, but so has the CFPB, and people across this country are mad at both. Thank you. Time of the gentleman has expired. The chair now recognizes the gentleman from Minnesota, Mr. Ellison.

Mr. Chairman, I ask for unanimous consent to enter into the record a report entitled 'Banking on the Hard Sell: Low Wages and Aggressive Sales Metrics Put Bank Workers and Customers at Risk.' I'd like to enter into the record... without objection. I'd also like to enter into the record an op-ed I wrote in The Daily Beast just the other day entitled 'John Stumpf's Wells Fargo Racket Shows Why Bank Workers Need a Union.' Without objection. And I'd also just like to note for my colleagues, the Progressive Caucus held a June 10th briefing listening to the workers that we've been talking about today. We'd be happy to do another one, but on June 10th we had workers come in and testify to the very thing that we've been talking about today, which is these high-pressure sales techniques. Mr. Stumpf, if you're a worker at Wells Fargo and you are expected to seek out and reach sales goals, you mentioned that, right? We had sales goals, yes or no, sir? Yes or no, sir? Because I don't have a lot of time. I'm not trying to be unkind to you, but I'm not going to let you waste my time. Okay? So yes or no?

J

John Stumpf1:18:56

Yes, we had sales goals.

U

Unknown1:18:59

Thank you. So could you tell me, do you all have something known as prospecting calls that were expected for bankers to make?

J

John Stumpf1:19:05

I don't know that level of detail.

U

Unknown1:19:10

You don't know whether there were prospecting... would you be surprised... do you deny that there were prospecting calls?

J

John Stumpf1:19:15

I do not know that level of detail in our retail bank.

U

Unknown1:19:18

Are you aware that each banker was expected to make at least 100 prospecting calls a day? Are you aware of that?

J

John Stumpf1:19:24

That's the first time I've ever heard that.

U

Unknown1:19:29

Mr. CEO, Chairman, are you aware that there were weekly meetings held by... no, morning huddles to talk about these sales goals? Are you aware of that?

J

John Stumpf1:19:40

I realize... I know that some...

U

Unknown1:19:45

You got to answer yes or no, sir. But it's yes with an explanation.

J

John Stumpf1:19:48

Well, okay, so morning huddles or not...

U

Unknown1:19:52

Yes or no, did they occur?

J

John Stumpf1:19:54

Yes, with an explanation.

U

Unknown1:19:57

All right. At these morning huddles, were there questions asked of workers how are they going to sell more credit cards, and were they given goals for specifically selling a number of credit cards?

J

John Stumpf1:20:07

I don't know that everyone holds... I have to give you an explanation, sir.

U

Unknown1:20:14

Home equity loans, were they given goals?

J

John Stumpf1:20:17

I don't know that. I don't know that every branch held a morning huddle. I know our team works together.

U

Unknown1:20:21

Were there publishing of charts on who sold how many products in your bank?

J

John Stumpf1:20:27

That's a level I do not know.

U

Unknown1:20:32

Are there publishing charts on who did not make their sales goals?

J

John Stumpf1:20:36

Again, I don't have that level of detail.

U

Unknown1:20:38

Workers say that there were. Okay, now, if a worker did not reach their sales goals, were they put on initial written warnings?

J

John Stumpf1:20:47

I don't know the process, and we got rid of sales...

U

Unknown1:20:51

Excuse me, if they did not... if workers did not meet second sales goals, again, were they given second warnings?

J

John Stumpf1:20:56

I don't know that level of detail.

U

Unknown1:20:58

Okay. If they were not... second warnings, were they written up, given written admonishments for not making sales goals?

J

John Stumpf1:21:06

Congressman, you're asking a question I can't answer.

U

Unknown1:21:10

So you're the CEO and you don't know this. And were they given performance improvement plans if they did not make sales goals?

J

John Stumpf1:21:16

Congressman, I don't know that level of detail.

U

Unknown1:21:20

All right. And how did you generate these lists for workers to have to make calls? How were the lists generated?

J

John Stumpf1:21:25

Congressman, I don't even know if there were lists. I just don't know that level of detail.

U

Unknown1:21:30

You're the CEO and you don't know if there were prospecting lists that each worker was made to do, to make cold calls on?

J

John Stumpf1:21:36

I don't know that level of detail, Congressman.

U

Unknown1:21:41

Okay. And if sales weren't important, you know, why were workers given credit card and home equity loan goals to meet?

J

John Stumpf1:21:48

Yeah, I don't know what their goals were. We want to deepen relationships.

U

Unknown1:21:55

Why were workers encouraged to open numerous accounts for customers?

J

John Stumpf1:22:00

Our team members are encouraged to sit with a customer, talk about their financial journey, and help provide the right products and services.

U

Unknown1:22:08

So if a worker got a person to open up an account, isn't it true that that account, let's say a debit account, that there has to be a certain minimum balance in that account, and there is a fee to hold that account if there's not the minimum balance met? Am I right about that?

J

John Stumpf1:22:25

I don't believe you are right that if there's an account... I don't believe that's correct.

U

Unknown1:22:30

If there's an account, does there have to be a certain number of uses of that debit account per month?

J

John Stumpf1:22:35

I believe that's one way to avoid...

U

Unknown1:22:37

And if there's not met, is there a fee associated with that?

J

John Stumpf1:22:39

I believe there's a minimum balance.

U

Unknown1:22:43

What is that fee? What is the minimum balance fee?

J

John Stumpf1:22:44

I don't know what those numbers are.

U

Unknown1:22:46

Time of the gentleman has expired. The chair now recognizes the gentleman from South Carolina, Mr. Mulvaney.

Thank the chairman. Mr. Stumpf, from over here... I don't know, I can't tell you how disappointed I am to even have to be here today as one of the many members of this committee who every single day in here defend the banking system, defend capitalism, defend free markets, to sit here and have to watch you essentially validate everything that the other side has said about you and your business and your industry, I don't know, for the last three or four generations, is extraordinarily disappointing to me. The damage that you have done to the market, to your industry, far exceeds the damage that you've done to your own business. But again, there's nothing I can do about that. I want to ask you, I think, just one question. I know a little bit about business, not nearly as much as you do. What little I do know, I didn't learn from college or business school. I learned from my dad, who was actually raised very similar to you. He was from Minnesota, born to a lower-middle-class family, went to Winona, went on to the university, a little bit older than you, but not much. And I remember him telling me one time when I was first getting into business, he said, 'You know what, you can learn a lot about an enterprise, about an organization, by looking at the leader. And that the organization will take on the personality of the leader or the owner or the person in charge.' And if you walk into somebody's... you walk into a lobby and you're received nicely by the young man who's sitting there answering phones, it's probably a really good indication that the lady that owns the place is a really good person. Conversely, if you walk in and you get treated like crap and with disdain, it probably says a lot about the people at the top of the chain. I happen to think that the folks that work with me in my office reflect that. You come to my office, you get treated well, because that's important to me. The place that you ran, Mr. Stumpf, and I don't know that much about Wells... I knew a little bit about Wachovia and Wells, I mean, the first unit, because of where I grew up. I mean, y'all were rotten. We've heard some stories today that everybody's heard about. I'm sitting here looking at the story from 2009 about the lawsuit that got filed. It says, Wells Fargo... Ms. Jacobson said in the New York Times, 'The bank saw the black community as fertile ground for subprime mortgages as working-class blacks were hungry to be part of the nation's home-growing mania.' Loan officer, she said in an affidavit, stated that employees referred to blacks as 'mud people' and to subprime lending as 'ghetto loans.' I can't tell you how hard it is for me to even say that. Y'all targeted black churches. I'm not going to defend that. That doesn't even deserve defense. I'm going to ask you one question: Does this organization reflect you?

J

John Stumpf1:25:38

Well, I charge... I am deeply sorry, and I've read that article that you just said, and that has no place in our culture, no place in what we've done. And we are today the largest lender to low- and moderate-income people on housing. We make more loans to African-Americans, Latinos, persons of color, and we're proud of that. And that place and that kind of language and that kind of behavior is not who I am. I've learned my life lessons also from my parents. My dad is 94 and he's still a wonderful guy and still a big influence in my life, and so is my mother. And I try to lead with courage and conviction. Our company is based on those values of ethics, of doing what's right. And the company, of course, we've made mistakes. Not everybody lives up to our vision and values, but the vision and values that 268,000 people aspire to and do every day is consistent with what I want to live my life and what our culture is of our company.

U

Unknown1:26:52

Thank you, Mr. Stumpf. I appreciate that. For the minute I have left, I want to say something to my Democrat colleagues, who I know will see this. And believe me, if the roles were reversed, I might see this as an opportunity to try and push a political initiative, a political agenda, to bang the drums for more heavy regulation. Everything that we're talking about here today, including what I just read, which I won't read again, happened since the CFPB and Dodd-Frank. It happened after we supposedly fixed all of this with regulation. And maybe I would suggest this: you can't fully regulate bad actors. I'm not here in a position to say if Mr. Stumpf is a bad person or not. That's not up to me. I'm not trying to be in the position of judging other people. That's for his board. I know how I would vote if I were on the board. In fact, he wouldn't even be here if I were on the board of that company. But you're never going to be able to fully regulate bad actors. And I hope we look at this with a certain level-headedness as we move forward. Thank you.

Time of the gentleman has expired. The chair now recognizes the gentleman from Colorado, Mr. Perlmutter.

First, Mr. Chair, I'd like to introduce into the record the reports, the Community Banking Reports of May 24th, 2016, from Wells Fargo... without objection. And the report from May 20th, 2014... without objection. Mr. Stumpf, about eight years ago, you were before this committee, and I was so proud of you and proud of Wells Fargo and the fact that I thought you guys operated as a bank and really looked after me, a customer, somebody who's been with the bank... I mean, all these young guys, I've been with one of the predecessor banks for 40 years.

J

John Stumpf1:28:42

Thank you.

U

Unknown1:28:46

And you know, I represented some of the predecessors, First Interstate, Security Pacific, United MH. The culture is what I want to talk about, because that really is you and it is your board of directors. And I've heard terms today that I don't really align with the banking business, if you will. I look at banks as something different. We came in with $800 billion to save the banking system when it was collapsing because it's something different. But I hear you use words today, and this is where I think the root of this problem is: sales organization, retail sales, stores. I've never ever in my life referred to my branch bank in Applewood, Colorado, as a store. You don't sell Vegematic. You don't sell grapefruit. You take people's money, you safeguard it, and you lend it out to people who may need it for interest, maybe me. And to get in... this is where Mr. Green was going with the products. I don't know how many products you got. I looked at my account. I do like the online banking, by the way, because I can look at all my accounts. I turn out, as Mr. Royce says, I have eight accounts, personal accounts, with you. How I have eight, the great eight, I don't know, but I do. So talk to me about why you're calling these things stores. Why you use words like retail sales and cross-selling. You're a bank.

J

John Stumpf1:30:29

We are a bank. And the idea here is that we want to make sure our team members, when you come into a bank or any one of our customers, that we treat them with respect and that we provide products and services that help them. When they do more with us, we give them a better deal. They get more value. It helps them and it helps us. And whether we call them a store or a branch or a location, it's what is in the hearts and minds of our people who are inside there.

U

Unknown1:31:01

So, and I'll accept that. But I still think you're a bank, and we treat banks differently than we treat grocery stores because you're the heart of the financial system. And so, but here's where I want to go. So I go into my bank, and there's been some turnover there. They always treat me well. They're always very nice young people. Sometimes they're saying, you know, do you need this, do you need that. I generally am saying no. When you talk about these goals that are established, why are you even setting goals? I mean, the goal should be if your customer needs something, try to help them.

J

John Stumpf1:31:42

Correct. We're getting rid of product sales goals.

U

Unknown1:31:45

And the goal... why did you have the goals in the first place?

J

John Stumpf1:31:46

Well, it was an idea that for people to make sure that they use the right way of sitting down, so they have a conversation with a customer. I don't want our people in our branches or our banks to be apathetic and just not care what people came in. I want them to sit and have a conversation about where that customer is in their financial journey, so they can meet a need with a product. And when it works well and it deepens relationships, everyone wins. No one should be ever, whether whatever the goals are, should be forcing a product or saying why don't you do this or why don't you buy this. It doesn't... that's not the way we train, that's not the way we incent. But even today, we have taken that off the table because we're learning that customers grow with us when they're happy, when they're satisfied, when they're... and our satisfaction scores and our loyalty scores have never been higher. That's a better way of doing business.

U

Unknown1:32:46

All right. And look, I'm just up here as a member of Congress who has worked with banks before, but I'm just telling you, you got to stop... you know, 'our stores, our stores generate more deposits than our competitors.' You know, you've got Denver up here on your chart. That creates the wrong culture. Okay? And I yield back.

Time of the gentleman has expired. The chair now recognizes the gentleman from North Carolina, Mr. Pittenger.

Thank you, Mr. Chairman. Mr. Stumpf, good afternoon.

J

John Stumpf1:33:18

Good afternoon.

U

Unknown1:33:19

I'm from Charlotte.

J

John Stumpf1:33:21

Okay, great. We love Charlotte.

U

Unknown1:33:24

Well, you have a very major presence in our community. I think there's some 23,600 employees there. They are my constituents. I do have deep respect and appreciation for the corporate citizenship that you all have been in Charlotte. You have been exemplary in terms of what you've done in our community. You take active roles, your employees do, in many nonprofit organizations, and that leadership is commended. And of course, we cherish the Wells Fargo Golf Tournament. And so you have a major presence in our community, and that's why today is such a sad day. I know it is for you. I'm sure as you look back on these 35 years and where you are today, you think, what if? What if I had done this? What differences could I have made? Where was I blindsided? What mistakes? Where did I err? And so I think I'm asking you to look as if you were sitting in our seat. We represent these people, as was said earlier, some 750 to 800,000 plus people. And you've heard a lot of outrage, a lot of righteous indignation, because we haven't seen what we've all expected. You know, in the SouthPark Wells Fargo facility that you have, there's written behind the teller station, the counter, a statement by Mr. Wells, came from, I believe, 1864. Do you recall that statement? I think it's very prominent. Perhaps it is another Wells Fargo. It seems to be the motto of your bank. Are you asking me a question?

J

John Stumpf1:35:21

Yes, sir. Yeah, I don't... he's made a lot of statements, but treat every customer with respect. And I can't recall what we have there at the SouthPark.

U

Unknown1:35:29

It says, 'We have one very powerful business rule. It is concentrated in one word: courtesy.' So I think as you look at all of... there's a lot embedded in that word, courtesy. But I think that's the challenge we have today. What could have been done different? Certainly the regulators were there, yet this was reported by a news agency. What would you have done different today as you look back in the changes and the mistakes that were made? As the CEO, what happened in that corporate culture that did not allow that information to come to you in a more timely fashion that would cause you to take even greater direction and leadership?

J

John Stumpf1:36:16

Yeah, I think it's a good question. I probably asked myself that a thousand times, a million times. And while, you know, I want to defend our culture and our people, I recognize that we could have done more earlier. And I don't know if there's any one point, but surely we should have realized earlier that product sales goals could elicit behavior that's inconsistent with our culture. Even if it happened, like this case, with 1% of our team, it's way too much. It's simply not worth it. And frankly, it's not even consistent with where we're going and given the business today. So, you know, I don't know if I can be clearer than that. And there's a lot of people doing a lot of introspection within the company today to make sure that we never, ever put a customer or a team member at... We want always customers to be the foremost of what we do. And if courtesy is the right word, we think of relationship. We love long-term, mutually beneficial relationships with our owners, our team members, and most importantly, our customers.

U

Unknown1:37:37

Yes, sir. I think those of us who understand free markets... I was on a bank board, small bank, but we understood the customer. We understood the importance of the financial industry and what it does to facilitate economic growth. And that's why we're so challenged today, because we see there's been a strangling of regulations on the financial industry. And yet, with that, we're having to deal with you and with this bank and with this problem that's going to have ripple effects. And the messaging is going to be that there needs to be even more oppressive regulations. Thank you.

Time of the gentleman has expired. The chair now recognizes the gentleman from Connecticut, Mr. Himes.

Thank you, Mr. Chairman. Mr. Stumpf, we've focused a lot today on accountability. I want to go back to something that, like Congressman Lucas's concerns, troubles me, which is kind of the focus on culture and the materiality of what happened here. We're hearing that there's not a problem with the culture, and you're hearing an awful lot of disagreement up here. And we're hearing, certainly in the Senate hearing, that this wasn't material. And I guess if you sort of exquisitely, finely define materiality the way maybe the SEC defines it, maybe $185 million in fines is not material. But this is about much more than a legal definition of materiality. And we need to hear you say that you understand the magnitude of what has occurred here. It's more than $185 million. It's about the trust and the faith and the belief in the system. It's not about the ups and downs of one company. It's about people's faith in the banking system. It's about their faith in the market economy. It's about whether competition is perceived as a good thing by the American public or a bad thing. This is really about people's faith in organizations like yours and like the one that you're testifying in front of today. But let me start with the numbers quickly here. What matters to an investor, of course, is the value of the company they own. And your shareholders have already paid out $185 million, including, by the way, the state of Connecticut's pension funds. Mr. Stumpf, do you know what the market cap, the value of your company is today?

J

John Stumpf1:39:48

I didn't look this morning, but I think it's 220 or 230 billion.

U

Unknown1:39:55

On September 7th, when this all started, it was $253 billion. And there's been no other material impact. So just this event has cut $25 billion off of the value of Wells Fargo. That's a big number. Do you know what the value of Ford Motor Company is, Mr. Stumpf?

J

John Stumpf1:40:13

I do not follow Ford.

U

Unknown1:40:15

$50 billion. So just since the 7th, you have and your organization and the culture have obliterated a full half of a Ford Motor Company. That has to be material, doesn't it?

J

John Stumpf1:40:26

Congressman, I take this as much more than the $185 million. I don't want to diminish this. I am deeply sorry that we didn't do the right thing, and I understand that re-earning the trust of our customer and the American people is going to be our biggest challenge.

U

Unknown1:40:43

I appreciate that. I do want to get away from the numbers because, again, I'm troubled by this whole culture thing. Do you think that you can fully measure Wells Fargo's value with the hard assets, the dollar cents, the number of accounts? Let me ask it another way: are intangible things like Wells Fargo's reputation and brand an important part of the company's value?

J

John Stumpf1:41:01

There's no question. I think the most important... yes.

U

Unknown1:41:05

The answer is yes. Do you believe that Wells Fargo's... with an explanation, though.

J

John Stumpf1:41:08

Yeah, yeah, okay, go ahead. I think, frankly, what is in the hearts and minds of our people and the trust with our customer is by far the most important thing, because they make all the rest happen.

U

Unknown1:41:19

Do you think that Wells Fargo's reputation has been damaged in a material way by this?

J

John Stumpf1:41:25

I think there's been damage, yes.

U

Unknown1:41:27

Okay. What I worry about is bigger than Wells Fargo. It's the fact that the system comes apart if people don't have faith and trust. Stumpf, can you see what I'm holding up right here?

J

John Stumpf1:41:38

I think it's a $1 bill.

U

Unknown1:41:43

It's a $1 bill. It's the almighty dollar. It's a piece of paper with some green ink on it. Yes. Does this thing have any intrinsic value? Can I eat it if I'm hungry? Can I use it to cut wood? Does it have any intrinsic value at all?

J

John Stumpf1:41:54

It represents a promise.

U

Unknown1:41:56

It's a promise. Yes. So it relies on the faith and the belief in the American people that this has some value. Otherwise, it's a piece of paper with green ink on it. Is that not correct?

J

John Stumpf1:42:06

I totally agree with you.

U

Unknown1:42:08

And can I not expand that point to the banking system? If Americans really started getting anxious about the fact that you don't have enough money in your banks on any given day to cover their deposits, we'd have a problem, wouldn't we?

J

John Stumpf1:42:16

There's no question about that.

U

Unknown1:42:18

And the only thing standing between us and this being meaningless and between them believing that the banking system doesn't work is trust and faith in the fact that it does.

J

John Stumpf1:42:28

Congressman, you are absolutely right. Trust is the absolute critical element here, and we have a lot of work to do to work on that.

U

Unknown1:42:40

So your investors are equity investors. They accept risk, including the possibility that something like this could happen. If you don't want this kind of risk, you buy bonds or treasuries or whatever it is. I would implore you, as somebody who I think understands that the market economy is important and that the financial services industry is important, I would implore you to please don't continue to focus on this idea that this is not material. I think we're now agreeing that it is material.

J

John Stumpf1:43:08

I've never said that.

U

Unknown1:43:10

And please work with your colleagues to repair some of the damage that has been done to the faith and the trust that we both here today have acknowledged is the only underpinning of the system that has done so well by you.

J

John Stumpf1:43:21

Sir, thank you for your comments, and I couldn't agree more. This is bigger than the $185 million. In fact, I don't even think in those terms. Regaining trust...

U

Unknown1:43:31

Thank you. You yield back. Mr. Chairman, time of the gentleman has expired. The chair...

Wells Fargo CEO John Stumpf GRILLED by Congress - House Financial Services Committee Hearing 9/29/16

About John Stumpf