Wells CEO said he never considered firing executive over fraud scheme

Wells Fargo CEO John Stumpf said Tuesday that he never considered firing the executive who oversaw the bank’s employees who were allegedly responsible for creating more than 2 million unauthorized accounts. 

Hit by a volley of tough questions from Sen. Elizabeth Warren (D-Mass.), Stumpf said “no” when asked if ever thought about firing Carrie Tolstedt, who is expected to receive more than $90 million in compensation when she retires at the end of the year.

{mosads}“Seriously?” Warren responded during the Senate Banking Committee hearing on Capitol Hill. 

“You didn’t even once consider firing her ahead of her retirement?”

Stumpf said he was looking at Tolstedt’s “full body of work and customer service” over her 27-year tenure at the bank. 

“How do you know those weren’t fake?” Warren asked. 

Tolstedt oversaw the division in charge of all 5,300 employees who were fired over five years during the scandal in which credit and deposit accounts were opened without customers’ permission. 

Warren also asked Stumpf whether he would recommend to the bank’s board that Tolstedt forfeit part of her compensation considering the breadth of the fraud scheme. 

But Stumpf repeatedly said that he would not say anything to influence the board’s decision and would let it go through its process to assess Tolstedt’s compensation in the wake of the fraud scheme.  

“I don’t want to prejudice the board,” Stumpf said.

Although Stumpf is chairman of the board, he said he doesn’t sit on the independent compensation committee.

Still, Warren pushed back, asking him whether he would “personally support clawing back” all or part of that payout for Tolstedt. 

“I’m not going to in any way try to influence or prejudice the board,” Stumpf said. 

Warren responded, “You keep saying, ‘the board, the board,’ as if they’re strangers you met in a dark alley.

“You are not passive here,” Warren said. “If you have nothing to do, then what are you doing serving as chairman of the board? If you have no opinion on the most massive fraud to hit this bank since the beginning of time, how do you get to continue getting a check as chairman of the board?”

Stumpf chimed in, saying, “I disagree with the fact that this is a massive fraud.”

Earlier in the hearing, Republican Sen. Bob Corker (Tenn.) said that there should be some claw back in executive pay, and it would be “malpractice” and make it difficult for the bank to rebuild trust without some action on the bank’s part. 

“I would be surprised that it doesn’t take place,” Corker said. 

Last week, Warren said she and four of her Senate Democratic colleagues sent a letter to Wells Fargo urging it to consider clawing back Tolstedt’s compensation, as well as that of other top executives at the bank.  

In its response, Warren said Wells told the lawmakers that Tolstedt may be eligible to receive an incentive award for 2016 because she isn’t leaving the bank until the end of the year. 

“That is unbelievable,” Warren said when told that Tolstedt could receive an “incentive award for doing a great job.”

Earlier in the hearing, Warren called for Stumpf to resign and face a criminal investigation.

Warren wrapped up her wave of questioning by saying that Wells Fargo’s behavior is proof that Wall Street hasn’t changed its behavior since the financial crisis in 2008.

“In 2008, Wall Street promised change, but it looks like it’s business as usual,” she said.

“A giant bank cheats the little guys, and yet the executives line their own pockets,” Warren said. “You make it clear Wall Street won’t change until we make it change.”