Wells Fargo's move to terminate thousands of staffers while simultaneously defending senior executives in the wake of its fake accounts scandal was "despicable," Sen. Robert Menendez said Tuesday at a Capitol Hill hearing.
"I am personally appalled by the size, the scope, the duration and the impact of the scandal, and I must say that I'm shocked and incredibly disappointed by the response of Wells Fargo's corporate executives," the New Jersey Democrat told CEO John Stumpf.
"In the last week you and your chief financial officer have taken to the press and laid the blame squarely on low-paid retail bank employees, and while I don't excuse what they did by any stretch of the imagination, I find that despicable."
Wells Fargo's CEO pledged changes before the Senate Banking Committee investigating the bank's account fraud scandal, but he stopped short of saying executive pay should be clawed back, or that staffers had committed fraud.
Menendez criticized a sales culture where he said managers would be "breathing down your neck to meet sales quotas."
Andrew Harrer | Bloomberg | Getty Images
John Stumpf, chairman, president and chief executive officer of Wells Fargo & Co.
Stumpf said the bank is conducting an expanded review of accounts to ensure that customers are not being unnecessarily charged or that unwanted accounts remain open, but he stopped short of saying that the former consumer banking chief, Carrie Tolstedt, deserved to have her benefits clawed back.
"There was no orchestrated effort, or scheme, as some have called it, by the company," Stumpf said. "We assumed this would not happen. We were wrong."
Still, lawmakers railed against Stumpf and Wells Fargo in the wake of the bank being fined $185 million by regulators including the Consumer Financial Protection Bureau for fraudulent accounts.
The bank fired more than 5,000 staffers over a five-year period after reviewing more than 2 million credit card and checking accounts for which it "could not rule out the possibility that an account was unauthorized." At an industry conference in New York last week, Wells Fargo Chief Financial Officer John Shrewsberry insisted that the accounts were mostly created by under-performing staff who were trying to keep their jobs or inflate personal accomplishment tallies.
"The vast majority of the people did exactly what we wanted them to do," Stumpf told senators.
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