Wells Fargo & Co. Chief Executive John Stumpf most likely will face some hostile questioning about the bank’s improper sales tactics at today’s Senate Banking Committee hearing, as the panel is filled with some of the industry’s most outspoken congressional critics — led by Sen. Elizabeth Warren (D-Mass.)
Stumpf plans to begin his testimony with an apology.
“I am deeply sorry that we failed to fulfill our responsibility to our customers, to our team members, and to the American public,” his prepared testimony says. “I have been with Wells Fargo through many challenges, none that pains me more than the one we will discuss this morning.”
But the pain probably will just be starting for Stumpf.
Warren and four other committee Democrats — Sherrod Brown of Ohio, Robert Menendez of New Jersey, Jeff Merkley of Oregon and Jack Reed of Rhode Island — pushed for the hearing last week after Wells Fargo agreed to pay $185 million to settle investigations into sales tactics first uncovered by the Los Angeles Times in 2013.
Committee Chairman Richard C. Shelby (R-Ala.) agreed to hold the hearing and call Stumpf to testify. Although Shelby is friendly to the banking industry, he’s no fan of big banks and could have some pointed questions. Another Republican on the panel, David Vitter of Louisiana, also has been critical of large financial institutions and has teamed with Warren and Brown on bills to crack down on banks that are “too big to fail.”
But Stumpf’s toughest time will come when Democrats are tossing the queries. Brown, the committee’s top-ranking Democrat, is a populist and longtime critic of big banks. Warren joined the Senate in 2013 after making a name for herself grilling bankers and regulators as head of the congressional panel overseeing the $700-billion Troubled Asset Relief Program bailout fund.
Merkley was one of the key proponents of banning banks from trading for their own profit and limiting their ownership of risky investments. The provision, dubbed the Volcker Rule, was included in the 2010 Dodd-Frank overhaul of financial regulations. Menendez and Reed also have been outspoken about abuses by big banks.
The five Democrats wrote to Stumpf on Friday, asking him to rescind — or claw back — the pay of some top executives because of the scandal.
“This was not the work of a few rogue employees over the course of a few weeks,” the letter said, in a preview of the confrontational approach the senators are likely to take at the hearing. “Wells Fargo had a long-standing, systemic problem created by stringent sales quotas and incentives imposed by senior management.”