WASHINGTON—Wells Fargo (WFC) CEO John Stumpf apologized on Tuesday for the bank's opening of millions of secret accounts without customers' permission but argued that it was not part of an "orchestrated" scheme and refused to push for a clawback of executive compensation, including his own.
Facing pressure from senators to relinquish past pay after his company opened more than 2 million fake accounts, Stumpf told the Senate Banking Committee that Wells Fargo has implemented measures to overhaul its sales culture. He also announced that the company would expand its internal review of the scandal to include 2009 and 2010 after previously investigating the matter back to 2011.
He said he did not learn of the scandal until around the time the Los Angeles Times published a report on the matter in 2013.
"I am deeply sorry that we failed to fulfill our responsibility to our customers, to our team members, and to the American public," Stumpf said. "I have been with Wells Fargo through many challenges — none that pains me more than the one we will discuss this morning."
The company has come under fire for providing incentives to retail bankers to "cross-sell" products to its customers, which critics say encouraged employees to open accounts without permission to meet aggressive internal targets.
"I do want to make very clear that there was no orchestrated effort, or scheme as some have called it, by the company," he said. "We never directed nor wanted our employees, whom we refer to as team members, to provide products and services to customers they did not want or need."
The company has fired some 5,300 employees, or about 2% of its current workforce, over the fake accounts and has eliminated quotas for bankers, branch managers and district managers starting Jan. 1.
U.S. Sen. Bob Corker, R.-Tenn., said it would be "malpractice" for Wells Fargo not to claw back compensation from Stumpf and former community banking chief Carrie Tolstedt. Tolstedt retired this summer with Wells Fargo stock worth tens of millions of dollars.
Sen. Sherrod Brown, D-Ohio, blasted that decision as "unfortunate." "Workers lost their jobs with no parachute of any color," he said.
Wells Fargo agreed to a $185 million penalty as part of a civil settlement announced Sept. 8. It has acknowledged unauthorized accounts were opened from 2011 through 2015, racking up $2.6 million in fees that have since been refunded to affected customers.
"Wrongful sales practice behavior goes entirely against our values, ethics, and culture and runs counter to our business strategy of helping our customers succeed financially and deepening our relationship with those customers," Stumpf said. "That said, I accept full responsibility for all unethical sales practices in our retail banking business, and I am fully committed to doing everything possible to fix this issue, strengthen our culture, and take the necessary actions to restore our customers’ trust."
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