The head of Wells Fargo got an earful at the Capitol as he apologized to Congress for the bank's aggressive sales practices. Facing US Senators this morning, including Elizabeth Warren (D-MA), Wells Fargo CEO John Stumpf was forced to answer for the banks' admitted wrongdoing in creating 2-million accounts without customers' authorization - malfeasance that some believe indicate the bank is too big to manage.
Sen. Elizabeth Warren flatly told Stumpf he should resign. "You squeezed your employees to the breaking point so they would cheat customers," she said. "You should resign. You should give back the money you took while the scam was going on."
In a letter to customers last week, Stumpf wrote "You may have seen news recently that some Wells Fargo customers received products and services that they did not want or need. Every day we strive to get things right. In this instance, we did not - and that is simply not acceptable." Earlier this month, California and federal regulators fined the San Francisco-based company a combined $185 million for the allegedly illegal activity - including a $50-million settlement with the City Attorney of Los Angeles. However, no individuals are being held accountable. While falsifying new accounts is illegal, aggressive “cross-selling” of credit cards or savings accounts is a profitable business that helps retain customers and is not illegal.
Is the practice too susceptible to unethical and illegal activity by bank employees? What consequences should the bank face for the wrongdoing in these cases?
With files from the Associated Press.
Lisa Gilbert, Director, Congress Watch Division of Public Citizen - a consumer advocacy organization founded in 1971
J.W. Verret, Professor of Law, George Mason University; Member with The Mercatus Center at George Mason University - conducting market-oriented research; From May of 2013 through April of 2015, Verret served as chief economist at House Financial Services Committee