| Sept 29
Sept 29 Wells Fargo & Co's Chief
Executive John Stumpf returns to Capitol Hill on Thursday with
his job still under threat and the bank facing rising political
pressure over a sales scandal that has become a major issue in
Washington and on Wall Street.
The bank's move earlier this week to claw back $41 million
in stock awarded to Stumpf, an unprecedented rebuke for a major
U.S. bank CEO, is unlikely to silence calls for him to resign
over revelations Wells Fargo's branch staff opened as many as
two million unauthorized credit card and deposit accounts to
meet sales quotas.
The scandal has triggered lawsuits, investigations and wiped
more than $20 billion off the bank's market value.
California, Wells Fargo's home state, suspended business
relationships with the bank for a year on Wednesday and said it
would work with the state's two giant public pension funds to
change the management structure at the bank, including
separating the roles of CEO and chairman.
The episode has been a stunning reversal for Stumpf, long
regarded as a safe pair of hands in the industry for navigating
Wells Fargo successfully through the financial crisis.
"I don't know that he will survive this. I don't think
there's any way to come out of this with the same leadership,"
said Patricia Lenkov, CEO of Agility Executive Search.
Stumpf will appear before the House Financial Services
Committee, his second congressional appearance in under 10 days.
Thursday's hearing may be softer on Stumpf than the
bipartisan tongue-lashing he took from the Senate Banking
Committee on Sept. 20, in which Massachusetts Senator Elizabeth
Warren called him a "gutless leader" who should be criminally
Warren said on Wednesday that Wells Fargo's decision to
launch an internal investigation and claw back bonuses paid to
Stumpf and Carrie Tolstedt, the former head of the retail
division at the center of the scandal, were "important first
steps," but still insufficient.
"The reduced compensation represents only a fraction of the
total pay and bonuses received by Mr. Stumpf and Ms. Tolstedt
during the years that their compensation was based in part on
inflated retail account growth and cross-selling success," she
wrote in a letter to Wells Fargo's board of directors.
Andrew Duberstein at public relations firm Sard Verbinnen,
which is representing the board, did not respond to requests for
comment on the letter.
Stumpf will tell lawmakers on Thursday that Wells Fargo will
eliminate sales quotas for branch staff from Oct. 1,
accelerating a previous plan to halt the practice by Jan. 1,
according to prepared testimony he will deliver.
Federal regulators will also be in focus at the hearing.
Since the scandal broke, Texas Republican and chairman of
the House Financial Services Committee Jeb Hensarling has asked
why they did not act sooner and he is expected to raise that
U.S. Federal Reserve Chair Janet Yellen promised the
committee on Wednesday that the central bank will scrutinize all
big banks in the wake of the Wells Fargo scandal. Some
Democratic committee members said it showed that some banks are
too big to manage and should be broken up.
The most powerful Democrat on the committee, Representative
Maxine Waters of California, said she had not reached that
conclusion, and wanted to hear Stumpf's answers first. She
declined to say whether steps taken by Wells Fargo, including
the $41 million clawback, were sufficient.
"We will ask some of the basic questions about how this
fraud took place and why did it happen and whose decision it
was," she said.
(Additional reporting by Ross Kerber in Boston; Writing by Dan
Freed in New York; Editing by Carmel Crimmins and Bill Rigby)