(Adds details of Wells settlement over car repossessions,
By Patrick Rucker and Dan Freed
WASHINGTON/NEW YORK, Sept 29 U.S. lawmakers
called on Thursday for Wells Fargo & Co chief John
Stumpf to resign and a top House Democrat demanded the bank be
broken up because it is too big to manage.
Stumpf's second trip to Capitol Hill on Thursday went no
better than his first as lawmakers from both parties rebuked his
handling of sales abuses and said the bank had damaged customer
trust as well as the broader banking system.
Wells Fargo staff opened checking, savings and credit card
accounts without customer say-so for years to satisfy managers'
demand for new business, according to a $190 million settlement
with regulators reached early this month.
U.S. Representative Maxine Waters, the committee's senior
Democrat, faulted the bank for identity theft in the fraud and
called for Wells Fargo to be dismantled because it was too big
She called the sales abuses "some of the most egregious
fraud we have seen since the foreclosure crisis." After the
hearing, the California lawmaker told reporters she would
introduce legislation to break up Wells Fargo.
The bank has said as many as 2 million accounts may have
been wrongly opened and Stumpf promised to undo any harm to
The chief executive said, however, that Wells Fargo did not
expect to see disgruntled bank customers in court.
Wells Fargo is offering arbitration for its unhappy clients,
Stumpf said. Pushed about whether he would waive that mandatory
arbitration rule and allow customers to sue, Stumpf said: "No."
Members of the House Financial Services Committee blasted
Stumpf over the bank's culture, his compensation and whether the
right people were being punished for opening fee-generating,
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. Stumpf
again heard lawmakers calling for him to step aside.
Jeb Hensarling, the Republican chairman of the committee,
said in his opening statement he had lost faith in Wells Fargo,
which does some of his banking.
"Mr. Stumpf, I have a mortgage with your bank," Hensarling
said. "I wish I didn't. I wish I was in the position to pay it
off because you have broken my trust as you have broken the
trust of millions."
Wells Fargo shares fell 2.07 percent to $44.37. Since Sept.
7, the last trading day before the scandal broke, its stock has
lost 11 percent, or about $27 billion in market value, based on
Reuters data. The stock is trading at its lowest since early
Republicans on the committee have often advocated easing
Wall Street regulations, but they were among Stumpf's strongest
critics at Thursday's hearing.
Asked by Representative Sean Duffy, a Republican from
Wisconsin, about whether Wells Fargo employees 'stole,' Stumpf
said: "In some cases, they did."
"I am deeply sorry that we didn't do the right thing,"
Stumpf said in response to a lawmaker who said the scandal had
eroded the bank's market value.
Representative Steve Pearce, a Republican from New Mexico,
faulted Stumpf for saying the company's board could eventually
be relied on to sanction the executives responsible.
"I, sir, think you ought to submit a resignation and your
board cannot hold off action on that," he said.
Representative Brad Sherman, a Democrat from California,
asked the committee to summon other Wall Street chiefs,
including from Citigroup Inc and Bank of America Corp
, to determine if they had imposed sales demands and
quotas on their employees.
"I don't think, Mr. Stumpf, that you should be alone in this
joyous experience," Sherman said.
Stumpf said the bank was strengthening oversight of sales
tactics, changing procedures for issuing credit cards and had
paid back past and current customers for any fees incurrent on
the ghost accounts.
Earlier this week, the bank took back $41 million in stock
awarded to Stumpf, an unprecedented rebuke to a major U.S. bank
chief executive officer.
Democratic Representative Carolyn Maloney of New York raised
questions about $13 million in stock sales by the CEO in 2013
after he learned about the abuses. Stumpf said he sold stock
with proper approvals and added the sales were made "with no
view about what was going on."
The affair has triggered lawsuits, more investigations and
wiped more than $20 billion from the bank's market value.
While Wells Fargo may be shielded from some customer
actions, the bank may just be starting to face heightened
On Thursday, the bank agreed to pay the Justice Department
$4.1 million to resolve allegations it illegally repossessed
cars owned by U.S. service members. In a separate settlement of
similar allegations, the bank will pay a $20 million settlement
with the Office of the Comptroller of the Currency.
(Additional reporting by Ross Kerber in Boston and Lisa Lambert
in Washington; Writing Nick Zieminski in New York; Editing by
Alan Crosby and Peter Cooney)