Congress unleashes the Furies, but never at itself By Jeff Jacoby
Published Oct. 10, 2016
When Wells Fargo's longtime CEO, John Stumpf, appeared before the Senate Banking Committee recently, Senator Elizabeth Warren tore into him with the relish of a Rottweiler mauling a favorite chew toy.
"You should resign," a wrathful Warren told Stumpf, who was summoned to testify after Wells Fargo acknowledged that thousands of its low-level employees had opened sham deposit or credit-card accounts for customers who never authorized them. "You should be criminally investigated." For the senior senator from Massachusetts, few pleasures compare with making the leader of a great financial institution squirm, and she milked the session for all it was worth.
"Have you returned one nickel of the millions of dollars that you were paid while this scam was going on?" demanded Warren three times as the cameras rolled. "You squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket." She charged Stumpf with "gutless" leadership, and accused banks like his of routinely "cheating as many customers, investors, and employees as they possibly can." Wall Street will never change, Warren said ominously, until "executives face jail time when they preside over massive frauds."
In truth, Wells Fargo mostly cheated itself. The bank's aggressive "cross-selling" strategy, which tempted employees to sign customers up for accounts they never asked for, has cost the company far more than it gained. The fraudulent accounts generated only about $2.6 million in fees, which the company has refunded. That amount is dwarfed by the $185 million penalty imposed by federal regulators. Even more costly is the hit to Wells Fargo's reputation, and the loss of some of its biggest customers --- including the state of Illinois, which this week suspended its annual $30 billion investment relationship with the bank....
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