This week we present 17 minutes of cross examination of Wells Fargo CEO John Stumpf by Sen. Elizabeth Warren (D, MA). This amounts to an argument for criminality by the bank and its high level executives.
This hearing, and Sen. Warren's questioning in particular, has been called an exercise in "grandstanding". Rick Newman (Fox Business) has used the term "grandstanding" in a piece entitled "In Defense of John Stumpf and Wells Fargo". Newman wrote:
But here's the thing. None of that makes Stumpf an executive who "should be criminally investigated" or a "gutless" leader who "should resign," as Senator Elizabeth Warren suggested in her overwrought rant. I think her grandstanding accusations were unjust and her call for new legislation would do far more harm than good.
Let's start with some facts. The numbers may sound big and the optics may look damning, but in my view, what occurred had negligible impact on consumers. Contrary to Warren's repeated accusation that this was a "massive" fraud or scam, the sum total of fees the bank received from those 2 million fake accountsOpens a New Window. was all of $2.6 million. That means the average consumer was duped of a buck thirty. The company has since refunded the fees and agreed to a fine of $185 million.
To put that in perspective, Wells Fargo is the nation's largest bank with 267,000 employees, a market cap of $230 billion, annual revenues of $90 billion and net income of $21 billion. And since politicians love to talk about how little corporations pay in taxes, the company paid more than $10 billion in federal income tax expense in each of the last three years for an effective tax rate of roughly 50%. Some corporate villain.
Statement by Sen. Warren:
The Consumer Financial Protection Bureau caught Wells Fargo in a massive, years-long scam. The CEO hasn't resigned. He hasn't fired one senior executive. Instea...d, Wells Fargo's definition of "accountable" is to push blame on low-level employees who don't have the money or PR firms to defend themselves. That's gutless leadership.
A bank cashier who steals $20 would be facing theft charges, but Wall Street executives almost never hold themselves accountable. Not in 2008 when they crashed the economy, and not now. Wells Fargo CEO John Stumpf should resign, give back the money he took while the scam was going on, and be criminally investigated.
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