The following editorial appeared in The Mercury News.
Nobody takes apart icons of corporate greed better than Sen. Elizabeth Warren of Massachusetts. And nobody deserved it more than Wells Fargo CEO John Stumpf.
Warren grilled Stumpf on Tuesday after the bank was fined $185 million by the Consumer Financial Protection Bureau for one of the biggest sales scams in banking history. Wells Fargo fired 5,300 employees between 2011 and 2015 for creating up to 2 million fake accounts – but the line workers were responding to impossible sales goals established by management. Not one executive has been fired or accepted personal responsibility for what happened.
If Stumpf had an ounce of integrity, he would have resigned months ago, returned the $12.5 performance bonus he “earned” in 2015 and demanded that the corporation claw back the ill-gotten gains of other top executives who directly or tacitly condoned predatory and illegal sales practices – especially Carrie Tolstedt, who ran the consumer banking unit that oversaw the whole scheme. Instead she was allowed to resign with a $100 million sendoff.
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Since it became clear Tuesday that Stumpf won’t quit, and current law is inadequate to put him in jail, shareholders should demand that the San Francisco bank clean house at the executive level. Warren Buffett holds a 10 percent stake. He can’t be proud of this. How about starting the movement?
Sen. Warren’s masterful performance was consistent with her political approach to the banking industry throughout her career. The Consumer Financial Protection Bureau that uncovered this outrage was her brainchild in the wake of the 2008 banking disaster that nearly destroyed the U.S. economy.
We wish we could say the same for Sen. Pat Toomey, R-Pa.
Toomey went after Stumpf on Tuesday for what the senator termed Wells Fargo’s “fraud against customers” and attacked its executives for being “completely out of touch.” But the Philadelphia Inquirer reported that Toomey had on Monday called for dismantling the consumer protection bureau, saying it was “very ill-conceived and badly governed.”
In 2010, it was Toomey and Senate Republicans who blocked Warren – then a Harvard law professor – from becoming the bureau’s first director. Then they did all they could to weaken the bureau’s authority to oversee banking.
The bureau’s investigation of Wells Fargo proves that bankers will not police themselves, when millions in compensation dangle before them. Most of the super rich were not personally hurt by the Great Recession in the way that people who suffered mortgage foreclosures were, so for those lacking a conscience, risking another collapse is no big deal. This is why government regulation is necessary.
What happened at Wells shows that current laws and oversight do not go far enough.
Warren began questioning Stumpf by noting Wells Fargo’s vision and values statement: “If you want to find out how strong a company’s ethics are, don’t listen to what its people say, watch what they do.”