The committee will come to order. The gentleman from texas, mr. Green, who is also the chair for subcommittee and oversight for investigations is recognized for five minutes. Thank you, madam chair. Madam chair, as a practitioner, i once represented a recipient of welfare who was charged with a crime because she made more money at a job and received some benefits from the federal government. She had to be prosecuted. A crime was alleged. If this bank, where its mu was smaller, had maybe ten employees, had engaged in this type of activity, opening fraudulent accounts, creating fraudulent credit cards, someone would be prosecuted. A small bank would have had prosecutions take place within the ranks of the person within the bank. Evidence shows that small banks have had persons prosecuted. But wells fargo created 1. 5 million fraudulent accounts. Wells fargo had over 500,000 credit cards created, fraudulently. Is it the case that if you become so big and you create such a grand scheme, that youre beyond the law . The law ought law ought to appl fargo just as it applied to that welfare recipient, just as it would apply to any small bank in this country. Wells fargo cannot be too big to prosecute. You cant be too big to jail. Wells fargo has to be held accountable. We cannot allow 17 be billion in penalties to be the cost of doing business. While these criminal activities were taking place you were making billions. And you sat on the board. And you ewe what was happening. And this morning you as much as acknowledged fraud when the chairwoman asked about the accounts. Did anybody ever think to say somebody ought to go to jail . Somebody has to be prosecuted . This is a crime . 1. 5 million accounts. Its unbelievable. Its unimaginable. Yet no one has been prosecuted. Maybe im mistaken. If someone at wells fargo has been prosecuted for these egregious offenses, would you kindly extend a hand into the air, either of the two of you or both. Let the record reflect that no hand has been extended into the air. I shall have a photograph of this in my office, and it will have under it can be ask me about this picture. And it will show you. It will show you with no hand raised. And i will explain this to people. You cannot escape the long arm of the law. It applies to all. If you believe that this board could have done more to bring to justice those who perpetrated these criminal activities, raise your hand, please. Let the record reflect that the Board Members have concluded that no one or the board could not have done more, because no hand was raised. I shall have a photograph of this in my office, along with other photographs i might add ive collected from persons who have been similarly situated. We are now at a point in our history where weve got to rethink the wells fargo paradigm. I concur with those who are saying weve got to rethink whether or not wells fargo is is not only too big to fail but we corrected that but also too big to exist. Maybe you are too big to manage. Maybe the solution is going to have to be something that emnates here because you are not being prosecuted. At some point the long arm of the law has to reach to wells fargo. I yield back the balance of my time. The gentleman from texas, mr. Williams, is recognized for 5 minutes. Thank you, adam chairman. Thank you both for coming here today. Yesterday we heard from the new ceo Charles Scharf who said wells fargo has a lot of work to do before the structural problems that allowed the scandals to go unnoticed for so long aris fixed. The previous Ceo Tim Sloan seemed to care only about getting the assets cap lifted without fixing the underlying problems that caused customers to be harmed. As Board Members im disappointed that you were not more active in positions to get wells fargo back to the strong presence that they have historically been in this country. So uncovered that the board was well aware of mr. Sloans poor performance and misleading comments about the progress yet able to still keep position as ceo. As a Small Business owner for 50 years im a car deal they are texas, i know how important the attitude at the top levels of leadership are to the employees. The ceo sets the tone. And if they are not taking the problems seriously its hard to get other employees to change behaviors as with he will process ms. Duke, quickly, why did you stick with tim sloan for so long . So if im going to answer your question if i could just respond. No, maam ive got time here, please. Answer my question. Okay. Okay. Tim we tim sloane we made him the ceo when we when we replaced john stom of. He stopped the sales practices, incentives, replaced the management in the Community Bank. He took action quickly. We had problems that needed to be addressed immediately. The time it takes to find someone in an external search and as number of you notice, the question of whether or not anyone with the ability to sit into this role would be willing to come into that role, made the question of all right. I understand. All right. The Committee Reports uncover there were a lot of Third Party Consultants brought to work with regulators once the scandal broke. It makes sense to bring outside experts to make necessary shortterm adjustments to protect consumers. However, it will doesnt seem there was a large push internally to hire individuals to deal with the nonfinancial risk in the longterm. Mr. Quigley, did you have concerns that wells fargo couldnt do the work internally . Or why wasnt it a priority even after the regulators voiced their concern . I definitely had concerns and unhappy with the pace occurring. With respect to the use of third parties as the formerly ceo of a large professional Services Firm i know sometimes when you want to accelerate progress you will look to add third party to try to accelerate the activity that needs to be taken. But we needed to build capability. And we needed to recruit capability. And we needed to build capacity into that independent Risk Management group. And one thing that i know is true, to find the most able resource takes much more time than finding the most available resource. Im not happy with the time that has been required. But i am pleased that progress is now being made, and i agree with the points that mr. Scharf made yesterday with respect to the real urgent nature of the action to be taken and his absolute focused on regulatory. All right. Good. So as we mentioned earlier, the regulators took the highly unusual step of making a Public Statement that tim sloane was being overly optimistic in comments about the progress of wells fargo and becoming compliant with various Consent Orders pop so mr. Quigley in your testimony you state once the board is made aware that they were not receiving quality information decisive actions were taken to fix the issue. So my question is, what struck quickly what structural changes made internal to ensure that the board will receive complete and Accurate Information moving forward . We have a very active communication between Committee Chairs and their Liaison Officer who is bringing information. We review the agendas and challenge the quality of the data coming our direction. I was pleased with the elimination of the fed rated model, pleased with the need to strengthen the independent Risk Management group. And with that came Higher Quality information to the board to enable stronger and more effective oversight. All right. In close, let me just say this, i hope that this institution eliminates the i dont know attitude. We heard that from so many people, i dont know. And its unbelievable. I have 200 employees, and i think i know. And that that i dont know attitude has really run rampant. And i hope that your leadership level will stop that. And i still cant believe how much money they pay you as board of directors. Me either, mr. Williams. The gentleman from missouri mr. Cleaver, also the chair for the subcommittee on national kmrt Monetary Policy is recognized for five minutes. Thank you, madam chair. Let me first of all express some appreciation and some surprise. You were not subpoenaed. So you came here of your own volition. And so thank you for coming. Some of us were doubting seriously whether or not you would come. So i appreciate you coming. Let me try to get some information from you. Im gravely concerned about the report we received, the Committee Report we received. Are either of you aware of an informal, unofficial, secret back channel to the cfpb, to the regulators at the cfpb . Im not aware of that. And i dont believe that it occurred. I dont know what it was referenced. I did read the Committee Report. And i was the one that had quarterly meetings with mr. Blankenants. And when i met with him there were members of the cfpb with him and i was accompanied by people from wells fargo. Thank you. Im not so youre saying that the Senate People got something wrong, or made it up or. I understood your question was i aware. Yes, thats right on a back channel cfpb and i was not. That means they put it in the report. So somebody did something incorrectly, or falsely, maybe with intentionality. But you just really got my attention when you said you met with mr. Blancen stene. Do you detect any kind of Racial Attitudes when you were meeting with him . I did not. He came to our board of directors and spoke on behalf of the cfpb. And following his report to the board i then reached out to try to meet with him if he had time when i was in washington. And, again, those meetings i was always accompanied by someone from wells fargo. And he was always accompanied by others from the cfpb pmt i never had a oneonone with him. Im only interested in that because of the fact that we know he used an n. Word because it was his email. Youre not aware of that. I read what was in the report but never seen it before. Its right there now. Yeah. Right there. There was an note allen sent to me summarizing the discussion he had had with mr. Blanken stene. And then at the time he was departing. And i didnt follow up. I was not i didnt ever have further communication with him. But you but when you saw that were you alarmed . Well if you have to think about it, you werent. So i mean, i you know, theres been ailgs about back channel, which you say was not there. So ill change that. I just its so offensive to me as a human being to be referred with the nastiest name that somebody could call somebody of my color. So lets move on. So appoints the compensation committee. I mean you guys are gone. Ill trying to find out, get information. Who appoints compensation committee. All the committees are appointed by the governance and nominating committee. And see like the desirable committee on the bank board . I dont think its necessarily the desirable committee. We look for people on that committee who have had responsibility in their careers for Human Resources. We also look to make sure is that that committee is diverse, because they deal with so many issues related to our management and employees. A lot of people dont want to be on the Appropriations Committee here in congress. So mr. Quigley, do you im sorry i didnt understand the question. Same question, the compensation board are people pushing and shoving there was a time and as an auditor im sensitive to this. But there was a time everybody wanted to avoid the Audit Committee, because they felt that was simply a place not to be. But i have i believe the aggressive approach. Finish your statement. The aggressive approach with respect to the Human Resources committee and the comp committee, thats become a difficult seat on any board. And i dont see people elbowing and fighting and trying to have that privilege. That is a very heavy lift. Thank you, thank you madam chair. Thank you, the gentleman from ohio mr. Davidson is recognized ford five minutes. I chang the chairwoman. And mr. Duke, mr. Quigley, in your view now now youre no longer with the board do you believe that some of the criminal actions taken by employees at wells fargo should be prosecuted by federal officials . Or do you believe that the fines that have already been implemented provide enough redress for consumers . So i appreciate theability to answer that. I wanted to respond to it twice before. We when we did our investigation of what happened in sales practices, we delivered all of the evidence that we found to the s. E. C. , doj, criticism and criminal. In the pleads the plea agreements highlighted as you paid find fines, settlements as a corporation, you acknowledged crimes were committed. Thats correct. Thats correct. We dont have the ability to prosecute. But what we did do with the individuals we found culpable was to claw back, forfeit, not pay compensation to terminate for cause, and we we find individuals through those mechanism 180 million or so. And in particular carrie tolsted and john stumpf took 60 million each. So should the prosecute prosecution occur for the crimes. Thats a decision for prosecutors but we have in no way impeded the ability to do to. Mr. Quigley. We provided all the information we learned through the investigation. I understand. He committed crimes should they be prosecuted you dont have an opinion. Im not on the bench. You vote present . I would say yes. On the buttons you get yes no who are present. You guys say present . On an essay. Yes no or present. Do you ac flonl it wasnt the atms wsh the Conference Rooms committed crimes. Someone working for wells fargo committed crimes should they be prosecuted. Your point is acknowledged. Present. Pathetic. I dont know what else to say im glad youre not on the board there fang frankly. Presumably by getting hired for such a board you had an exceptional amount of experience, and you are well qualified, considered so by someone who offered you the position, and generous compensation package for being Board Members. How was the culture at wells fargo different than the presumably positive cultures that you were port part of before . Or is this just really indem nick of all the place sns should we look at everyone in the industry the same that the world is looking at wells fargo. At wells fargo we have stated clearly that culture change is needed. Im pleased with the progress that is being made. These are early days for charlie. But his commitment to change culture, as i stated in my opening statement, im pleased that that is one of his top priorities. Better late than never right. I need mr. Scharf has potential. I like his resume and background. Its not my job to hire the Board Members or ceos of any corporation now i know longer own or control shares of a private company as i did. But i do know the culture matters. Unless he is empowered to change a ship of 270,000 employees, that culture isnt changing overnight. Now, as the federal government having seen very little action by the executive branch with a duty to take action where federal crimes have been committed, i think its right that the legislative branch is calling attention to that not just with the failures with in particular bank but with the failures within the department of justice to prosecute people. Yes, there is prosecutial decisi succession but the idea every day americans feel there is a standard for them and a different standard for the well connected well to do people operating Companies Like wells fargo or frankly work at the fbi, the director of national intelligence, the cia or any other part of the executive branch. And we cant have people going around lock her imip u. P. Be lock him up all day because the department of justice continually fails to apply one standard of law and have the lady justice blindfolded. There lass to be accountability. And frankly when crimes are kplited, particularly in cases like this six plus billion dollars in fines and acknowledged that the crimes were committed someone should go to jail. We need our department of justice to provide that accountability and we need Board Members doing their duty. I look forward to the progress made under the new ceo scharf and hope we never need to see wells fargo here again except to kmepd them for positive change in culture accomplished. And i yield. The gentleman from colorado mr. Perlmutter is recognized baier five minutes. I guess im sounding like a board apoll gist compared to everybody else. Because i look at the board a little different. I have been a zmers of the bank and have been a customer of the bank for years. And went from two accounts to eight credits. I was given a credit card for twice the amount with a big line of credit attached. Things i never asked for just sort of appeared. So i know the abuses that occurred. My my problem here is theres been a lot of time passed, obviously. The report detailed all of that. The board in some instances appears to have taken really some serious action with mr. Stompf mr. Sloane trying to deal with the consent decrees. So my questions and you can answer as you choose. I think there is three choices sit something up here. Either you were derelict in duties and didnt address the Consent Orders. Or the culture of the bank needs to be changed pretty dramatically in terms of its personnel and operations. Or the thing is just too big and for any board or anybody any manager to get their arms around it cant be done. So, ms. Duke if you could respond to my concerns. What we have found is that some of the issues are directly are directlily attributable to individuals. But a number of of the issues are attributable to the structure of the way the company is managed, the decentralized structure. And that is required that we centralize, and also standardize and simplify the way all of our employees do their work. We need to be much clearer about that. So what that looks like is, for example, if you take 83 different Human Resource departments and put them together, you dont get one fully functioning Human Resource department. It takes quite a bit of time to build the capabilities of a central Human Resources department to work with 265,000 employees. Mr. Quigley, that leads me to other questions for you. But mr. Quigley your response. If i could comment on the multiple choice, i would choose culture change and thats what you married heard from the ceo yesterday. He is driving to build a culture of Operational Excellence and integrity as a number one priority. Im pleased that thats what he said to the entire team on day one. And he has not varied from that message. He continues with execution, execution and we need to to get to that point. Let me challenge you both on that point then. Because i dont know how many customers, 70 million customers, me being one of them, 275,000 employees, 83 personnel departments. At least five years from the first Consent Order to try to remodel or revamp the culture. And yet that hasnt taken place. Still ongoing. And with a lot of things unanswered. I mean, its getting to me that this thing is just too big. And thats not the answer i was thinking i would get to. But thats where its going. Miss duke. I dont think the problems are a function of size. I think they are a function of the way the company is organized. And the way its been organized historically. And but now we have gone five years. How long is it going to take to restructure or reorganize . I was a bankruptcy lawyer a long time, did a lot of reorganizations. Do you think this is going to take the to reorganize the company, now looking in the rear view mirror . We have a new ceo you heard from yesterday. And you saw that he is moving with a sense of urgency. He has a new operating committee. He is building the culture. And this is his number one priority, and he filled the seat of chief operating officer was made regulatory progress. That individual is a priority. You dont think the last two ceos were capable of doing this . Youre saying this is different . I believe having a ceo from the outside is absolutely different. There was a question earlier about what are the differences between mr. Sloane and mr. Scharf . And there is no question that this is different under charlie. And ive been on the board six years, and now im working with the fourth ceo. The board was not derelict in duties but actively at the trablo table and trying to drive change in a way that could be sustainable and to make sure that customer harm never occurs. Thats absolutely what i wanted and what the ambition was. All right. Thank you. I yield back. Madam chair, a unanimous consent request. Without objection, such is is the order. At 35 bankers were sent to prison for financial crisis. Cnn business article. Wells fargo to pay 3 billion over fake account scandal, nbc news article. Good jobs article that tracks the amounts of penalty that is wells fargo paid since 2000. Unanimous consent that they be placed in the record. Without objection. The gentleman from tennessee, mr. Kustoff is recognized for five minutes. Thank you thank you madam chair and miss duke and mr. Quigley for appearing today. Miss duke in your remarks i heard you talk about how you came up through the ranks as a teller to Customer Service representative. I did the same job back when i was back when i was younger. My question is, in my district, wells fargo does have a retail presence. If you were on the front lines today as the Customer Service representative and you had one of your main street customers come into the bank, hourly employee, Small Business person, what have you, what would you tell them why would you tell them they need to continue with banking with wells fargo after the years of misdeeds . Thank you for that question. And id like to talk a little bit about the front line employees at wells fargo. Because the front line employees at wells fargo were not the reason for the sales practices issues. It was the way they were managed. And there are hundreds of thousands of those employees who come to work every day who served customers 40 years. Many of you have been their customers for 40 years. And the bond between those employees and their customers, and the service that theyre committed to and the importance of the bank to those customers, has been something that to me with all of the ugliness that i have seen, is is the reason i joined the board of wells fargo. And i have the employees who work there, their jobs have been much much harder during the time that we have we have created damage to their reputations and to their companies reputation. Yet they continue to love the company and want to do everything they can to make the company succeed, and and their customers are pulling for them as well. Let me reclaim my time and ask a different way. Wells fargo has put the front line employees in the position of having to defend actions that you have just stated they are not responsible for. What do these front line employees tell their main street customers about why they should continue banking at wells fargo . They tell them about the service that they offer. They Pay Attention to the customers needs. They look at the customers needs. They look at the products that we have that meet those customers needs. Were still the largest Small Business lender in the country. Were the largest lend they are low to moderate income areas. Were the largest mortgage lender. Ing a cultural lender. And still important to our customers and they talk about how important they are there. Would you agree, mr. Quigley, the wells fargo reputation and brand is damaged. Unarguable. Would you do you believe its irreparably damaged. I believe it can be recovered. And the plans that charlie reported yesterday looking again at the future of wells fargo, were optimistic. We need and want a strong wells fargo. Yesterday and some today we have talked about sales incentives that were provided to employees back under mr. Sloane and what they are today. How do you compare the sales incentives for those employees toward versus those under sloane . The sales incentives were term terminated as soon as the board was informed. And we understood it was part of the root could you say how the abusive behavior occurred. Im delighted thats part of the past. And the new structure focuses on customer experience, and how the individual that comes into the branch that youre asking about what is their experience, and what do they benefit from being there . Yeah. The two of are you no longer on the board. But im going to ask you to speak for those members who are currently on the board. And ill start with you first, miss duke. Do you believe that all current members of the board have the right attitude for a new culture at wells fargo . I absolutely do. Many of them were recruited knowing what happened at wells fargo and being committed to making the necessary changes so it wouldnt happen qin again. Mr. Quigley. The same im confident mo in my formerly colleagues as and their commitment to do what is right. Thank you. I yield back to the remainder of my time. Thank you. The gentlewoman from ohio, mrs. Beatty also the chair on the subcommittee for diversity and inclusion recognized for five minutes. Thank you no the witnesses. Ive been sitting through the hearing and trying to digest the questions and your responses. And quite frankly im trying to figure out what you thought your roles were as trustees, and what you got paid for with so many of these widespread consumer abuses, the regulatory findings, and certainly the lack of effective Corporate Governance. Let me start with my first question to miss duke. You took great pain in writing about your background in your testimony to us, more than ive ever seen in any other testimony. You say reminded us that you started out as a part time teller at a drive through bank. You transitioned as a new account clerk. You take great pains to tell us that you were the Second Lowest paid employee and how you sat across from customers and how you put them first, how you worked your way up, how you became the first woman to chair the american bankers association, the board of governance, and how much you understood and knew about regulatory practices that you were just stellar in this. Yet you act like youre a member of us. In your testimony you also say you were as appalled as the member of congress with all of the findings. And you didnt know how it happened. Well thats appalling to me. And then i notice you then are the one that also agreed to mr. Sloanes payment the board decided that mr. Sloane was worth more than 18 million in compensation, including a 2 million bonus, despite all of this, miss duke, you also drafted a proxy statement that you released to the investors stating, the board decided to award tim a cash bonus for 2008 as recognition for his substantial progress in changing the culture and Business Practices of wells fargo, and building out a strong management steam to focused on the remaining work to strengthen the compliance and operational risk. Now with everything you knew, being paid, being responsible, and this background, and then we hear what they did, the abuses to consumers, tell me why you drafted this statement . And did did you really believe this . Or did someone make you do in . Or are you paid extra to do this . Congresswo i joined the board of welts fargo because of the company i thought they were. No, no, thats not my question. Tell me why you wrote in statement about him after all these things and you were there that happened before whoa you wrote this statement . 2018. So we did not find that mr. Sloane had any responsibility in sales practices. He became the ceo in 2016. We paid him no bonus for 2016, 2017. Im just saying a lot happened as we heard congressman meeks read off all the things that happened between both your watch. And you can jump in mr. Quigley, if you want to respond, since you were there and read and witnessed and when they wrote this to the shareholders. Did you have any response . Did you feel this was misleading the shareholders at wells fargo . There is no question that i read the proxy. And there is no question. Do you agree with it, yes or no. Yes. Because my time and i have a question for you. Yes. You all think, despite now saying its appalling, all you heard is that you happened, even in 2018 you know what this makes me feel that you are as irresponsible as he was in all of the things. And it is criminal that you are even sitting here. Mr. Quigley, let me follow up on congressman cleavers line of questioning regarding back channel relationship between wells fargo and cfpb, specifically a politically appointee of the trump administration. You remember the question. So mr. Quigley you stated to mr. Cleaver that you did not believe a back channel exists. Yet, in appendix 3 already in the record of the majority staff report, there is an email from acting ceo allen parker to you regarding in political appointment. Are you aware of that . I did see the email in the report, yes. And so do you still have the same response that you had after it in quote says political . I interpreted that quote political as simply selves an appointee into the cfpb. Im sorry, my time is sup and i yield back. The gentleman from texas, mr. Gonzalez is recognized for five minutes. Thank you, madam chair. And i want to begin by thaenging ann cruz ab, a dear constituent of mine watching from back home. Ill begin by saying formerly chair wom duke today you have the auspicious honor of being the first board member i believe to testify in front of Congress Since enron. You allege in your testimony that you and indeed the rest of the board learned from Public Statements over 20 times of the number of employees were terminated than originally disclosed to you by management yet no one in management was fired for this. At this point, you and the board retained independent counsel to conduct a full unfitered investigation into the scope and causes of misconduct, allegedly this is when the board acted to thoroughly repair the damage done. Again your words, not mine. Since then, wells fargo engaged in charging improper interest on your customers accounts, sold unnecessary auto insurance, foreclosured op customer homes after wrongful denial of loan modification agreements. And essentially threw people out in the street. And finally, purposefully reduced the customer investment returns on the sales of wells fargo advisers, products by actively trading securities you had disclosed as longterm holds. All of in conduct is admitted in one Consent Order or another. There are many active and open orders that is quite a lot to digest. I want to ask you, why should we simply why shouldnt we simply remove the bank charter break up the company and let the banks out there that can run clean operations have your customers . Or wells fargos customers . How many years until you can properly serve your customers . You dont have to answer that. I know you already have in one way or another. If any attorney steals client funds and i know this because im lawyer and practiced law for 20 years and mixes their funds with clients or deceives as to the nature and scope of representation of them and consequences are disbarment and potential jail time why would a bank chart are be in different . You can answer that. So there were employees who committed criminal acts. You said was anybody fired . People were fired for the acts that they committed. And the information about. Management. Has been turned. Management. Was management part of this firing. Yes. In the case of sales practices. Senior management. Senior executive responsible for the commune bank was terminated for cause. Its clear that. The management of the auto division, i believe was terminated. So in and in individual cases where there was misconduct, those employeesy terminated and the appropriate suspicious activity reports filed, i believe. Okay. Well well its clear that you did not serve your clients best interests. I think you admitted that already. If it were up to me and i believe many members of this committee on both sides of the aisle, a few of you would be in jail today. And certainly if you remember the president of the American Bar Association instead of american bankers association, you would be disbarred today. And i clearly hope the department of justice continues to investigate these bad actions by bankers and Board Members across the country, and hopefully stop this malfeasance in this country. The American People are looking forward to this. And i yield back. The gentleman from florida, mr. Lawsen is recognized baier five minutes. Thank you, madam chair and welcome to the committee. I was trying not to make sure i dont ask the same questions as some of the other members asked, simply due to the fact that this centers around the same area. But one of the things that i want to know, get you, miss dubois dukes to respond on in 2017 independent investigation, a report was released into wells fargo fraudulent account scandal. The board was supposed to have accomplished three goals. And these are the ones that i want you to respond to. And somewhere you have said some things about them. But one was to get to the root cause of the Company Sales scannedland and identify a solution so it would never happen again and restore trust in the bank. In response, wells fargo board what i can gather blamed it on exemployees. But dont you think the board yourself included failed in oversight duty by serving on the board you can tell me on those three issues that came up, how was those three issues handled . The root cause was found to be that the the sales goals were inappropriately set, that they were too high and that the Sales Management was aggressively was aggressively pursued. And and to restore the confidence, what was discussed in the board to the sales goals were eliminated. The employees were terminated. And the new Incentive Plan was designed to reward Customer Service and to to do li be more of team goals than individual goals. What we found and see while there were was some of the behavior to get the incentive, it was more to avoid criticism by the managers. Okay, the reason why i was concerned by sales goals, i have been involved in sales for maybe 40 years. And i know that what happened is management does set these sales goals and for agents and so forth for else goals for you to try to reach. And and but i did know until the day even when the chairwoman started doing that banks would have sales goals that would trickle down to all of the branches, so that they would go out and trying to attract more business. What i cant understand is how even though you said the employees were terminated, how could managers that has been in the organization a long time would not want to monitor all of these branches of the sales goals when they knew they had to know that something was going wrong . Now even though you say they were eliminated, im sure wells fargo still had sales goals they have to meet. How is that handled now through the board when they establish goals that they want to meet, being the Third Largest bank, i understand, quigley mr. Quigley was saying about being a bank that that provide resources to Small Businesses, to minority firms and so forth. How do you all handle that now in order to make sure is that you do the things that are good in the marketplace, but allow things to happen such as people, 570,000 borrowers bought Car Insurance that they didnt need, and about 20,000 of them may have had the vehicle possessed, results like that, how do you handle that now . So, again, with consumer the collateral protection insurance, once we found that issue, we quit requiring the force placed insurance that requirement is no longer in place. Did you want to respond to that. And the effort was made to one customer at a time identify harm and then be able to remediate them. And Charlie Scharf gave the update yesterday on the progress with respect to remediation and the accelerating the time to get that done and get it done right. A question i might not be able to get answered, do you think wells fargo is too large . I do not think wells fargo is too large. Wells fargo needs to change the its culture and that is under way under the new ceo we recruited. Madam chair, i yield back. Thank you. The gentle womowoman from michigan, miss dlab is vensed for five minutes. Thank you so much madam chair for your leadership in creating this report. Have you seen this. Yes, we have. Yes. I know you dont have it in front of you maybe. But on page 13 lists in a snap shot some of the announces, which you call culture, i call criminal schemes. I mean, you all made money off the backs of poor people, off of working people. Fake accounts, millions of people. Were not talking about a short period of time of one mistake. Were talking about from 2011 to 2016 literally enrolling millions of customers and banking products and accounts without their knowledge or consent. Were talking about 27,000 people impacted by unnecessary auto insurance. I actually would differ with my cha chairwoman one dhing thp i wouldnt call it unnecessary, i call it fraudulent and criminal. The fact you enrolled Bank Customers literally had the vehicle repossessed following defaults arising from this added insurance cost, that they didnt need, they didnt want. You know, corporate disease is corporate greed is a disease in our country. Its so bad that it infill traits. I dont like it when Corporate America calls it a cultural issue. Its a crime, to defraud americans. Lets be very clear about that. And i dont want you to see my passion as oh this is not its the fact that i have the third poorest Congressional District in the country. Literally our communities are front line communities that get targeted by this. Not the higher income folks. The folks that have two or three jobs, the folks trying to survive right now. Theyre on survivor mode that are targeted. Yes or no, you ac flonl the fact that i see miss duke you were on the board since 2015, arbor quigley since 2013, correct . So on page 13 it talks about Service Member abuse. Between 2006 and 2016 Wells Fargo Bank charged Service Members higher Interest Rates than allowed under the federal law you would consider that a crime correct misduke. I would. How about you, mr. Quigley. I would. I would say that that Service Member remedyiation was undertaken. At the they cars repossessed. I dont know whats going on with the Credit Report. Thats something im working with the chairwoman on trying to get peoples Credit Report cleaned up from this. You know thats impacting employment, access to housing all of the opportunities they need to thrive. Ee roenz mortgage fees, yall, from 2013 to 2017, youre both on the board. Were not talking about one year, six months of bad behavior. And criminal scheming of working class folks. Were talking about over a decade for many of these criminal schemes. And these corrupted behavior. And coming having your chair come before the committee yesterday and not be able to really truly answer the question in detail was troubling. I need to know from all of you, i mean, courageous for you to come before the committee. But this is needs to be read by every single board of directors. Every single one of them need to read this. Because i dont think they realize this is not only about numbers. But behind every report is a story of a fellow human being impacted by the criminal schemes. I want to talk about something that i have a c. O. O. Pay tax pap and i want to emphasize to you all to try to incorporate in like an incentive here. If you have your ceo getting paid 200 times more than your own employees, and they have to get on public subsidy, dont you think thats unfair . Do you think that right now having your bank tellers and the folks working in your your execution getting paid 200 times less than the ceo is problematic . So ive been a bank teller. And ive been paid at the lowest rates. And i know how difficult it is to survive on that. I think i think we need to address both the way we compensate them but also career pathing. Because i was able to learn antique advantage of industry education and opportunities. And miss duke, at the same time, right now theyre in line to get public subsidies, Food Assistance things that us the public have to pay for because you are allowing corporate greed to continue to fester within your company. Mr. Quigley, do you agree that we should be paying working workers a living wage, shouldnt be paid almost 300 times less than what your employees are getting paid. Charlie responded to that yesterday with respect to what he is doing on the minimum wage. Yes he works for you, right, charlie works for you. Im a formerly member of the board. I recruited him and im pleased i was able to get helm to say yes. Are you pleased with the fact that you left people thank you, madam chair. Thank you, the gentleman from south carolina, mr. Timmons is recognized for five minutes. Thank you, madam chair. Miss duke can you explain the normal responsibilities and duties were for you and other Board Members . Yes, we received materials in connection with meetings. We schedule meetings. We had meetings of the board, meetings of the committees. How often did did you meet . How often were the meetings . How many meetings did you take out of your calendar last week. When i resigned i removed 85 meetings from my calendar in the next 12 months. Meetings or calls. So Time Commitment per week, per month what would you guess . Whats a good estimate . There were big blocks of time last year when i was working fundamentally fulltime because i was working to recruit a new ceo. And many of you or many of your colleagues asked Charlie Scharf yesterday why would you accept such a difficult job . How would you like to be the guy recruiting him to get him to yes. It was time intensive. I havent kept track op per hour basis but i was absolutely working fundamentally fulltime. Over the course of your tenure on the board average 20, 30 hours a week. 15 hours a week. Probably in the 20, 30 kind of range. Is that same for you miss duke. Since i became chairman i have been available to the company fulltime. I dont make other commitments. And what so that was my next question. What other jobs or positions do you hold outside of the board or did you hold outside of the board . Im the chairman of the board of hess corporation, the only other Public Company where i am on the board. Did you have any outside i do not. Okay. I appreciate that. Im slightly confused. And dont really understand why we are holding this hearing today. The chairman called for both of to you resign, and you did. There is nothing either of can you do at this point to help right the ship that is wells fargo. With all this in the world today and in the financial system, why are we publicly to some degree humiliating two former Board Members of wells fargo right now. I dont know this is the best use of time. I appreciate you all sit something through and showing up and im not sure i would have. But im not excusing the performance. Obviously its abundantly clear both the majority and minority reports, a lot went wrong and several missteps made. Which partnerwood the dealer iks of obama era regulators led to disastrous result for your bank and skblers. But i dont understand what traging you two in here today is accomplishing. I think i had its good you resigned. The right decision given the circumstance. Its very unfortunate. And im encouraged by the new ceo. He was very his testimony yesterday was productive, i think. I hope that wells fargo can get back on the right track. And i know this committee will continue to keep a close watch along with the regulators to help regain the trust of the customers of this committee and of the american public. So, yeah, i just thank you for coming here. And with that i yield back. Thank you, the gentleman from illinois, mr. Garcia is recognized for five minutes. Sthaung, madam chair, and the chairman green for convening the hearing and to the two witnesses thank you, as well. So regulators have been working on wells fargo since 10u6r to bring the bank into compliance when the banks current troubles first came to light. The written testimony that each submitted to the skmt claims that since to a that time the board of directors that is focused on changing the culture at wells fargo. Bup there is an important change i think you left out. This week the Roosevelt Institute published that from 2016 to 2019 wells fargo more than doubled the money it put towards dividends and stock byebacks from 12. 5 billion to 30. 2 billion. Miss duke and mr. Quigley did you vote in favor of the dividends and buybacks. We voted in favor of the capital plan including those. Including those thats a yes. Same. Mr. Miss duke and mr. Quigley, yes or no did you and the rest of the board decide to direct more resources toward share buybacks and dividends to boost the companys share price . Yes or no . The capital plan is very clear. And all of the elements in it. And. Its a yes . Yes we did approve the capital plan. Both of you . Yes. Which included that. Thank you. You decided to use more money to pay off shareholders, the majority staff report found that, quote, wells fargos board and management prioritized financial and other considerations above fixing the issues identified by regulators. To me, the fact that wells fargo doubled the money it spent paying off shareholders during this time is a clear example of that. Miss duke and mr. Quigley, yes or no do you agree that wells fargo could have used the billions to invest in the workforce which may have in turn fixed its internal culture . Yes or no. I would say that we have approved considerable expenses in order to fix the issues that we need to fix at wells fargo. And we have could it have gone furtheringer. We have not limited the bungts. Mr. Quigley the number one priority is remediating the issues and that was made clear by mr. Mr. Scharf yesterday. But having done differently could have advanced the cleaning up of the culture. Last year i introduced the reward work act pach h. R. 335 a, the bill banning share buybacks and allows company directly employees to elect one third of the corporate board. I think its fair to expect companies to invest in their people and in growth rather than simply lining shareholders pockets. In 2013, we first learned from the Los Angeles Times about wells fargo fake accounts and pressure tactics driving employees to open them. The committee for better banks, a group of work organizing for better conditions helped bring the practices to light. And wells fargo responded by filing thousands of by firing thousand of front line employees. Miss duke and mr. Quigley was firing the front line employees the correct response to Management Issues at the bank . There was further action needed to be taken with managers at the banks. However whenever an employee is found to have engaged in ha dishonest act against the customer we have no choice but to terminate. Mr. Quigley . The same. The culture of a company and accountability in a Company Always start at the top. Yes or no, would you agree . Yes. Yes. As Board Members, you both bear responsibility for what went on at wells fargo when you were at the top. Your testimony expresses regret about what happened to the banks workers. But here we are. Bank workers, alerted the tuck to your banks practices, and they got fired. You both resigned before testifying today, perhaps to absolve yourself what happened on your watch. Do you think it might be a better idea to let employees elect corporate Board Members for themselves . Im sorry. I didnt understand your question. Do you think it might be a better idea to let employees elect corporate Board Members for themselves to be represented. I believe in the Corporate Governance models that shareholders elect the directors. I agree with mr. Quigley. Its clear, youre consistent in that. Madam chair, i yield the rest of my time. Thank you. The gentleman from texas mr. Taylor is recognized for five minutes. Thank you, madam chair. Appreciate you both being here. I served as a Bank Board Member for 12 years as a Community Bank back in texas. And i will say that where you are today is somewhere where i think not a Single Member of a bank board would ever want to be. And i was wondering if you could actually let me back up a second and say i find some of the actions taking place at wells fargo to be criminal in nature. I certainly agree with you, madam chair and some of my colleagues, that the they were criminal in nature. Im surprised that no one has been prosecuted. And i certainly would agree with bringing in the either the u. S. Attorney owner the District Attorney for the jurisdictions that comport with in to ask why has no one been prosecuted. Because i think there is an example to be made there here. This is unacceptable behavior and its criminal. This is not i think there is agreement in this room it was criminal and therefore there should be some discussion with the people that prosecute what the heck . Its not up to these guys theyre not on the bench were not. I think its worth asking that question. Circling back to being on a bank board, do you have any Lessons Learned that you would tell the other 255 other banks. 50 to 10 ou thousand people serve on bank boards large and small. I hope you dont stop here. I know this is unpleasen but you have something to teach other Board Members about how to run a bank. Youve been through one of the most difficult problems a bank has been through in the last decade. What duff to teach . What would you say oh is to other bank Board Members about what you when you can and situation which is thrust on you its nothing you desire was thrust on. What lessons we learned . Theres no question of that the communications with the regulators who have significant presence inside these Enterprises Need to be robust and timely. You have to be aggressive in terms of your fall. When it comes to determining that there is a need for change to occur in a culture you have to be assertive and make sure that in fact that occurs it might leave that you might have to make substantial changes in the Leadership Team including at the top. I acknowledge that in my six years at the bank i worked for for ceos. Quickly to go into that i wanted to ask you about this, is you relationship the regular layers. Might other than the Bank Examination reports that the bank revealed every eight and months, that was the only interaction i ever had with a regulator. I never got a call or email from a bank regulators. You really earlier testimony that you were talking almost daily with regulators almost on a surprise to me. Was that typical to problems prior at forego . What led to quote unquote almost daily interaction with regulators . Thats period of time i was chairing the ceo Search Committee so i was interacting with them on a regular basis because of the requirement for me to be able to obtain a super i supervisory non objection for the but i was recommending. But prior to a sales practices issue being made public and for the board to be import informed unaware, i think a quarterly kind of touch which have been much more what might have been expected she spoke with the issues that we were dealing with any aggressive approach to remediation, that interaction with the regulators became much more frequent and much greater substance. What was the Standard Practice and i would hope this would be for all banks of your size for regulator board interaction. Again, my experience was 18 months have a meeting and then thats the. You are clearly was very. Different surf i could, my career was as a Community Anchor in my board did not interact with the regulators. And Community Banks they did not even come in for the annual review of the annual activities when there was a close out conference with the regulators. I think my Audit Committee would come in and meet with the examiners but they did not meet with the board when i joined the board of wills oracle for the first two years close to two years, regulators would come in and present annually reports of their examinations but that was really the extent of the contact. Neither piece was that each of the Consent Orders that we sign had a requirement for an Oversight Community of the board and so when i, soon after i got there they asked me to serve on that committee and share it. That did involve the reporting that was on the Consent Orders and so i had regular contact with the examiners about those Consent Orders of the progress of the work. Thank you i yield back. Thank you the gentlewoman from new york mrs. Maloneys recognized for five minutes. Thank you. Mr. Quickly, i want to ask you about an email exchange you had with the former ceo alan parker says that is an appendix three of our Committee Staff reports you and mr. Parker was discussing a series of conversations that we had with a political appointee at the cfpb eric blank instant acts about resolving the banks regulatory issues with the bureau let me read what mr. Parker wrote to you on may 17th 2019. He said and i quote, eric also assured me that they would continue to be political oversight as the engagement with us and quote. Mister quickly, are you familiar with this email . Yes or no . Yes. What did you think mr. Parker meant by political oversight of the relationship with wells fargo . Did you understand that he met mr. Blend can 15 who is promising a softball approach to wells fargo . I did not interpretive thigh that way nor do i think that is in fact what occurred. What do you think occurred . Do you think it is appropriate for political appointee at the cfpb to promise a bank softer treatment in the career staff is recommending . Do you understand that that provides an appearance of possible corruption . Let me provide a little bit of context in terms of my meetings with mr. Glen cornstein. He came to the board and july of a teams, you know might have been 2017 not sure which here but he spoke at the Board Meeting in july, and i started trying to have a quarterly touch with him when i was in washington. Each of those meetings i was a company by someone from wells fargo and he was accompanied by others from the bureau. You let me ask you a different question. Do you think it is appropriate for political appointee, a political appointee at the cfpb to come to a meeting with the bank and promise a bank softer treatment in the career staff is recommending . No i do not think that is appropriate and i am not even sure that it occurred. Do you think what do you think he meant when he said that he would continue quote political oversight of the engagement . I think he was talking about his departure from the cfpb and that his successor who is going to be a political appointee might have continued touch with the bank. It doesnt read that way to me. I have no further questions. I dont think i would like to thank our witnesses for their testimony today. Without objections all members will have five legislative days within which to submit additional written questions for the witnesses to the chair which will be reported to the witnesses for their response. I was water. Miss hoarder . We will again give you an opportunity to question the witnesses asked started into the clothes but we will rescind that and go forward. Thank you very much about you and thank you very much madam chair and mister chair i really appreciate the accommodation. I want to ask mr. Miscue can mr. Quigley about the board compensation so much to make on the board . 630,000 dollars. 417,000. How many times last year at the border convene in person . Did you convene a full Board Meeting in person . I guess im guessing perhaps 12. I had probably 90 meetings in relation to my Committee Meetings and my calls. The full board only met 12 times. I was working fulltime. What about the other companies you served and we not forking fulltime for . Them not fulltime. No he were working fulltime for wells fargo for portions of that time mueller is doing to ceo it required muzzled in every single day, that was the point i was trying to make. Got it. So my question is about your thoughts as long term Board Members at wells fargo about the remainings board. Because folks that are sitting on the board today, and i have thereby owes here. These are folks that oversaw data breaches at staples, Health Marketing scandal at kellogg, massive data breach of 110 million a target, the auditor for a ig these calls, these are not exactly eagle scout. What is your opinion about the current i would like to have you go on the record about what your pinion is about the capacity of the current lord that have come from consumers harmed situations to wells fargos and steer them in the right direction . I have confidence in the capability and the integrity of the members in the board that i once served with miscue i do. Experts i think the expertise of those directors is excellent as we have repopulated our board, reconstituted our board. We have added a number of new directors. When i joined the board i was the only directors on the boards who had banking experience. They are now even without me, i believe for directors who have banking experience. Is the board actively seeking additional for you to see seeking replacements for you to and in the past and changing Board Members, is wells fargo seeking people have presided over major court great or consumer scandals or is that just a coincidence . Is it a qualification tuesdays to be under wells fargo ward . That is not that is not what we are actively seeking. However, i would say particularly in the case of clark it was an executive at kellogg, its her experience in dealing with and remediating that crisis, that Health Crisis and also, as a Public Policy she was the Public Policy officer at the time, and her experience in that situation has been invaluable to our lord. Do you think that the compensation of Board Members is in line with members of ours that they work . It is in line with the response novel ever sponsored realty but they have taken in the compensation for other directors of similar institutions. Let us talk about that responsibility. What are the consequences or personal responsibilitiess that you or mr. Quickly have suffered as a result of presiding over the bordering the scandals . We are subject we are subject to liability for our actions as a director. Those wells fargo have director Liability Insurance that will cover those claims . They have directors and officers Liability Insurance that covers. This so between the two of, you have 1 Million Dollars a year, what are the responsibilities for which you deserve such tremendous comes sensation . What are the risky were personally exposed to as a result of serving on the . Board boardroom is to oversee the Companies Management and business strategies, he was only like the performance of its ceo, to monitor the performance of that seal and to work through the successions land selection of the ceo. That was the point i was trying to make earlier where i was spending full time. I think you would like to thank the witnesses for their testimony today. Without objection all members will have five legislative days in which to submit additional written questions for the witnesses to the chair which will be forwarded to the witnesses for their response. I ask our witnesses to please respond as promptly as you are able without objection all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. This hearing is adjourned. And this is a place minister according to dollars we need to do more homes on brownfield site but weneed also need to mae cones are of a decent standard and the states across my birmingham constituency and kings nor
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