Transcripts For FBC Varney Company 20171003

Trump growth agenda. One more number for you, please. This rally has added 4,856,000,000,000 to the nations wealth since the election. Got it. Today the president travels to puerto rico. He will see firsthand the recovery effort. Personal insults coming in from the left. This opinion piece appears in todays New York Times. Quote an unfit president fails puerto rico. The writer, michelle goldberg, calls the president one of the worst people and a nasty show biz huckster. Well, on his trip today the president is not scheduled to meet the mayor of san juan who criticized him as a sexist, but he will be pledging billions more in aid. You want to know how your personal information and that of 145 million other americans was stolen from equifax . Stay tuned. Their guy will take the heat today. Itll be political theater. The lawyers will be watching. Can you say class action suit . Where they get the money and you get nothing. All right, everyone. No, we have not forgotten the outrage in las vegas. Were going to take you there in a moment. Varney company is about to begin. Stuart i want to get right to las vegas. There is still no clear reason why Stephen Paddock killed 59 people and injured 527 others. No motivation known at this point. On the scene is jeff flock. Jeff, its a somber, subdued las vegas this morning, i take it . Reporter most of it, yes. Althoughyou look down the strip, stuart, i tell ya, some of it looks like nothing ever happened on the end of the strip that is just to the other side of where we stand here. But the mandalay bay, as you see behind me, and the venue where all of this took place. And youre right, youve got the headline exactly right. Weve learned a lot more about Stephen Paddock, 64 years old, retiree, fairly well heeled, a guy who had what some would consider the ideal life, had money and time to spend it. But it was another side, and thats what investigators are probing now, and they have learned nothing that would shed light and make any sense of what took place here. Whats going on behind me right now . Ill give you the headline on that too. That is, occasionally you will see an ambulance emerge from the scene behind me, that e means they are bringing more bodies out. They have much more work to do. Well be watching it all morning, stuart. Stuart jeff flock, thank you very much, indeed. Still bringing the bodies out, extraordinary. Jeff; thank you. We will be back to you. I e find this we dont know the motivation, cant put our fingers on the motivation for this outrage just the other night. Thats more frightening it really is. No military background, no political, religious affiliations. By all accounts was, to jeffs point, was a multimillionaire, property owner, gambled a lot, was a big gambler, for sure, but no indication that this was in his personality. And Law Enforcement found what are called bump stock devices meaning devices that can turn guns into automatic weapons. They can be gotten for you can buy them, rather, for 50 online. So this adds to the outrage of what happened and this disgrace that happened in las vegas. Stuart it is, its i think youre using the right word. Too many people call it a tragedy. In some respects, yes, it is a tragedy, but it is a flat out outrage, and we should be pounding the table about this. Hotels, again this is las vegas, theyre taking a second look at security after the shooting. Wynn is now checking suitcases using wands on arriving guests. Come on in, bob massi, fox news legal analyst and a longtime vegas resident whats your reaction to this idea that some hotels are getting into here of checking luggage as you come through the door . It seems like it could become oppressive already people. I think its sort of like the airports where you realize its become a way of life, stuart. And the questions going to be is this really what the futures going to be not only in las vegas, but all over the country or maybe all over the world. I was talking to jeff before, different parts of world hes been in, you have to go through metal detectors. Whether this is going to be a reaction to this outrageous massacre, yes, it could be, but the publics going to be tough on it because they may not want to go through this. Theres going to be an economic discussion also. Stuart its a logistical nightmare as well, i suspect. I want your opinion on the gun control debate which started within hours of this outrage. Whats your take on that . Well, you know, when i started hearing Hillary Clinton and these other people saying it, i mean, obviously, when you live in a city where this type of thing happens, the last thing you want to talk about is gun control, particularly when she started talking about making, putting a silencer on and saying that the nra wants to do that. There just isnt time for it. Ive always believed that bad people will get guns, evil people will find the kind of guns that they want because theres a huge black market out there. But they start politicizing this, stuart, at a time when were not even were just about 24 hours occupant of it. Makes absolutely no sense to me and most people that are of even those people who, in fact, are against the second amendment, i think, say lets could we just take a deep breath on this massacre that people are dealing with in this country right now. Stuart well said. Bob massi in las vegas, thank you very much, indeed, bob. We will see you again real soon. Thank you, sir. Lets get to your money, the markets. Look at futures. Were going to be up at the opening bell. Remember, please, any gain will mean another record high. Im going to say it again, were not that far from dow 23,000. All right, how about tesla . This is a premarket quote for you. The company fell short of its plan to produce 1500 model 3s over the summer. It only actually made 260. It blames a production bottleneck. Teslas down to 335 this morning. And this is something i dont get. General motors, they plan 20 allelectric models by the year 2023, and the stock zoomed to 42 a share. What is this, liz . S this is what gm is seeing, they see a future in robot taxis. In other words, cities that will have dedicated lanes for robot taxis. They want to own that market and watch this, they are working hard and fast to own the space in Hydrogen Fuel batteries and Hydrogen Fuel cells. The u. S. Army is working on it, gm is working with honda on it. Gm is saying theyre ready to launch Hydrogen Fuel cells as well. Whats interesting is theyre doubling down on this when all their fronts are being generated right now by huge suvs and pickup trucks. [laughter] stuart exactly. Fascinating that they really believe in this. So does volkswagen, toyota, jaguar, so does rolls royce, a number of major Car Manufacturers are saying electric. Stuart i see that. And i admire the pr view of the futuristic company, i just dont see it being with all electric. We dont. Stuart heres whats coming up next hour, equifaxs former ceo is going to be grilled about that data breach. The company apparently knew about it six weeks before they told the public, and they therea suspicious Insider Selling of the success when it was at an alltime high. Greg walden is a member of the panel that will grill the equifax guy. Sir, you cant fix the breach thats already happened, obviously. But can you realistically stop others in future . Well, if we find out what went wrong here, perhaps we can. You know, there are already plenty of laws on the books that govern how companies should operate to protect our most valuable data. And you keep asking yourself how does this happen. Its like the guards at force knox standing idly by as the back door thieves raid the vault. Theyve raided our Financial Data time and again. This is the most egregious example of that, and we want to get to the facts and find out how did it happen. Stuart is this going to be a bit like the tobacco executives who were put on the stand, raised their hand, swore to told the truth and congress piles on them . Is that going to happen again today . Look, im just after the facts. I have a degree in journalism, and i want the facts to lead us to a solution so it doesnt happen again. I think people are outraged. Were the peoples house. We expect to get to the facts, and we hope mr. Smith coming to washington will give us the answers that we seek so that this doesnt happen again. What we do know is this, apache strut, one of their underlying pieces of software, made known a vulnerability in march. This company used that software but didnt know they used that software or at least didnt communicate it to their cyber team. And as a result, the hole was exploited, a known hole with a patch that was available. How does that happen, stuart . This is the question people have. Stuart will there also be questions about the three executives who sold the stock thats right. Stuart after the breach but before it was public . Youre going to question him about that, i guess . Im sure that will come up as well. I have reason to believe the department of justice is probably looking at that as well. Anytime you have an Insider Trading on the stock and Something Like this happened at the same time, it raises all kinds of questions that they need to be able to answer. Again, though, how do you trust a company that has all your data and then behaves in this manner where it all gets exposed . Stuart indeed. Greg, you have a degree in journalism. Were flattered that you would appear on this program. Thank you very much. [laughter] honor to be with you. Stuart well be covering you later on, and well watch for your questions. Thank you, greg walden, we appreciate it. President trump is now enroute to puerto rico getting a firsthand look at the damage there. The president s scheduled to land on the island about 11 45, and you will see it. More fake news problems for facebook. It admitted that its systems automatically promoted false stories about the las vegas shooter. Toys r us got a plan to get you back in the stores. A new augmented reality app. Walk around the store with your smartphone out, and the app superimposes pictures of cartoon characters on top of the world thats going to do it. [laughter] stuart right. Sad, sad news to report. Rock and roll legend tom petty die after suffering a massive heart attack. Pettys spokesperson says he died peacefully, he was surrounded by friends, family, band mates. He was 66 years old. Now, you are going to hear his music throughout the show today. And i wont back down the bottom line is, for your goals, this is a strategy id recommend. Huh. This actually makes sense. Now on the next page youll see a breakdown of costs. What . Its just. We were going to ask about it but we werent sure when. So thanks. Yeah, thats great. Being clear and upfront. Multiplied by 14,000 financial advisors, its a big deal. And its how edward jones makes sense of investing. Stuart were following a couple of ther markets, weve got the price of oil down to just 50 a barrel as we speak. How about the price of gold . Substantially below 1300, yes, it is. Its dropped further, 1273 is your bouillon price this morning. I want to get to tax reform. Green arrows for the market since the reform plan was announced last week. However, the deduction for state and local taxes, oh, that is still very much up in the air. That is a huge Sticking Point for this plan. Come in, congressman pete process couple, republican from illinois. Oh, dear me. Sir [laughter] illinois is a hightax state. If you do away with the deduction for those high taxes you pay locally within your state, you and your constituents take a hit. Youre going to get rid of that. Youre not going to get rid of that deduction, are you . Well, heres what i think we are going to do, stuart, heres the point. Any tax reform effort and ive talked to colleagues from hightax states like me, you know, folks from new york, new jersey, california, illinois look, we need to evaluate any tax proposal in its entirety. Look at the rates, look at all the other things that are happening as it relates to changes on retirement incentives, education incentives and so forth. Theres also been a lot of discussion maybe trying to separate out property taxes from other types of state and local taxes because property taxes are those that my constituents in particular are particularly outraged by. So what were looking for now is some Common Ground. How can we find a place where we deal with this issue where it doesnt waylay tax reform, and i think reasonable people can come to the table and find a compromise here. Stuart can you get, there are 33 republicans in the house who come from very hightax states. If they say, okay, were going to get rid of that deduction for all the taxes we pay, the income taxes we pay to our states, you get rid of that deduction, they dont get reelected. I dont see, honestly, how they could vote for this plan as it now is. And even if youve got some kind of Minor Leagues compromise about property taxes, youve still got that elephant in the room, the deductibility of state and local are income taxes local income taxes. I dont think those 33 people could vote for it, and thats your margin of victory in the house. Let me put it a different way. Those members have to be accommodated. Theyve got to, you know, their voice has to be dealt with and will be dealt with. I mean, as you put it, the math is fairly simple. Now, the notion of any touching it at all as it being off limits, no, of course, it cant be. Its a policy that has to be revisited as does Everything Else in tax reform. And the appeal here is to hook at a Tax Liability to look at a Tax Liability in its totality. And this is where the further we get in in terms of the detail, where the brackets are placed, what we do on retirement, education savings and some of these other things. I think when it all comes together and working through a compromise on state and local, i think on balance people are going to look at this and say thats a good plan, im for that, that makes sense. My Tax Liability is going down. Im not here skipping along and saying this is not an insignificant issue. Its incredibly significant. But heres the other point. To do nothing, to basically say, oh, were just going to embrace the current status quo of our tax code, who would eat me alive . This tax code is dissolving underneath us, so rather than wringing our hands and saying its too big and too overwhelming, a lot of people are saying, look, lets come up with a plan, find some Common Ground and move forward because weve got to update this tax code. Stuart yes, sir. For the sake of the republican party, youve got to well, for the sake of the country and our future. Its bigger than a party thing. Stuart always a pleasure to have you on the show. Thanks, stuart. Stuart look at this. A huge boardroom fight at uber today. And its going on while the ceo is in london. How about that . Well have more varney after this. Can i kick it . Yes you can can i kick it . Yes you can can i kick it . Yes you can well im gone s list for free. Which means everyone has access to our real reviews that we actually verify. And we can also verify that what goes down, [ splash, toilet flush ] doesnt always come back up. Find a great plumber at angies list. Join today for free. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Stuart were going to open this market higher agained today. Remember, the record high yesterday was 22,557. Well be up from there this morning. There is, ive got to tell you this, theres a battle royal brewing at the uber board over exceo travis kalanick. Liz, seems to me like hes trying to hold on to his power as the big shareholder. Its a big power struggle between the new ceo and kalanick. Hes the guy whos responsible, critics say, for the frat house culture. Benchmark capital, biggest big, big investor in uber hates him. Also soft bank in the biggest private equity deal ever, 10 billion theyre going to to put into that company, the new ceo is saying weve got to clean the house here. Were going to dial back on kalanicks power. He did appoint john feign who ran Merrill Lynch to be on the board of uber, they may be on the way out. We dont know yet. A big, powerful fight going on right now. Stuart you cant go public with an ipo unless you fix the board. Yes, exactly. Stuart ashley, youve got to tell me about this, the toys r us story. Theyre punting, apparently, towards augmented reality. Well, thats computergenerated images that are posted using an app on your smartphone. You can see computergenerated as were seeing in this video images posted over the real world environment. They believe, this is a company in chapter 11 bankruptcy thats trying to turn it around. The ceo says we need a reason, people have a reason to come to the stores, interactive technology, they believe, it is. When you walk in the store, boom, you see that in theres geoffrey, the infamous toys r us mascot. You go around, you gain stars by watching all of this augmented reality. Is it going to be enough to get people to go back to theyre going to go nationwide, by the way, with this next month. I dont know. Stuart no. Yes, you do. [laughter] yes, you do. He has an opinion. Stuart you dont like it. I think it may have been my tone. It may have been obvious it wasnt going to work, hey, ive got to try something. [laughter] stuart fine young man. Market higher in about four and a half minutes time. Were going up 20, maybe 30 points. Any gain today will set another new record high. Well be back with the bell after this. Stuart all right, we have 15 seconds to go before the market opens this tuesday morning. Like to remind everybody that we closed yesterday on the dow at 22,557. That was the 43rd record high just in this calendar year. 9 30, here we go. Were off, were running, and we are on the upside, 5, 6, 8 points higher, 9 points higher. Not a huge rally by any means, but theres a little green on the lefthand side, and theres some red as well. Were up 18 points. Of course, that is an alltime high. Youve never been there before. S p 500, 2,530. A fractional gain but gain nonetheless. How about that nasdaq . Well, its up seven points,. 12 . 6,524 on the nasdaq. General motors, the stock reaches 43 per share. Its up a buck as of now. It plans 20 allelectric models by 2023. Equifax, 30 minutes from now their former chief, Richard Smith, is going to be grilled in congress about the massive data breach. One in two americans affected. That is going to be high political theater. Whos with us . Ashley webster, elizabeth macdonald, Scott Shellady and jeff sica. All right, markets at record highs and going up as we speak. So, sica, as in jeffrey [laughter] are you going to throw cold water youve been throwing cold water over this rally for the last 2,000 points. Keep in mind, im not wrong, im early. [laughter] heres the thing, we are in the theater of the absurd here. The market is running out of things to celebrate. But heres the one thing that the market needs, and if it doesnt get, it is going to, its going to be pun earned, and thats tax cuts. This market priced to perfection, anticipating tax cuts, running out of things to celebrate. The Congress Better deliver, and if they dont, this market will fall. Stuart the russell 2000, by the way, just hit yet another alltime high. The question becomes, jeff, where do you put your money . If times running out and doomsday is upon us, where should we were taking our money out, where do we put it . I would say that the bottom line is to start thinking about this obscure asset call cash. Keeping it, keeping money on the sidelines. People dont want to do that. They want to have everything invested, and when youre all in, you have nothing left to do but sell or maybe borrow to buy. Stuart all right. So you say youve got two minutes worth of input there. [laughter] Scott Shellady, you also have been bearish for the last 2,000 points. Where to from here . Is he there . I like what jeff had to say, and Vince Lombardi said the same thing. He never lost a football game, he just ran out of time. [laughter] sob so is i think that, ultimately, the situation that we see in front of us right now is the fact that there is still so much investable cash on the sidelines that these downdraft that is we think we should get turn out to be little blips. And again, i just dont like the fact, stuart, that were setting alltime record highs with barely a percentage move higher. Thats the problem. Its like having a bunch of home run hitters, you know, outracing each other by one home run instead of having babe ruth win the whole thing by 40 home runs. Thats the difference. By doing so, it cheapens these rallies a little bit. And look whats happening to the vix. Everybodys getting complacent. Yeah, we could go higher, we probably will because theres so much money on the sideline, but at some point in time history tells us this will correct. And thats okay too. Make sure youve got something to participate in you see the correction. Just make sure you dont have 100 of your investable assets involved, have Something Back so you can take advantage of the sale prices that are going to come. Stuart i think youre back in london with that same old, same old approach there. I make no comment. [laughter] heres a story i really want to discuss, and thats general motors. Theyre going big on electric cars. What is it, 20 new models by 2023 . Yeah, thats right. Stuart why are they doing this . Because they say thats the future. All the other automakers are piling in, and Deutsche Bank is now saying the robot electric cars, the ridesharing electric cars, driverless, not coming in years, in quarters. Theyve moved up the deadline for when gm will introduce robot electric taxis. So theyre seeing a market here. Stuart thats why the stocks gone to 43, the great electric hope, i would guess. Im not buying it. Theyre doubling down, but all the money comes right now, and maybe this is short sight, but gas prices are pretty decent, and everyones buying suvs and pickup trucks right now. Ford put out a 100,000 pickup truck. Stuart they did. This is 1 of the market, and gm loses 9,000 on every chevy volt that they sell. This is a very, very bad business mold for gm. If theyre going to go full bore into electric cars, they better find out a way to make money on them, because consumers dont want em. And all theyre trying they bought into the tesla mystique, and theyre making a big mistake. Stuart speak of tesla [laughter] ill get to you in a second. I heard that. [laughter] all right, they fell short on that plan to produce 1500 model 3s over the summer. They actually only made 260. They said theyve got a production bottleneck. Now elon musk is saying theyre got to produce 5,000 by the end of the year. I think thats right. Scott, are you a hes that kind of guy . Oh, im more or less in jeff sicas camp. Look, these are all nice ideas, stuart. Yeah, the idea of an electric car and we get away from the fossil fuels, theyre all nice ideas. I would like Deutsche Bank to tell me what were going to do with all these cars that were still selling today and look at the car sales. Where are they going to be . Is are they going to be obsolete in quarters . It just doesnt make sense. I feel that somebody else is driving this argument down our throats because it looks like it might be a great idea, but in practicality its not. Stuart thank you, you are right. At least not yet. Youre right, stuart, five to ten years, not five to ten quarters. And whats going to happen with the car i buy today . Is. Stuart right. I just bought one. You still need fossil fuels to power the electric utility plants to power these cars. Tesla, by the way, is saying an estimated 10 billion its going the burn through cash by the end of the year. Hasnt made any money so far stuart and the thing is down 8 or 9, 8. 55, youre back at 332 on tesla. Got it. Check the big board, because this is a new alltime high. We hit it just moments ago. Same story with the s p 500 and the russell 2000, all of them record highs as of this morning. Couple of individual stocks, lennar, that is a home builder, much higher profit. The stocks up 3. 5 . How about the gun stocks . They went up yesterday right after the las vegas massacre. And theyre up again this morning, not a whole lot, but they are up. Casino stocks went down yesterday with after the massacre in las vegas. No Real Recovery this morning. Theyre pretty much flat across the board including mgm which owns the Mandalay Bay Hotel which was the scene or right outside there of the outrage. 20 minutes from now the ec equifax hearing on capitol hill starts. I want to know is equifax going to make it all the way through . No. Stuart are they done . Theyre done. And the ceos walking away with 18 million. Half the country has seen their personal identification hacked. Stuart yeah. Half the country. And so now, i mean, if theyre the Data Warehouse for our personal identification and information and they own that information making billions selling stuff off of it and theyre not protecting it . Stuart exactly. Thats outrageous. Are they done, jeff sica . Theyre done. And keep in mind, he knew about this in advance of his cfo selling, and the fact that he knew about it and failed to advise people, it makes it necessary that this person not be involved with this type of industry at any point in the future. They have a very, very important function, and they blew it, and somebody else needs to come into that spot. Stuart real fast, Scott Shellady, can they survive this . They should be done, but i think they will survive because i havent heard any big company come out yet and say were not going to use equifax anymore for their credit scores. Good point. So far everybodys been quiet, and i dont know what theyre waiting to hear. This is outrageous, they should be done, but i bet you because its america theyll be okay. Stuart i think youre probably right. Okay. I want to get to nordstrom. Back in june we reported the family was trying for the sale of the company. That apparently fell through. Its not going to happen. Whats the story, liz . Theyre trying to pull together 10 billion for a private equity buyout. Looks like it aint gonna happen. Macys and jcpenney also went down on this deal. What also is happening, watch this. Wall street is saying happy days for the retailers, a good holiday season. Why . Warm weather forecasts beginning in october. That means more people out shopping. So youre seeing a lot of retailers bouncing back a little bit higher. Stuart warm weather in october equals a stock bounce . Not so sure about that one. The nasdaq just hit an alltime high, bottom of your screen you can see it. Gm, what did you say, justin . Yes, also hit another alltime high, up 3 this morning on general motors. Got that. Now, is it that time . Have i got to say goodbye to jeff and scott . Already . What happened . Stuart time flies when youre having fun. When youre hitting market records all the time, you have to say goodbye to the stars. [laughter] ashley, liz, youre gone. [laughter] jeff, thank you very much, indeed. Same with you, scott. Well see you again real soon. [laughter] look at this, look at this. We are, what, ten minutes into the session, were up another 40 points, 22,598. Almost 22,600. Youre 400 points from 23,000 on the dow. And please remember, weve add 4,856,000,000,000 to the value of american stocks just since the election. How about that . Theres an opinion piece in the New York Times. It calls President Trump an incompetent huckster who has failed to help puerto rico. One of the top guys at fema will respond to that in a moment. And shake shack testing out a new cashfree restaurant. You want a burger, you order it from a kiosk. No humans working the registers. We will be back. At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. My business was going nowhere. So i built this kickin new website with godaddy. Building a website in under an hour is easy 68 of people. Who have built their website using gocentral, did it in. Under an hour, and you can too. 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Weve got the dow, the s p 500, the nasdaq come positive set, the russell 2000, all of them at or very, very close just moments ago they hit record highs. This is a rally, ladies and gentlemen. Now take a look at an opinion piece, this is the headline in the New York Times. Opinion an unfit president fails puerto rico. And if you actually read the article, it is really personally harsh and contemptuous of our president. Joining us, fema deputy administrator daniel kanuski. Its good to have you with us. What do you make of that . The president has failed puerto rico. Headline, new york time. What do you say . You said it was an opinion piece, i apologize, i havent had a chance to read the New York Times this morning. Were focused here on operations, were focused on supporting those disaster survivors in puerto rico and making sure they have everything they need. We will not rest until they are cared for. Stuart well, has the effort so far failed . Has the delivery of aid been slow or in some way badly done . Well, theres certainly aid on the ground. Our ten Distribution Centers are pull of commodities. The 78 jurisdictions are all coming in, picking up their supplies. To the extent that they cant, the National Guard is stepping in. The National Guard there in puerto rico is delivering supplies to those in need that cant make it to our regional distribution hubs. We have dozens of helicopters operating as we speak overhead in pert rio right now making pert puerto rico right now making sure those disaster survivors that dont have access to our aid are getting it as we speak. Now, what will President Trump pledge today . Hes visiting, hell get off air force one, and hell say heres what ive got for you. Whats he got for you . Yeah. So, one, hes going to meet with the governors and local elected officials. He wants to hear firsthand from them how progress is being made and if theres any concerns that we can address. Two, he wants to see the situation with his own eyes. He wants to make sure that what hes heard is consistent with what exactly is happening on the ground. And, three, he wants to comfort disaster survivors. He wants to be there for them and offer any aid he possibly can. Be. Stuart is he going is he scheduled to meet the mayor of san juan who was not happy with his performance in organizing the relief . I believe he is scheduled to meet with a number of the elected officials there including several of the mayors. [laughter] stuart any idea what he might say to the mayor who accused him of being a sexist . I cant say. All i can say is the federal government is here, and we are providing all the support we can. To the extent that any of the elected officials in puerto rico or the Virgin Islands have concerns, we would appreciate them coming into our joint field office to work with us in a unified approach to make sure that the disaster survivors of puerto rico and Virgin Islands are care for. Stuart daniel, id love to be a fly on the wall if and when President Trump meets the mayor of san juan, but i wont be, and i hope you are. Dan yell, thanks for joining us, sir daniel, thanks for joining us. Thank you. Stuart 30 points higher, 32,58 22,587. Weve got shake shack, now this is interesting, testing out a cashfree and i believe human beingfree location. Whats going on, nicole . Reporter pretty much human beingfree. There is actually a hospitality champ. Ill describe that role in a moment. Stock is slightly higher, this is a cashless shake shack starting here downtown in manhattan. You go in, you order your burgers, whatever you like, on a kiosk. No cash. Using a touch screen, right . How do you know when your order is actually ready . Well, you get a text message, of course, stuart. I mean, this is how this whole thing works. I talked about the hospitality champs, they make 15 an hour and are there to assist the people with the kiosks in case the whole thing blows your mind. It is interesting, though, how do tourists deal with this in maybe they really only use cash, and many of them come, they love shake shack from abroad. And also how do you order high quantities . Some of these guys get 20 burgers. In the olden days, they got a thousand white castle burgers all at the same time, so im not sure stuart ive got to tell you, nicole, the story to me is gettingly of human beings as much as getting rid of human beings as much as possible because they take vacations, they get sick, they may complain occasionally, and a kiosk does not. Thats my opinion. Thanks, nicole. [laughter] how about the dow 30 stocks . What do they look like . Pretty even split between winners and losers, the greens and the reds. Political fallout from the massacre in las vegas. The shooting reopening a debate over gun silencers. Judge napolitano on that coming up next. If youre on medicare, remember, the open Enrollment Period is here. The time to choose your medicare coverage. Begins october 15th and ends december 7th. So call unitedhealthcare to learn about. A plan that could give you the benefits youre looking for. Its the aarp medicarecomplete plan insured through unitedhealthcare. What makes it complete . It can combine medicare parts a and b, which is your hospital and doctor coverage. With part d Prescription Drug coverage, and more, all in one simple plan. For a low monthly premium or in some areas, no plan premium at all. An aarp medicarecomplete plan offers you benefits like an annual physical, preventive screenings and most immunizations. All for a 0 copay. Youll also have access to a local network of doctors and much more. 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We make it easy to enroll, too. So call or go online today. [sfx mnemonic] stuart on your screens now, Richard Smith, the exceo of equifax. Hes preparing for his testimony before a house panel. He will be grilled about that massive data breach. I want to bring you up to speed on apple. The x, the iphone x. Mac rumors, thats a web site, it says samsung, arch competitor of apple, will make 110 every time you buy an apple x. Every time an iphone is shipped, it already has samsung products in it. But the iphone x will have in addition to the samsung components samsung oled screen, flash memory chip, batteries and etc. In other words, a large part not a large, but quite a bit of the iphone is made up of samsung components. [laughter] how much . 110 worth every time an iphone is sold. Thats how much samsung will make. Now, they make 202 per galaxy s8 sold, but based on volume ld sold theyre going to make more money off the iphone than they are off their own galaxy s8, which is fascinating. Stuart thats a good story. I dont want to be lightheartedded about this, i want to get back to the las vegas massacre. Its reopened the debate about gun control, specifically about silencers or suppressors on guns. Judge napolitano is with us now. Real fast here, weve got a bill before the house of representatives which says that itd be easier for people with guns to own a silencer. The democrats want to stop that going through. Okay. So silencer is the hollywood term, suppressor is the technical term because it still makes a lot of noise, it just doesnt make as much noise. The theory of that statute is its for sportsmen so that they dont have to wear the ear muzzles and the sound of the round coming off does not scare away other animals who the sportsmen might want to shoot at. The argument against it is, you know what . Bullets make noise for a reason so that you know where the shooter is, and its actually an act of personal freedom for me or you or any potential victim to know where the shooter is. Stuart i think this is a sidebar to the whole issue of gun control. I think so, i think so as well. Mrs. Clinton yesterday, within minutes of us realizing the gravity of this tragedy, started blasting the concept of silencers. Stuart because they are favored by the nra. Right. Stuart and anything the nra does Hillary Clinton and the democrats to oppose. Correct. The flip side of that is not everything the nra wants is necessarily consistent with human freedom. It might be consistent with human freedom for us to know where the shooter is. And the noise might actually benefit human freedom because we might flee from the noise or are repel the noise with our own side arms. Were going to go through in the next few days, we always do whenever there are tragedies hike this. Stuart which side are you on, real fast. Of what . Stuart you want silencers to be allowed or banned . Which is it . I think it should be up to individual choice. Stuart thats not an answer to the question. If its up to individual choices, then i dont want them to be banned. Stuart exactly. But i myself having a farm out in the country, as do you, want to know when people are on my property which is so large i cant manage it using guns, and if they have silencers stuart you always want it both way, dont you . [laughter] always, always, always. Hold on. Weve got with 60 seconds left. Whats this you object to shake shack saying no cash . I dont object to saying shake shack say nothing cash stuart yes, you do. The federal law and the constitution does. Cash is privacy. You have the right to pay for something with cash. Read the dollar bill. It says right on it, for better or for worse, this bill is valid legal tender for all debts, domestic and private. No private entity can reject that. Stuart i challenge you to walk into a shake shack and pay cash. I dont want even know what they sell. Stuart shakes, from a shack. [laughter] im going to demand to pay cash and bring a fox camera crew with me and well see what happens. That would be funny. Stuart if youre not careful, well cothat. [laughter] judge, well see you in the 11 00 hour. You got it. Stuart look at this, up 45 points on the dow industrials, 22,600, we have arrived. All right, were expecting some political theater moments from now when former equifax chief testifies before congress. This may be a rare case of bipartisan unity. 145 million americans affected. Everybody wants a go at equifax, and is youll see it next. Stuart remember when Tobacco Company executives were grilled on capitol hill . It was political theater. You will see something similar in a few minutes. The former equifax chief will be asked to explain that stunning and potentially ruinous hack. Your personal information and that of 145 million others were stolen. In a string of this year, hackers got inside of equifax. They roamed through the files being discovered six months later in july. Six weeks later equifax found out about it. We could have gone on defense but we didnt know about it. Richard smith, the head at the time, will have questions. It was not set up to help consumers t was set up to help banks. They get all your information together so lenders can decide if you are a good credit risk. Should they give you a loan. Securing that information is not equifaxs priority. Second, watch the lawyers. They smell money. Odds there will be a classaction lawsuit with people claiming they were damaged by the breach. Orders are equifax would settle. Odds are, lawyers get the big money and you get a few pennies, maybe a coupon for free credit check. I exaggerate but you do get the point. The politicians, they love these hearings. They can display their righteous anger for tv cameras, and folks back home. You see high and mighty taken down a peg or two. At end of the day your information is still out there. Who knows how it will be used against you. The second hour of Varney Company is about to begin. Stuart okay. I think you can see Steve Scalise there i believe, left side of the screen on the righthand side there. Wearing a blue tie. That is Steve Scalise, back at work on capitol hill today. Thats a fine thing a fine thing to see. Good for you, steve. Former equifax chief not only event on capitol hill. Republicans holding their weekly news conference. Majority whip Steve Scalise could make an appearance there as well. Well bring you headlines. Wells fargo chief testifying before the Senate Banking committee. We could get fireworks when questioned by senator Elizabeth Warren. You didnt build that. Remember that. 57 points higher, well above 22,600. The s p, dow, nasdaq, russell, all of them at alltime highs. The russell hit one and retreated just a little. Got to show you general motors, alltime high for the stock, reaching 43 a share. Up 3 , theyre making a big push into electric cars. Investors seem to like it. Mgm downgraded. The downgrade people say tragedy in las vegas will lead to lower profits the coming months. Mgm back to 30 bucks a share. Walmart, amazon they have acquired a Delivery Service called parcel. That company specializes in sameday delivery and overnight, scheduled twohour windows. Walmart going up on the news, close to 80 bucks a share. Back to equifax hearing. We want to hear the q a portion. We could see real drama. Come in judge Andrew Napolitano is still with us, despite his miserable performance about cash and shake shack. I have emails from friends you really want go to shake shack . I generally agree with you on futility of class actions and how they substantially benefit the plaintiffs lawyers and only marginally, marginally, infinitesimally the victims but think of it this way. There are 143 million victims, potential victims of the equifax scandal. Stuart they cant sue unless they show damage. You have to show your damage was abused. You have to show harm. Even if 10 filed suit, how many stuart scalise is speaking. I want to listen in. Who prayed for me during the tough times. How much it meant. Tremendously uplifting, gave me andfy family a lot of strength during that time. At same token, jennifer and i pray for the people involved in the nevada shooting. So much loss of life and so many people injured today, those families need our prayers right now. They need to be uplifted, people saying what can we do to help, we need to remember there is tremendous loss of blood, go to the local blood bank, donate blood. That alone can be a positive sign especially looking how much blood was lost, probably will need to be used at local hospitals as people continue to be treated. So, there is a lot, there is a lot we need to pray for. Surely the loss of life and those injured. Hopefully those injured can get through their injuries and can get back to their families. Keep them in their prayers. Stuart i would have to say that mr. Scalise, Steve Scalise there, looks in fine form. If i may say so. Ashley you may. Stuart remember the shooting incident he was involved, that could have become a mass cure. There were other republicans, democrats, congresspeople in the dugouts. Had that shooter not been stopped, he would have mass cured massacred people in the dugout. That is worth remembering. We should show you mr. Scalise after the massacre in las vegas. Massacres all have the same ending, they all have the same ending. He should be killed sooner, rather than later. Reason will not stop him. Stuart back to equifax. Where we were . Stuart equifax. The choices, 10 to people, cant call them customers, because involuntarily, 14 Million People were harmed. You want 14 million lawsuits in federal court, or you want one lawsuit with potentially injured people involved . That is hobsons choice. One would clog the court system forever. The other produces no actual compensation for those harmed. Stuart exactly, hobsons choice, that is precisely what it is. Right. If damaged people got money, real money for the damage caused commensurate to their damage, that would be a good thing, that is what the courts should do. When there are so many damaged people we dont have the resources in court system to address all those cases. At one time, in one place, the damages are minuscule to each of individuallyharmed persons. Im with you. Stuart there is no good solution for equifax. There is no good solution. Today is not a good solution. That is making him political whipping boy. He is not even ceo. Liz written testimony, former ceo forced out es, he will say in testimony, that he learned personally about the breach and, july 31st, he waited for three weeks before he told the full board. Now he is going to be on the hot seat, Richard Smith. Stuart he knew about it, didnt tell the board. Liz didnt tell the board. Stuart Richard Smith, about to testify in 20 odd minutes, he is the man who is saying yes he did know, did not reveal until later liz three weeks later. That is the hack was done by sophisticated state actors. When i say state actors, foreign state actors. Stuart bring in patrick tucker, defense one technology editor, an expert on this hacking story here. Patrick we dont have a way to defend ourselves against these hacks, do we . There is no defense here. I have no defense for my personal information, period, am i right . Theres a best defense and in this case, that best defense was not something that equifax put in place. The vulnerability were talking abouter hooks vulnerability with system called apache. As you point out the researcher first disclosed it to apache back in march. He did a great job. He found the vulnerability about it. The Company Issued a patch. They disclosed the vulnerability in something called the National Vulnerability database. It was sitting there for any company, for any cio, to see to implement the patch across the system, across their enterprise. It didnt happen in this case. That National Vulnerability database is the first line of defense for every known vulnerability gets reported. That is key. It was ignored in this case enterprisewise. Stuart if i were to freeze my credit, that is the expression i keep hearing, freeze your credit, is that a defense for me now if my personal information has been revealed . Probably, yes. One of the possible indicators this was a statebacked actor they havent operationalized this material yet. The way that the actors moved about inside of the system after gaining initial entry, that is something that suggests a very big actor, particularly china, and also the fact they seem to be sitting on it at least right now because they havent figured out what to do with it, that also speaks to china. Stuart if i had known about the hack, this breach, as it happened, if the company told me, they have got your information, could i then imposed, this credit freeze, and that would have worked . That as well as a lot of con think ensures credit monitoring. You decrease the amount of stolen information as soon as you act on it. Stuart pat, what is a credit freeze . What is it . This prevents somebody opening a line of credit in your name without you knowing about it and potentially complicates life for you if you want to open a new line of credit. That is something youre aware of. That is why you implement the freeze. That is something you can use for somebody stealing your identity and opening a bunch of accounts with your name. Stuart is it easy to do . What do i do here . Is it easy to put a credit freeze in place. It should be in this case, more importantly before you do that go to the equifax site set up, to see if your name was compromised, if your information was compromised. From there there are a number of different ways to implement a freeze depending what bank or banks youre doing it with. First implement the resource, in somewhat tardy fashion to check whether or not youve been made vulnerable. So now, annoying thing. Now onus goes to consumer to check what this news story actually means for them. Then make decisions on basis of that. There is a website set up. You can go to check whether or not your name and personal information are part of the breach. A lot of people are being surprised by the information. Stuart i got to tell you, a lot of people just dont like doing that. I know it is valuable. I know you should do it. Hassling with websites and phone calls, you know, just a pain in the neck, isnt it . Like when you have your credit card compromised. Your daughter cant get out of florida during irma because they dont recognize just a pain in the neck. Almost call it damages. Stuart yes. Thank you. Im going to sue. I will join the classaction lawsuit. Do you need a lawyer . Stuart i need a lawyer. Hold on a second. Were dealing with politics and security and all that. I want to deal with money for a second because lets not avoid this. Were hitting a series of record highs for stock prices. Right now were at 22,600. Not that far from 23,000 on the dow industrials. I want to bring in steve cortes. He is our money guy. He is also a trump guy. Sir, im saying the latest leg up on the rally because trumps growth agenda appears to be gaining some momentum, gaining steam. Im sure you will agree with me . Stuart, i am. As awful as a lot of headlines are recently in the world, when it comes to the economy we had a lot of wonderful headlines lately. Those terrific headlines are revealing reality on the ground which is growth is accelerating. Market is starting to price that in. Aggressively pricing that in. You talk about the records. We had a fantastic manufacturing number. American manufacture something accelerating. Not because of what trump will do, but what he has already done, easing regulation, making it more predictable and sensible for american businesses. There is confidence on the ground and it is real and markets reflecting that. Stuart i want to ask you about puerto rico. You are a trump guy. You are hispanic by heritage i believe. Yes, sir. Stuart we have this opinion piece in New York Times today, almost personally insulting to the president , that the president failed puerto rico. That he is just a huckster, a nasty, showbiz huckster, one of the worst people we elected president. It is getting kind personal here. I dont think that is justified. What do you have to say about it . That is not justified, stuart. New york times, most mainstream outlets are dying for this to become trumps katrina. They dont care with facts on ground, they want to run with their narrative. Dont take my words for that, talk about the governor of puerto rico, literally on the ground, leader on island, he said it to our network and fox business, the president and administration, every time we asked them to execute, they have executed quickly, end quote. So that is what the governor tells us on the ground. What New York Times tells us in manhattan isnt very relevant to me. They and other outlets given far too much credence, speaking of media political huckster, to mayor cruz in puerto rico. Her Approval Rating of her constituents on the island is 24 . Keep that in mind when she goes on television and grandstands and wears ridiculous tshirts. She is a political huckster who craves media attention. Stuart steve, i have to go, very important subject. That is greg walden making a statement right there before the panel which Richard Smith will be questioned there. New record for the dow. Back in a second. Grandma grandpa thanks mom. Here we are. Look, right up to here. Principal. We can help you plan for that. Can i kick it . Yes you can can i kick it . Yes you can can i kick it . Yes you can well im gone s list for free. Which means everyone has access to our real reviews that we actually verify. And we can also verify that what goes down, [ splash, toilet flush ] doesnt always come back up. Find a great plumber at angies list. Join today for free. Stuart in las vegas 59 people killed, 527 wounded. Authorities trying to figure out why 64yearold Stephen Paddock opened fire sunday night. Dozens of guns found in his home and hotel room. Jeff flock in las vegas for us. Jeff, you told us last hour they are still bringing bodies out. Im looking at windows he fired from. You are right on the crime scene again. Reporter indeed, 32nd floor. Windows were broken out by a hammer. The focus, two chief focuses tore investigators. One the guns you made reference to, 23 were found in the hotel room. 19 more found in mr. Paddocks home. The question, did he get them legally . Were they somehow modified to be semiautomatic or automatic . That is what sounded like. Enabled the carnage to have sufficient volume and as many people wounded and killed in fact injured. Of course the other chief focus is paddock himself. At this point im sorry to say authorities still do not have a clear motive this is a man who, by all accounts had a pretty good life. 64yearold retiree. Seemed to have plenty of money. Was able to gamble, highstakes gambler, golfer, pilot. Didnt fit profile after guy who would do Something Like this. That is what authorities are trying to figure out. A broken record. Stuart very, very difficult question to answer. That is the truth. Jeff flock in middle of it again. Well be back. Stephen paddock the shooter may have used something called a trigger crank when he fired his weapons. That is a device attached to a semiautomatic gun to allow it to fire fully all i canally. Be automatically. Joining us, katie pavlich, townhall. Com contributor. Would you have any objection making this crank device flatout illegal . I dont think i necessarily would. You have to look at details and technicality here what atf considers turning something into a machine gun. When you get into the details, doesnt technically according to the National Firearms act do that, because it releases one round per trigger pull. Now it is rapid fire not at rate of a machine gun. Therefore it is not classified as a machine gun. Stuart so, you see where im going with this . I mean this has, when a man kills 59 people, and turns a Country Music festival into a shooting range, with 59 people are killed, 527 wounded, you have to ask, what are we going to do about this . I dont think im being premature introducing idea of discussing guns. I dont think it es premature to introduce the conversation at this point . Considering theyre still bringing bodies out of the crime scene, i would argue it a little too soon to discuss it. I would argue also we dont foe the facts what firearms he had, whether he got them legally. Whether he had the device on the firearm. We dont have confirmation on all the details. Im totally open to a conversation about this as long as were doing it based on the facts that we have, that are confirmed. Right now we dont have those things. I think there is room for compromise on these devices, you have to understand a lot of people who own these devices and according to atf theyre not used in crimes. Unfortunately it was used here. When you look at number of people who have them dont use them, the question would this have been any different if this, another regulation was put on the books . And, the answer is probably not unfortunately. Stuart i hear you, katy. Sorry to cut it short. I have a developing story on equifax. Would you stay with us . Sure. Stuart what were looking at what were seeing shortly, the q a session with Richard Smith. Now he is former ceo of equifax. He has got to explain why was this delay between the time when they found out about the breach, when they actually reported it to the public. That is very interesting question. He will have to answer that question. There will be hostile questioning. We will cover it for you. You will see it in just a moment. Stuart Richard Smith, equifax guy. Begun his statement. I am prepared to testify what i learned, what i did in my role as ceo and chairman of the board. Also what i know about the incident as a result of being briefed, the companys investigation investigation which is on going. We know the criminal attack was made possible because of a combination of human error, and technological error. The human error involved a failure to apply a Software Patch to our dispute portal in march of 2017. Technological error involved a scanner, which failed to detect that vulnerability on that particular portal. Both errors have since been addressed. On july 29th and july 30th, suspicious activity was detected and team followed security incident protocol. The Team Immediately shut down the portal and began our internal security investigation. On august second, we hired top Cyber Security forensic and legal experts. At that time we notified the fbi. At that time, to be clear, we did not know the nature or the scope of the incident. It. It was not until late august we concluded we experience ad major breach. On weeks leading up to december 7th, the team worked around the clock to prepare. We took four steps to protect consumers. Step number one, determining how to notify the public. Relying on our experts. We need a plan in place soon as we announced. Step 2, developing a website, staffing up mastiff call centers and Offering Services free to every american. Three, preparing for increased cyber attacks, which we were advised by the cybersecurity experts we should expect. Finally. Continue to coordinate with the fbi, and their criminal investigation of the hackers. And also to notify other federal and state agencies. In the rollout of our remediation program, the mistakes were made, which again, i deeply apologize. I regret the frustration Many Americans felt when our websites and call centers were overwhelmed in the early days. It is no excuse, but certainly did not help that Hurricane Irma took down two of our larger call centers in the first few days after the breach. Since then, however, the company has dramatically increased its capacity. I can report to you today that we have handled over 420 million consumer visits to our website in just over three weeks. And the wait times of the call centers have been substantially reduced. At my direction, the Company Offered a broad package of services to all americans. In addition we develop ad a new Service Available on january 31st, 2018, that will give all consumers the power to control access to their credit data. By allowing them to lock and unlock their credit files when they want. They can do that for free, for life. Putting power to control access to credit data in the hands of the American Consumer is a step forward. I look forward to discussing this new tool with you during my testimony. As we have all painfully learned, Data Security is a National Security problem. Putting the consumer control of their credit data is a first step toward as longterm solution to the industry, problem of identity theft. No Single Company can solve a larger problem on its own. I believe we need a Public Private partnership how to protect americas data Going Forward. I look forward to being a part of that dialogue. General walden, Ranking Member pallone, and honourable members of the subcommittee, thank you again for inviting me here today. I will close by saying, again how sorry i am for this breach. On a personal note, i want to thank many hardworking and dedicated employees that worked with me so tirelessly over the past 12 years at equifax. Equifax is a very good company with thousands of great people waking up every day trying to do what is right. I know they will continue to work tirelessly as we have over the past two months, to right the wrong. Im looking forward to answering your questions. Thank you. Thank you very much. This concludes our witness testimony. Well move into the question and answer portion of the hearing. I will begin with the questioning. Recognize myself for five minutes, i would remind members, because we do have quite a few members that want to ask questions today, i will try to keep the fiveminute rule on questions in place, so you will hear the tapping. But i will begin with questioning. Mr. Smith, the timeline of events is raising some red flags. I would like to ask you about, according to your statement the first time you heard about the breach of security was on july the 31st, of 2017. Is that correct . Congressman, that is correct. And you first asked for briefing about the breach on august the fifteenth, is that correct . Thats correct. The first time the board of directors was notified by the breach was august 24th, is that correct, the full board . Congressman on the 22nd i notified our lead director, presiding director at that time. The full board was briefed on 24th, 25th, subsequent meeting after that. And you notified the public about the breach on september 7th, is that correct . Correct. You state in your testimony that you began developing remediation for consumers on august 25th. Why was there a 10day delay finding out personal information likely stolen, beginning to develop the remediation plan, an do you think that 10day window was responsible for having learned about that personal information being stolen to Start Talking about how to talk to the consumers . Congressman, i understand the question, if i may. Go back to the time frame of the 31st. So 29th and 30th, someone in security had detected what they deemed aspect schuss activity. That is as suspicious activity. That is something that happens routinely around our business. On the 30th. They bring down this particular portal and they start their own internal investigation. As i mentioned in my opening comments, written testimony, on the 2nd of august, they had engaged, leading forensic, experts, cyber experts and leading king spaulding, leading law firm and their Cyber Security team. We talked to the forensics experts. They will tell you that the complications of trying to understand where these criminals were, the footprints they had left, inquiries they had made, is a cumbersome, cumbersome process. Thats why it took weeks before we had an indication for the breadth and depth of the issue which brought us to the august 24th date that you mentioned. Lets back up to july the 31st when you learned, again, talking with the experts at that time. You learned about the breach. You testified that you did not know that personal information had been stolen, at that point. But did you ask anyone if personal information had been stolen, when you fund out about that breach . Congressman, on the 31st all i was told at that tile was, that security noticed a Suspicious Movement of data, out of an environment we call a dispute portal. That wasnt until later that they understood that was an actual dispute document. We had no indication on the 31st of july there was any pii information that was vulnerable. Okay. So i guess, again, but not knowing if that information, that personal information had been stolen at that time, you know, your company is built on data. At any point did you think it was important or somebody in the company to start looking at personal data had been stolen at that point . Congressman, im telling you we work with the best forensic auditors in the business. They do this for a living. We had great cyber team of king and spaulding with us. It took them time. At that time they did not know if data was compromised, exfiltrated or what the data was. When we go back you found out about the breach in that conversation with your chief. This estimate has a reach breach. If there had been a breach at the company to notify someone o, give a factoface . That the sndard operating procedure the congressman athat time, which had n indication itas a breach. It was a suspicious activity. Did you tell anyone else in senior management, any other members of the board of directors about the breach at that time . Is it not until you told the, august 2th, you had one call, 24th before the rest of the board of directors, did anyone else know about the breach . It is important to say july 31st we did not know about the breach. Suspicious activity. First notification of the board, lead director tore on 27th of august. Followed crow noll of events. Meeting i had with our cybersecurity expert. That occurred on 17th of august. My time expired. I recognize the gentlelady from illinois. Ranking member for five minutes. Want to talk about john kelly, who was head of security at time of the breach and its discovery, is that right . That is correct. Mr. Kelly reports directly to you, correct . Correct. So, we were told that mr. Kelly was informed by the chief Security Officer, that week of july 30th. Weve been talking about that. That a cybersecurity incident, you mentioned that. Had occurred. Is that correct . He was notified, my understanding of the 31st of july. Suspicious activity in a particular environment called a web portal, that was dispute environment. We were told that mr. Kelly, this is our staff, was informed at the same time that the incident might have compromised personal, personally identifiable information. Is that correct . Only knowledge i have is he was notified on the 31st that there was suspicious activity in consumer dispute portal. Well, we were told mr. Kelly wrote a short memo to you regarding the incident. Is that correct . Correct. Congresswoman. In his email, it said, some suspicious activity. Okay. Around that same time, three equifax executives sold over one Million Dollars, equifax stock. That is on august 1st, an august 2nd. It is reported that mr. Kelly was ultimately responsible for approving those sales. Is it true mr. Kelly or one of his direct reports would have been required to sign off on these stock sales . Yes. Mr. Kelly was our general counsel. Owns the clearance process . I have a lot of questions. So the answer is yes. He was supposed to sign off . Yes. Did anyone, did any of these three executives have knowledge cybersecurity incident had occurred. Best of my knowledge, congresswoman, no. When were they informed that the incident had occurred . I dont know exactly the date that they were informed. Best of my knowledge, they had no knowledge at the time. They cleared their trades with general counsel. Do you know for sure they didnt know . Best of my knowledge they did not know. And, mr. Kelly, who you were told knew of the breach, and that it contained personal information, still approved the stock sale, is he still chief legal officer for equifax . Congresswoman, i would come back to it again, it was a breach, when he approved could have been a breach . All he knew at the time, it is my understanding, that suspicious activity when he approved sales. It could be a breach, right . It was no indication that pii was compromised we had no idea information was exfiltrated at that time. I understand you agreed to forebo 2017 bonus. Three Million Dollars for the past year, correct . That is correct. You will be free to sell your equifax stock which is worth 24 million, is that correct . Congresswoman, that calculation. It is complex calculation. Depends on total return of shareholder for the company. There are multiple variables. There may be different estimates. Ive seen different estimates. Hard to say. Wont know until the end of the year. That is in addition to equifax you sold for 19 million a year earlier in the year . That is correct. You could be eligible for 22 million on performance based compensate station, depending on equifax stock performs next three years . Let me be very clear, if i may, congresswoman, if i announced my retirement, best for company to move forward with new leader, i agreed to step down at that time with no further compensation. I agreed i should not get a bonus. I agreed there would be no severance. I asked for nothing beyond what i already earned. I was just informed by staff that the chief Security Officer told the chief legal officer verbally, that there was pii. According to a call with staff yesterday, that actually there was a mention of the preach of personally identifiable information. The cso told, yeah, told us in a call yesterday, is what i just heard from staff. Congresswoman i have no documentation, no insight, no knowledge that anyone in the company had informed me or the in that case the chief Security Officer, the chief counsel, that there was a breach on july 31st, is that what you said . Yes. We didnt say a date im told. That our staff didnt say a date. Okay. Let me just say im glad the fbi is looking into it, and many state attorneys general. The city of chicago has sued. Well probably get more information that way as well. Thank you. Thank you very much. The gentlelady time expired. The chair recognize chair ever the full committee, the jent from oregon, for five minutes. Thank you, mr. Chairman. Thank you, mr. Smith for being with us. Stuart i will interrupt for a moment here. Mr. Smith has been questioned about the time lag between the discovery of the breach and making that breach public. He has given a series of reasons as to why there was that time lag, whether it was three weeks or six weeks is frankly unclear at this point. Liz, can you summarize what his reasons why for that delay in making that the breach known . Liz it was board of directors. He was meeting with Senior Leadership team. Meeting with outside lawyers. Meeting with the Cybersecurity Firm investigating the hack. He basically accused of the sitting on the information, not telling the board at this time too. At this time consumer data was physically stolen. He is saying he needed to get the response in order for consumers. Stuart he has said that. That is his reasoning. Liz that is his reasoning. Ashley when he said was first informed on july 31st it was called Suspicious Movement of data. He said it was called an incident. It wasnt even called a breach at that point. His point was, we had no idea what it was. Just that something was up. Recovering lawyer, Gregg Jarrett has been listening to this he knows a lot about this subject. What do you think about his defense of the delay that he imposed. It is incredibly weak an vacuous, honestly. A plaintiffs lawyer will make mincemeat out of him and the other execs. Why . They knew for five years that their cybersecurity protocol was inadequate. The sec warned them five years ago. Then again a couple years later. These hackers were inside of their system allegedly for four long months before it was ever detected. Put that all together youre talking about serious corporate malfeasance, gross negligence. There will be, there are already are some lawsuits. There will be more, including probably a class action by shareholders. It is obscene that this guy walks away with 18 million and pension, roughly, apparently, 24 million in stock options. Stuart hold on a second. I will interrupt. We find in a different hearing on capitol hill, senator Elizabeth Warren is questioning the guy at, lets listen in. And as cfo you spoke to potential wells fargo investors a lot. On those calls you aggressive promoted wells fargos ability to open up new accounts, didnt you . No, i didnt. No, you didnt . No. Well, here are the transcripts from all of the investor earnings calls that you participated in from 2011 to 2014. I have read through them. And on these calls, no one, not even ton stump, who was the ceo at the time, bragged more about wells fargos ability and commitment to open new accounts for existing customers. In the april 2011 call for, example, i think i marked that one, you said, i cant wait to get a credit card in every one of our creditworthy customers wallets. Nothing about whether your customers wanted or need ad wells fargo credit card. All that mattered was opening new accounts. While you were bragging to investors about opening new accounts on these calls, from 2011 to 2014, you also personally owned roughly two million shares of wells fargo stock, is that right . Senator, i dont recall how much stock i owned in wells tagger foe. Im a very proud share holder. It is in your sec filing. It is public, out there. Two million shares, so looks like you had a really good thing going. Talk up wells fargos ability to open new accounts. Get investors excited. Hey, if the stock goes up by a dollar, you make a cool two million bucks. Then, in december 2013, almost three years into your time as cfo the l. A. Times published a long article on the relentless pressure wells fargo put on employees to open new accounts. The article was based on review of internal wells fargo documents, court filings, interviews, with more than 30 current and former wells fargo employees. The article specifically said, that employees had opened fake accounts in response to this pressure. Now you were interviewed for that piece, mr. Sloan, and you said, quote, im not aware of any overbearing sales culture. Hmm. That is really interesting phrasing, im not aware of any problem. So when the l. A. Times came to you and showed you concrete evidence of a terrible problem with fake accounts at your bank, did you launch an investigation into the issue before brushing it off . Senator, first, as it relates to my comments in 2011, im proud of the credit card products that we have at wells fargo. That is not the question im asking. I just asked you brushed it off. Im not aware of any problem. Did you open an investigation when someone laid out evidence of fake accounts. I said to the best of my interview with best of my recollection l. A. Times, they didnt provide me with any information. It was soon after that, as i mentioned in 2013. I take that no. Thats correct. When i asked you question you did not open an inquiry into it, is that right . Senator, again the l. A. Times didnt provide me with any documentation. It was a phone call. After that time did you read the article . I read the article, yes. And then you opened an investigation immediately . At same time the article was coming out, that was the time when Community Bank elevated this issue to the Senior Leadership team. That is the time that we began to take action. Lets talk about that time. You didnt look into the fake accounts but you went right back to pumping up the stock price by bragging about wells fargos Record Number of new accounts on your very next investor call. Now lets forward to 2016. Two months before the fake account scandal became public. You were then the chief operating officer of wells fargo. An interviewer ask you whether you thought the bank pushed sales goals and crossselling too far and your answer was, quote, no. The fundamental strategy that we have is not going to change. That is july of 2016. Just before this breaks open. According to wells fargos own investigation by july of 2016, you knew that thousands of employees had been fired for opening fake accounts, and other sales violations. You knew aggressive crossselling goals were to blame. And still, you publicly said the bank didnt have a problem, right . Senator, that is incorrect. You didnt say this, that you were quoted . Could you read the entire quote and could go through the entire presentation because i think, senator, i think in that presentation whether are or not you pushed employees too far. Your answer was no. The fundamental strategy we have is not going to change . I was referring to the vision of our company. The vision of company, fake scandals you were being asked about . . Every time i give a presentation to team members, i talk about vision, ground people in the cult you are of it our company, that our job is satisfy customers financial needs. Help them succeed financially. That the is context i made that statement. Since i became ceo i made fundamental changes to address issues were talking about today. Mr. Sloan, you were asked about pressure on employees which caused the fake account scandal. We all know that now. It is public. You knew there was a problem. When you were asked about it you lied. This is about personal responsibility. Wells fargo cheated millions of people for years. The Federal Reserve should remove all of the current Board Members who served during the fake account scam. Mr. Sloan, you say you have been making changes at wells fargo for 30 years but you enabled this fake account scam, you got rich off it, then you tried to cover it up. At best you are incompetent. At worst you are complicit. Either way you should be fired. Wells fargo needs to start over and that wont happen until the bank rids itself of people like you who let it into this crisis. Thank you, mr. Chair. Mr. Chairman. Could i respond to that . Yes, you may. I want an equal amount of time. Senator, couple things, first, i will get to your criticism of me in a moment but first lets talk about the board. I think the board has taken very, important steps in terms of a thorough, independent, investigation thats been made public. That is number one. Number two, the board has taken very strong action in terms of the executive accountability, that is unfortunately some of the highest in corporate american history. Again unfortunate. So i dont believe your criticism of the board are accurate. As it relates to me, again i think the reason that im the right person to run this company today, notwithstanding your criticism, is because i have been making change at this company for 30 years. I have made mistakes. I certainly havent been perfect. But i think having knowledge of the company, having the ability to make the change, the actions that i have taken since i have become ceo 11 months ago, have made fundamental change at this company. So im not afraid to make hard decisions when it is needed. And i have the support of 270,000 people. That is why i think im the right person. Can i make a short comment. Very brief. I know were over. But you really want to say, are you kidding . You know, look, you have been there for 30 years, and everyone of my colleagues, both republican side and democratic side who have spoken so far have talked about a broken culture at wells fargo. Have talked about the fact that the problem starts with leadership. The people who were there and leading wells fargo during the time of a years long scam, and multiple scams as our chairman pointed out, those people should not be left in charge of this business. And when you promoted exactly what was wrong with this bank over and over and over, you went to the stock market and you bragged about it. You made money personally off it. When you were asked about it, you did not tell the truth and you tried to cover it up. Wells fargo is not going to change with you in charge. Senator rounds is next. I do ask the senators to Pay Attention to the time limits. Thank you, mr. Chairman. I know that were not supposed to be in middle of, we normally get five minutes. Stuart very Interesting Exchange between senator Elizabeth Warren and till sloan, the chief Financial Officer at wells far going at the time of the account scandal. That was pretty harsh stuff. That was fireworks at Senate Banking committee. Ashley called him a liar. You enabled this scam. You got rich on it. You tried to cover it up. You should not be left in charge. That is very, very strong language. It was senator warren who basically got rid of john stumpfp previous guy at wells fargo. Now she is going after tim sloan, wants him fired. She cord points. Liz she did. Same fashion she took down of john stumpf. About a year ago she did that. Back then you exhibited gutless leadership. You should resign. It should be noted that mr. Sloan was the president and chief operating officer throughouthis wel fargo fiasco with two million fak accounts were cated. They paid 1 million in fines. She is sing thisiasco is linked to you pay. That the stock went up. That is why you guys sat on it. Didnt take care of problem. Stuart Gregg Jarrett, recovering lawyer, she did score points, your opinion . Wellprepared and skillfully filleted this chief, emotionally, most importantly, legally. She is laying out a case of fraud, both criminal and civil fraud, which is a material misrepresentation of fact, or a false fact, which was pedaled to customers, fake accounts, a scam. Profited by it. If it can be proven in a court of law, people can go to jail and wells fargo would face enormous government fines. Stuart the stakes are extremely high, that is what youre saying . Absolutely. Quite astonishing, that he is trying to cover for the board right here. There is no covering for any of this. Stuart very interesting stuff, i must say. Certainly some fireworks there. So weve got two hearings going on here, in which Financial Companies, very much in the target zone if i could put it like that. On one side of capitol hill, we have equifaxs chief or former chief i should say, being questioned about the breach of information of 145 million americans. Not defend the breach but defended length of time of the breach and being made public. That is ongoing hearing. On other side, senator Elizabeth Warren going right after the man from wells fargo. Liz with welts fargo and equifax, that will claw back of executive pay wells fargo. Clawing back Richard Smiths pay, sat on information, din tell the board for three weeks. Same happened with john stumpf. I am not saying tim sloan would be forced out the door, that is the overarching theme, get back from executive pay for these guys. They sat through the fiascoes. Stuart interest of our viewers is the stock price, is the stock price affected . I noticed earlier equifaxs stock price was going up, not much, a little bit, 103 a share. I have not seen wells fargos stock, i dont think either wells fargo or equifax, their stock price will be truly upset by the hearings were seeing. Liz not on wall street. The thing with equifax, they make billions of dollars of sales off our data. Our data ends up at equifax without our knowing it. They should know bullseye on their backs. They are a Data Warehouse for valuable information. They are the goto place for hackers to bet our information and make money off our information. How much did you know before you told the public and board. That is what Richard Smith is dealing with. Ashley seems like right here tim sloan is fighting for his job. I am the right person. I have backing of company. He is fighting for his own job here in unusual setting because Elizabeth Warren says you have no right to be in this position. This is multiple scams that went on for years. You are a part liz both of these fiascoes are equivalent to oil tanker spills. These are whitecollar problems in the private sector, two of the biggest fiascoes in years. Stuart it is 11 00 eastern time. Lefthand side of the screen he a quest fact hearing, right hand side the wells fargo hearing, both Financial Companies under stress. The stock market continues to rally. The bottom righthand corner of the screen the dow is at 68 points, 22,624. We have seen records for the nasdaq, the s p 500, the dow, the russell 2000. Today, all of those indicators, stocks across the board have gone up to new record highs despite financial scandal. Peter kiernan is with us. First question about equifax. The former chief is defending the actions of aqua fact after the breach and before it was made public. Does equifax as a Company Survive . It will be tough for them to survive in their current form. If he is arguing they handled it well, he has got a very steep road. We are on this conversation three or four weeks ago, this company was hacked in may, they found out in july. The public found out in september. That cadence is all wrong. The way they responded you dont judge a company just by the fact that hurricane occurred. You judge the ceo, how do they perform once they knew about the hurricane, when did they tell the fbi, and regulators and shareholders . Late, late, later. The fact that a couple executives stalled stock during this period, who is minding the store . Nobody sells a share, we have a problem going on, dont you dare sell a share. How could they have done that . Stuart they are in deep trouble. Economic malpractice. Stuart karl rove is with us, good to have you back again. I hope you saw that bravura performance by senator Elizabeth Warren. She had her facts very much in line and gave the wells fargo guy a very hard time, pretty good performance. Lets put the accent on the word performance. Full disclosure, i am a happy customer of wells fargo and have been for 30 years. And predecessor banks in austin. A bad thing happened at wells fargo but for Elizabeth Warren to say we ought to wipe out the board and the federal government got to dictate who is the president of the company and you are responsible because you were there, lets take the same logic, Elizabeth Warren is a member of the United States senate, a member of the democratic caucus, one of her caucus members, senator menendez of new jersey, is under indictment and sitting in a trial court in new jersey over charges involving bribery and malfeasance. Elizabeth warren by the same logic is responsible for him because they are a member of the caucus, she sponsored legislation with and signed letters with the last couple days while he is sitting in the courtroom in new jersey. Should we say senator menendez was guilty of something, you are guilty of something, it doesnt go that way. Stuart what about politically . Very harsh attack on wall street. On the financial industry. Absolutely particularly if you are from massachusetts. I love that she took a big binder of material, his calls to analysts, tossed it out. It was a bravura performance but for what good purpose . To destroy a bank, if there are people who did bad things in that bank, federal officials are to indict and send them to jail but for her to call for the replacement of the board, to sit on her high horse and say i am deciding who should or should not be the president or ceo of a private company, a company in the private sector, is not what america is about. If somebody did something wrong, indict them and send them to jail but do not destroy great Financial Institution and the relationship it has with its customers to score political points. Stuart hold on, it is getting tense in the wells fargo hearing. Only because of your size do we not understand totally which statutory tools, which regulatory tools, which consumerbased tools we have at our disposal to find a remedy. At a briefing for our staff wells fargo representative explained the banks make goodwill payments to customers who had their cars repossessed and their credit trashed as a result of Auto Insurance that you bought for them. As i understand it the bagel designate a Third Party Claim administrator and ask customers to send a form explaining how they were harmed and how much money they need to be made whole according to representatives. The claims are going to be paid up to 2000, no questions asked. My question is why not just cut checks up to 2000 for all those impacted . The only reason i can think of putting the burden on consumers to ask for this goodwill money that you have already approved, you are hoping many of them wont do it. Can i have your commitment to go ahead and presumptively push out the money rather than force people to figure out they have this and are likely to be approved up to 2000 but got to go through the paperwork. Can i have your commitment to that . You have my commitment we are making 500 goodwill payment to every one of those customers whether they were impacted or not and my commitment that we will make sure we make it right for those customers to the extent they were impacted. If we need to do more than 2000 to make it right we will do that. Can you please provide the committee with a list of all legislation wells fargo has lobbied for or against since 2010 . I will respond whatever inquiry you want us to respond to. If you could respond in writing. Senator tillis. Thank you mister chair. Mister sloan, thank you for being here. I want to make sure i get the numbers right. Stuart im going to break and again. The hearing sometimes have fireworks and sometimes they dont. Elizabeth warren created a real fireworks. Peter kiernan is with me. Obvious question. After all of this, should i buy wells fargo stock . Im an owner of wells fargo stock, i bought it when it bottomed out. Watching this, the sql is rarely as good as the first movie. She was planning this speech for a long time, went after the personal attack and i dont think he handled it well. Stuart going back to the aqua facts hearing, he is being asked about insidertrading. Before the holidays to give the american people, consumers confidence again because this is a mess. The gentlemans time has expired. The chair recognizes the gentleman from mississippi, vice chairman of the subcommittee for five minutes. Thank you for being here to testify today. Your written testimony and response to the chairmans questions, you stated you were informed of suspicious activity on july 31st by your chief Information Officer and went on to discuss that, you said i certainly did not know personal identifying information had been stolen or had an indication of the scope of the attack. Did you ask him if there had been personal identifying information that had been obtained . At that time i was informed it was a dispute over a document, something that typically houses if the consumer is disputing with and paid off the utility bill, may take a picture of the utility bill. Not to interrupt but the question was did you ask if any had been accessed . No, i did not. Where you made aware of the apache strike patch . No, i was not. Have you any meetings with your chief Information Officer for your Security Department about any of this issue prior to july 31st . No, i did not. Had you any meetings with them about security information during that time from march until july 31st . At routine meetings, security reviews. How often do you have those . In due process quarterly. Why did you not have this discussion come up . That is more than a quarter. How many meetings did you have between that time until july 31st with your Security Team . Why didnt how many meetings did you have during that time until july 31st . I dont have that information. We can get that. Do you remember any . Normally we would have it reviews quarterly and security reviews quarterly and argument that on an asneeded basis. With meetings and time lines, july 31st, we are covering into 3 quarters, not a total but you touch into 3 quarters of that year. It any point did you have any information about this going on . No, i did not. In your testimony you indicated the Security Department ran scans for the vulnerability but failed to identify it. Can you explain how this is possible and why was there never any confirmation of anybody coming back and checking if we have this identified information, a failure of someone on the team to identify this that it was being used, was there no one coming into verify that . Any outside person prior to the ones you hired to look at this . We get notifications routinely to apply applications. This individual as i mentioned earlier did not communicate at the right level to apply the patch. Follow up as you mentioned. You said this individual, one person responsible for this . As an owner of the patch process, communication comes from security, broadbased communication, received notification from a software company, dhs notify corporate people, an individual owns the patch process. For every one on your aqua facts team is there anything more important than protecting pii of the consumers . No, sir. Would you identify that is the number one responsibility of the company and everybody in your company . We have for years, yes. It just appears, obviously, the job wasnt done. We know that and are trying to look at this. It was an equifax spokeswoman who said we have taken shortterm remediation steps to continue to implement and accelerate longterm security improvements as part of actions to prevent this type of incident from happening again. We have 145. 5 Million People whose pii has been compromised. How many files do you have in the system . Worldwide . Yes. Someone mentioned earlier it is a public number, 800 some million consumers, 100 million companies. This breach includes some from canada, some from the uk. Is that fair to say . Verification, some data we had, 7 canadians in the us. The same environment, we had some data on uk citizens also in the us, that is under investigation. My home state of mississippi has 3 Million People, 3 Million People, almost 1. 4 million files have been breached in my state. If you take away our minors who dont have a filing yet, my entire state will be impacted. This is a travesty, something that was preventable. Saying we want to protect what goes forward doesnt bring us a lot of comfort today. I yelled back. Chair now recognizes the gentleman from california for five minutes. Stuart going to come out briefly, karl rove with us, you have been watching. It seems to me equifax is being given a very hard time and justifiably so. What say you . Absolutely. In early march, they were told about this weakness in the system. Their policy was to address these within 48 hours, they didnt. In late march, they ran gams, didnt detect the weakness in the software they had been told about. July 29th they finally have a spike in traffic, the ceo two days later on july 31st, not until the 15th they recognize personal information is, quote, likely to have been taken. They tell him on the 17th, 18 days, 20 days after they have been breached, they tell the ceo large amount of information, he doesnt tell the lead director, the board is not advised until two days later by phone call a have a Board Meeting on the first and have public announcement on the seventh 51 2 weeks after the breach took place. I suspect you have the same, i have family members concerns what to do about freezer lock, how to protect my Credit Rating now that my information is out there. Stuart this is good political theater as people want to see the equifax guy sweat and that is what they are seeing but at the end of the day i think equifax survives without much damage. What say you . I think equifax probably survives but i think they have to do right by all those people whose private information is floating around out there and also executives who between the time the board was notified by phone call on the 24th, 25th and the announcement on the seventh, those who sold stock got some real exposure. Stuart peter morici is with us, tenured professor of economics at the university of maryland, ceo of equifax, no tenure for that poor guy. Do you think you step down do you think equifax survives this . I think it does because it is necessary like a public utility much the way citicorp survived financial crisis because of its Payment System worldwide and so necessary to the United States commercially and from the point of view of National Security. Getting of equifax we have to create another one. The real problem is you the stuart varney, have no choice but to give your bank command through the bank Credit Bureaus, your personal information, when you want to get a mortgage or credit card or things like that, the only way you can do business in america. Moving to a cashless economy we are compelled to use some utility like equifax. The answer is how do we get them to act responsibly without imposing some terribly onerous and expensive system . This is a lapse of human judgment, failure to be careful. How do we get them to buckle the seatbelts, that is the question. I dont know that just throwing equifax to the lions is the answer. We are seeing a lot of vetting, selfrighteous behavior and i dont know that it is constructive. Stuart we are seeing a lot of grandstanding by the politicians. What are you saying . Lets differentiate. We saw greg harper from mississippi, measured tones, direct questions, gave the equifax man a chance to respond and Elizabeth Warren who is playing to the camera, kept interrupting the new president of wells fargo, refused to let him answer the question, interrupted him. There is a difference between what we saw from her which is pure propaganda from her ideological position calling for the destruction of wells fargo and greg harper, sober, sensible, asking what are you going to do about it . Stuart thanks for being with us, we need your expertise, washington a stockholder of wells fargo, you are not selling, you are holding on. Im holding on. This is a troubled franchise. I bought it when it got in trouble. Shareholders in that stock have been punished. It is nowhere near the performance. Stuart back to equifax a question about that stock sale point of stock. You were the ceo at the time. Thank you, mister chairman was a little latitude on my time please is what i would like to request of you, mister chairman and the Ranking Member, that we ask for specific hearing of this committee where we get john kell chief leg officer, who was then the chief legal aft er of equif, currently chief legal officer, hopeful when and we get him re he will still ha that title. Im distbed we are congrsg and has before us someone who no longer works for them. Thank you, i hope we can ask for that hearing where we have john kelly, the chief legal officer. The gentleman next time has expired. Recognize the former chair of the committee, gentleman from michigan. Stuart back to equifax and its stock. A lot of people said that might just go away. I dont think it will go away but peter kernan, would you buy the stock at this depressed level . Im not a buyer here because there is one piece that hasnt come to full flower. They are being accused of criminal activities and Insider Trading is proven by executives, that this is a trustbased business. You cant have a trustbased business with an internal core of people breaking the law. What frustrates me most is two weeks ago the sec chairman said our hack did not uncover, no one got to any personal information. All of a sudden looks like it did uncover personal information. There is a pattern here of hacking, congress and the senate will do right by the american people, time to create some rules, regulations and rules of the road because everyone is being hacked. Of the corporation is being hacked, every individual is being hacked, you can hack away at the personality you want but sooner or later someone has to step back and say what should we do Going Forward . Stuart is that true . The hack are constants which are they going to pull at of the sec and berate him, is senator warren going to berate the head of the sec . Because he was wrong. He said there was no personal information but there was. Every corporation is being hacked as we speak. Liz congresss fred upton held up 232 pages of information for one individual at equifax. That is how much information equifax has on each of us. They are the Data Warehouse. This is about whitecollar bureaucratic apathy, they have weak systems must withhold 5 years ago they had weak internal control, made billions off of their data and to protect it. Stuart peter morici, is that effective, that hearings in congress, putting the guy on the hot seat, shredding him and his company . Is ineffective to do i dont is a foreign is effective other and playing to voters in massachusetts. My feeling is we need to view this like a military disaster. Something goes wrong in the military you try to have hearings that focus on solutions. Leave it to the Justice Department to determine if there was insidertrading. Lets call in the people at the sec that werent engaging in proper oversight. We didnt do that with the bp disaster. We went after bp but not the people in the interior department because the obamas world and Elizabeth Warrens world the government can never be wrong unless it is donald trump. My feeling is we need to look closely at what we need to have in the form of regulatory reform, what is left of this company, may go to 0 value to shares and the company gets taken over, the show goes on. What do we do about reforming regulators themselves . If you want to be lethargic people, let me take you around the hall to the Commerce Department or the sec, there is good people in these places but a lot of people spend most of their time counting the number of days to their pension and that is how you get this. Stuart i dont want to spend too much time on two hearings in congress, equifax and wells fargo, when if you look at the bottom righthand corner of your screen you see the dow industrial average up another 70 points, it was up 150 yesterday, we are getting close to 23,000 on the dow industrials, record highs all across the board. I dont want to spend much time on equifax or wells fargo. Ashley it applies to half of this country, very good chance many of our viewers have their data compromised. What are the repercussions . Who will pay . Stuart many of our viewers are outraged at this data breach and the fact they got all this information and lost it, that is outrageous. Where does this end . I can people collect every last bit of information . I saw my Credit Report several years ago and it went back 30 years and was so full of nonsense, Bank Accounts that have been long closed and so forth and they are not the only people to do it. I had my knee fixed in the hospital and they were pulling up drugs i took 20 years ago, do you still take such and such . Why are people able to coopt so much information on us if we want Vital Services . Where are the limits . Stuart equifax is in the business of collecting that information and selling it. Look at google. Stuart sell it to the bank, thanks make a decision whether you are good enough to get a loan and they need that information. Equifax is not set up for the benefit of consumers but for lenders and banks to check on your credit worthiness, that is what it is but we have no way of knowing what they have got on us and whether it is accurate. Liz consumers present their own information to the bank and have the bank check it . Stuart you might be lying. There is an answer to that. One of the advantages of having information collected and consolidated it is much faster to get a loan. When i was a young man and my wife and i were trying to get mortgages it would take four weeks to run a credit check. Today you can borrow online from an online credit source because they can immediately access information. It is not that this is a bad thing, it is abused in multiple dimensions, they are selling information for profit, collecting too much information and not taking care of it properly. People you pay taxes to support at the sec and other areas or agencies are not doing their jobs. Plenty of good to go around. Stuart when you apply for a mortgage these days it still takes you a long long time to get loan approval. They want to know everything about you, they want everything in writing and dont you dare if you go to lending tree you get a mortgage faster. One of the issues that strikes me is we all leave a large amount of digital exhaust. We give off information on a daily basis, rules and regulations governing collection, monitoring, storage and sale of those digital exhaust we give off, our digital footprint is down by regulations that are generation old. We need to grow up and come kicking and screaming into the 21st century. Our laws, regulatory every state has its own regulation, every state has its own penalty, there is no governance of a comedy like equifax. Stuart the question being asked at the moment is our data is out there and there is nothing we can do about it. That lady is asking that question. Listening briefly. It is important we take action on the topic and all American Consumers Pay Attention. I would like to ask a few questions but no one has asked this question, quick yes or no. Have you or anyone on your team seen signs that the attackers were backed by a nationstate . We have engaged the fbi, at this point, that is all i will say. I dont think it is all the same but thank you. After your Security Department blocked the suspicious traffic you mentioned in your testimony did anyone from your team or outside Companies Venture beyond the perimeter of your network to attempt to locate where they came from . Congresswoman, we have the ability to track the ip address of the criminals, find a location where the ip address does that tell you where they are from. I think we all care. Stuart Heidi Heitkamp getting heated. At Community Bank, driven by wrongful incentives that were provided to the employees, right . I have not heard you say, other than taking responsible for the incentives, i havent heard you say mistakes were made at the highest level of wells fargo. We can say yes, we lost the ceo and there has been some publish mend and we are moving over but i do not hear a level of culture change that satisfies me today. And i think that is problematic for wells fargo Going Forward. Im not familiar is not an answer we should be getting here. It should be yes, we are aware of that and fixing it. When we only hear im not familiar we wonder what else we are not familiar and i caution you when you say this is everything, that is what the last ceo told us and the insurance scandal. Is up to your board to figure out what to do but i hope you take these comments and constructive because it is not helpful to say you are not familiar. I appreciate your comments. In my Opening Statement i was very clear that we take responsibility, for the mistakes that we made. When i say we i mean me. Im the ceo of this company, the buck stops with me every day but i apologize that im not familiar with the matter but to the extent that im not we will follow up on all of those. As relates to senator warrens comments she asked me not about the la times but talk specifically about information the la times provided and if i took any action. The only times in that interview didnt provide me with information so i cant take action of the la times didnt provide, having said that, we took action when that information got to the Senior Leadership team. I have taken responsibility for the fact that we didnt take aggressive enough action. That is why we are making fundamental changes at wells fargo to make things right for our customers and our team members and our stakeholders. Having said that, i completely appreciate your frustration. Im angry about what happened at this company and i pledge to you that not only are we fixing it but we will fix it. Stuart a momentary loss of audio. Heidi heitkamp really going after the wells fargo ceo. You say we didnt get information from the la times. You shouldnt have had to have information from the la times, should have read the story, is this true, lets go find out . We did. You knew it was true because you know about this years before that. I didnt and the board conducted it, an independent investigation looking at millions of documents, interviewed hundreds of people and their conclusion was consistent with what i said publicly here and elsewhere in the last year and that is issues in the Community Bank were elevated to the Leadership Team including me in 2013. We should have and could have taken more aggressive action. I apologize for that but we have taken aggressive action to fix the things that are broken. 2013. I think we have a document going back to 2008 but i will have to hunt it, dont have it in front of me. Thank you. Senator cotton. Stuart i sometimes think in these hearings especially well wells fargo is concerned i get the impression capitalism and the Financial System is under fundamental attack. We are looking at the whole system. I keep hearing the corporate and Big Corporation and the whole system is under her scrutiny. Thank god we have her at the post keeping track of all this. My views these guys, these questions have been asked and answered, they screwed up. I dont think they are well prepared but i do think what is going on is a broadening of the dialogue to look at more transgressions, a failed Leadership Team at wells fargo. Stuart peter morici, i will go back to the equifax guy very much in the hot seat, trying to explain why three executives sold their stock, some of their stock in equifax for a nice profit after the breach was discovered but before was made public. Peter morici, they have no knowledge of the breach when they sold that stock. That is a defense on the part of equifax of their executives who made money at the height of the stock price. That will be there defense in court, if theres an investigation of their behavior. I think the burden of proof will stand with prosecutors to prove they had knowledge. They have to have a good story. With Goldman Sachs they sold bonds that turned out to be of dubious value to investors in florida while oldman sachs was shorting those bonds. Some people in the administration were involved in that and used the defense that one debarment sold the bonds, the other department sold the short positions they were kept separate. It is conceivable they didnt know whether it turns out to be true, there will be an investigation and we will see how plausible their arguments are and how believable they are. Stuart judge Andrew Napolitano is itching to get into this. Judge napolitano i agree with what peter morici is saying but there wont be criminal prosecution, probably an sec investigation in which the standard of proof is a lot lower and you make a lot of inferences against the person who conducted the stock sale which would not be permitted in criminal trial. They can prove the case, find the daylights out of equifax but not criminally prosecute or take liberty away from executives who did this. Stuart from what you heard so far i think you believe equifax will face a large classaction suit at some point. Stuart or judge napolitano the demerits of this as well. Stuart that this meal of the day i dont think equifax goes away. I think it stays in business at a reduced stock price, that is the way the world works. That someone needs to perform the service, they do have some competitors but i think you are right. Stuart yeartodate im told equifax, the stock, is up 25 . Since the breach, has gone down 23 but if you look at the stock since the start of the year, 25 . Liz executive pay clawback story. Stuart liz hit the nail on the head. This is an executive pay clawback situation, Richard Smith equifax and tim sloan at wells fargo. One more piece people arent looking at, their fundamental business proposition is gathering this information and selling it without your permission, without your sayso and that Business Plan will be studied very hard. You want to talk about a solution. Businesses like google and equifax and others should not be permitted to gather information to provide a service like a credit check and be able to turn around and sell it with or without our permission because it will be so difficult for the ordinary consumer to deny permission where they need that 200,000 mortgage. It is very simple. Too much money is being made on private lives and private information of ordinary citizens. That is being that has to be made illegal. Stuart weight a minute. We have the judge with us. Make it illegal to sell information . Judge napolitano it out to be legal to collect and sell truthful and accurate information. Information you are compelled to give . Judge napolitano there are no particular rules, google does what it once, equifax does what it once, to me i dont know about the legality. This is an area begging for inquiry. Something going on here. Judge napolitano congress may choose to regulate this by putting you on notice as to what information is sold but if it is not available, truthful information cant be sold, how could a creditor decide whether to give a mortgage . You give the information for the purposes of getting the mortgage and Credit Bureau holds it for the purposes of making other loans but they cant sell it to a marketing agent or somebody like that. The point is we are moving towards a Cashless Society so you have no choice but to give up this information to get a credit card. You cant function without a credit card. It is false equivalence to say we are just selling truthful information. This is information we are not voluntarily giving, circumstances compel us to provide it. Stuart what you want to see judge napolitano under the present state of the law, to sell information you gave, sell it to somebody else, gave it to chase because i wanted a mortgage, chase has to tell me. That is not good enough. There is little i can do about it but they have to tell me. Stuart check to make the information is accurate. You will get junk mail from the next 5 years because they sold that information and one of the things that dont deserve scrutiny, i know people think we will sanctify the quality of the credit check. Lets leave that aside. What about the fact they are selling information without your permission to anybody who wants to buy it . That feel like a bridge too far. Stuart all the information we are talking about is in the hands of the bad guys. You know . One of the answers to the question here is security. Absolutely secure when an agency judge napolitano i had to add this principle from constitutional law 101 as i watch senators and congressmen and congresswoman drilling these corporate executives, there is a provision in the constitution that prohibits bills of attainder. A bill of attainder is a legislative determination that someone is an outlaw. Dont tell that to Elizabeth Warren. Dont tell that to her. The constitution is a mere inconvenience for people on the left. Stuart entertaining stuff but i got to break away to a more serious subject, that is the massacre in las vegas. Jeff flock is there on the spot and i believe you have new information. Reporter new information coming from the scanner audio of what took place sunday night. Some of it may be good news, some of it bad news. This scanner audio confirms that while the shooting took place, began at 10 08 00 pm, it confirms authorities got to the 32nd floor which you see behind me where the shooter was by 10 08 it started, they got to the floor by 10 25. By all accounts that is tremendously rapidly, 10 08 to 10 25 but it took them almost a full hour later before they got inside that room. That didnt take place until 11 21. I say this without judgment, this is just information from the scanner audio. The shooting started at 10 08 they got up quickly, 10 25 but did not open that door until 11 21, almost an hour later, they were met by gunfire. When they got up to the floor, that may explain why it took them so long. Whether that enables more gunfire to rain down on the folks on the ground or not i dont know but that is your information. Took an hour by the time they got up there to the time they breached the door. Stuart good information too. We dont know how long paddock had been dead inside his room when the authorities got in. We dont know that. Exactly. We dont have audio from inside. Stuart there was an hour between the time they located the right room and when they breached into that room. That was a one hour deal. It could be i shouldnt speculate, could be they didnt have the equipment to get inside, had to use the exposure device. Reporter this guy has got all sorts of ammunition in their. You cant just walk in the door and take a hail of gunfire, they may have taken time with that and maybe shooting stopped from outside the window so didnt feel the need to bust in until they were sure. Stuart all good information, thank you very much. What we are looking at, two things going on in congress, a hearing on wells fargo and a hearing on aqua facts on your screen right now. Do Pay Attention to the bottom righthand corner of your screen, presumably a far more important story right there, the ongoing trump rally. Make no mistake, this is a rally and a half, we are up 73 points, we are up 152 yesterday, 22,630, may i quote the number we gave you a couple hours ago which was 4,856,000,000,000, that is a very large number and that is the value, the amount of money the extra wealth created on the stock market just since donald trump was elected in november. Judge napolitano the varney savings account. Stuart 4,856,000,000,000. One more for you. Donald trump has just arrived, wheels down for air force one in puerto rico. He is there on a quick visit. He will meet with officials distributing the aid, back to wells fargo, what have we got . The wells fargo guy, senator Elizabeth Warren. Recently disclosed, july 2016 the customers had Auto Insurance policy that it without their consent, 800,000 customers, roughly the size of the state senate arounds represents. Every day since you have become the head of wells fargo for the last 11 months, every day you have made the decision to not disclose this information to the public. Your company knew about the online insurance policy when former ceo mister stump testified. When did you first become aware of the Auto Insurance policy and why did you think it was okay to continue covering it up . I dont think it was okay to cover it up, senator brown. In fact, when the issue was escalated to me in 2016, in late august, early september, i talked to our team about it and we decided at that point to end, tell our vendor to quit providing that insurance to our customers, that was effective at the end of september. We then created an internal group made up of business line experts, legal experts, our auditing function, to look at the matter, we brought in an independent law firm and independent Consulting Firm to help us do a comprehensive thirdparty review of the remediation. We got the results of their report the First Quarter of last year, we began to put together the remediation plan, we disclosed that remediation plan in august and we highlighted, we disclosed the issue in august, we described what our remediation plan is as it relates to those 570,000 customers, those checks have begun to go out and we reported that in our Second Quarter 10q. Could i make one more point . We disclosed that to our regulators in the Third Quarter of last year as well. You, the company, you personally, eight months, you the company, 13 months, to disclose such a violation of public trust makes me incredulous. Let me move to something else. You said arbitration is better for consumers. How have consumers ferritin arbitration with wells on the average . I dont have the answer to that. I do and im surprised you dont. On average the mpd found consumers made 7700 and arbitration overall in arbitration cases. Other data says well customers paid 11,000 on average. They brought arbitration or you brought them arbitration on the average consumers dont do well on arbitration suggesting there is something wrong and also suggesting arbitration seems to work out well for wells fargo but not your customers. It is troubling that you continue to dig in and say arbitration is better for customers. Can i give an example how we are changing the company . One of the issues we disclosed in the 10q was rate lock. Rate lock extension fees for our customers. We are not waiting for our customers to arbitrate. What we are doing as we said, i want to make this very clear because this will come out in the next couple days, so might as well mention it, we are going to our customers and saying the following. If you have a complaint about a rate lock extension fee you played at wells fargo we will remediate it. 108,000 customers, we will say the following. I am not saying you are not but on fundamental issues like continuing senator cotton talked about for whatever but optional, we are saying it is forced arbitration, not optional arbitration for so many customers. Right before the scandal broke ceo compensation at wells fargo increased 19 million to 21 million, you announced you will increase the minimum pay for tellers from 12 to 13. 50 an hour. To 17. 10 an hour depending where they are located, 12 increase, 80 above the federal minimum wage. Federal minimum wage is poverty wages. The ceo overseeing mass fraud, he gets compensation increased 19 to 21 million a year and tell us get a raise making those tellers still eligible for taxpayer subsidies to subsidize your employees, subsidies of medicaid and food stamps and housing, you fight classaction from employees and then pay overtime, strikes us as have a critical to be boasting about this minor increase. It matters to them, it does matter to them. You defend wage theft, your company is defending wage theft in court by fighting these overtime claims by your employees. I am very proud of the fact that we raised the base pay for our lowest paid team members. Stuart there we have air force one just landed in puerto rico, the president and first lady are there, about to descend the stairs, that is the way to call it, this is their visit, their official visit to puerto rico to look at the damage firsthand, speak to some of the victims and most important of all to speak to the officials on the ground who will be handling the distribution of american aid. We are now told that the mayor of san juan who had been somewhat critical of the president for what she believed was a slow response to the catastrophe, she also suggested he was a sexist, the mayor of san juan will be involved in the first briefing the president receives in puerto rico. We are waiting for him to come down the stairs, him and the first lady. Normally at times like this you would have an official greeting party. I dont see an official greeting party and judge napolitano i dont see the governor, i dont see the mayor. Perhaps the greeting is elsewhere but it is unusual for the president to descend from the bottom of air force one rather than a grantor exit on a runway and not to be greeted by the chief political officer of whatever government the airport is located. Stuart i should tell you this morning in the New York Times there was an opinion piece titled an unfit president fails puerto rico. The article was written by michelle goldberg. There is the president. She went on to say the president was one of the worst people command a nasty showbiz huckster. That is what she called our president in the New York Times. Larry, while we are watching the president arrive in puerto rico being greeted by officials on the ground, what is your opinion of this attempt by the left to smear the president for his response to puerto rico . The trump is fighting back, hes not going to allow the media to label puerto rico his katrina. I think one of the problems with the bush administrations they didnt fight back. This is an administration that accused of lying into the iraq war. I had the privilege of interviewing dick cheney and donald rumsfeld, both told me one of the deepest regrets was they didnt fight back against that scoreless charge, they assumed it was so silly and so stupid and offensive that the average american would not buy it. Now they realize they should have fought back. I think trump went to school and things like that. Recall kanye west in a fundraiser for Hurricane Katrina said, quote, george w. Bush doesnt care about black people. The Bush White House did not fire back, trump is not having it and i dont blame him. Stuart he fired right back at the mayor of san juan when she made those comments about him. I have been involved in relief, sandy relief, what you have to face is people say is this a marathon or sprint . It is both. We are past the sprint phase in a marathon. Puerto rico is a country with ten years of recession, 10 fewer people because people are leaving. Can you imagine a modern economy surviving with six months without electricity . There is an infrastructure play that will take a long time and the president will be right at the deck of that fear. Stuart the American Military i suspect will be spearheading the relief effort because they are the ones ashley 10,000 federal employees. The president changed the procedure. Instead of going into that van he trotted, jogged over to where American Military personnel where it appears to be greeting them. Stuart lets listen because i see geraldo. I know how it works. Stuart the video breaking up but i saw the president not get into the van which he was about to get into, strode over to the crowd, greeted them personally including geraldo rivera, fox news channel, who is in puerto rico, has been there at least a week. I think he was trying to get a word with the president as he set foot in puerto rico, didnt quite make it, the video breaking up, the audio breaking up but you never know geraldo. Now, Elizabeth Warren asking questions of the wells fargo guy. One more thing i would like to read from you. That is it is clear is that you are going to knock out a lot of employees here and it gets worse. At the same time you are planning to fire employees, you are promising to spend 11. 5 billion in the next year buying back wells fargo stock. You made this public announcement, you have that much extra money. So look. If you stick to your current plan it is clear that wells fargo employees making 30,000, or 40,000 you will get screwed. A fake account scandal before, it was executives who demanded new accounts be produced at all costs, but 5300 frontline employees who paid for that with their jobs and now that the fake account scandal has tanked wells fargos reputation, your way of pumping up the bottom line and keeping wall Street Investors happy is to costs i firing low level employees. What happens in these cases, these corporate scandals, almost always the frontline workers who pay the price, not the executives. The only way we are ever going to stop these scandals is to hold executives personally accountable, to fire the people who are responsible and when they break the law to march some of them out in handcuffs and until we do that, these scandals are going to continue and working people are going to continue to take the brunt of it. Could i respond to that . Im going to take my last word, last questioning period. Im interested in what your answer would be to senator warrens statements and the assertions that she makes. I couldnt disagree more with almost everything senator warren said. I think it is inappropriate to take various statements out of context and multiply numbers and apply them to people because you are scaring people and that is inappropriate. When you look at wells fargo, first and foremost my commitment is to our 270,000 team members to make sure they have a safe place to do business, to serve their customers, they are paid fairly and what those team members are saying to us, even in the midst of the fact that we said we need to become a more Efficient Organization is they like working at the company because our attrition is down. It is down to its lowest levels in years and that is because they appreciate the fundamental changes we made, many of which but not all of which we talked about. We care about our team members. That is why i spend a lot of my time going out and seeing them and talking to them and understanding how they are feeling about the company and we are making changes based on what they tell us. Every other month i hold a town hall with 1000, 2000, 3000 team members and ask them to give us suggestions. We havent lamented lots of their suggestions, we care about them but at the same time i have an obligation as ceo of this company to make sure we keep other stakeholders happy and that includes our shareholders who are not just wall Street Investors but shareholders that are Pension Funds that support many retirees all across this company, 401 k plans, we have an obligation to them. My job as ceo is to balance those appropriately and im working as hard as i can to accomplish that. Thank you. Stuart it is pretty clear you have a clash between leftist senator Elizabeth Warren and the guy who is running wells fargo. Ashley tim sloan under attack from Elizabeth Warren, wells fargo needs to start over again and the only way to do that is you should be fired, mister sloan. Urging that he be fired immediately. Stuart fireworks at the very least. This has warmed over dinner. We heard this a year ago and this is an earnest Community Banker, i know this he is trying to get on the right path. Having Elizabeth Warren looking everywhere and not listening shows a little disrespect. Stuart good body language. He needs to talk more like donald trump another bureaucrat banker. Doesnt play at hearings like this to have Elizabeth Warren going after you. Stuart real fast question, to what degree can someone like the gentleman from wells fargo go after a senator . You cant do that. You have to sit and take it. There is no judge ruling on the propriety of her questions, she gets to say whatever she wants and have to take it. Stuart we have one minute to go on the program. I want to take some time to thank peter kernan, peter morici, larry elder, a cast of thousands, the discourse on the day, we had a variety of subjects to cover, the wells fargo hearing, the aquifer facts hearing, the president of the United States arriving in puerto rico about to meet the mayor of san juan who had not very nice things to say about him. A new record for the stock market, the dow industrials are up 177 points, closing in on 23,000 on the dow industrials and added nearly 5 trillion to the value of american stocks just since the election. I stuart five seconds to go, neil cavuto. Now all yours. Neil thank you, sir. Is it me, stuart, or not one to judge various corporate grillings going on, for the senate side on wells fargo, for anyone there to be judging financial impropry cities of anyone improprieties, period, these are the same people who couldnt keep track of a couple trillion. I find it odd. Like me overseeing a dieting scandal, right . Well, you know, you had too many croissants, pal, out you go. Really . Stuart when you run up 10 trillion worth of debt in eight years neil youre jud