Thank you for your time. Both bush and obama to some extent were prisoners of the situations they did not create. On the other hand they were theing participants in existing budget again. Author and Washington Post columnist Robert Singleton talks about his columns on business and economic issues, and the u. S. Economic performance under president obama. My opinion is not so high because he pursued policies that atentially were aimed buttressing his reputation and his legacy. It seemed to me it undermine the general confidence in the economy. Tonight at 8 00 eastern on cspans q a. More we will have a government of, by and for the people. We are stronger together. In a matter what, remember this, love trumps hate. Cspans campaign 2016 continues on the road to the white house with the first president ial debate monday night live from hofstra university. Beginning at 7 30 p. M. Eastern with a preview of the debate. At 8 30 the briefing for the audience. At 9 00 p. M. , live coverage of the debate followed by viewer reaction. The 2016 president ial debate on cspan. Watch anytime ondemand at cspan. Org, or listen live on the free cspan radio app. Trump metacampaign stop this weekend in roanoke, virginia. It was his last scheduled event before the scheduled president ial debate. This is half an hour. [cheers] mr. Trump Virginia Tech won the game. [cheers] thank you. Its great to be in virginia a , state where i have so many great friends and wonderful employees. I have some Great Properties here with great employees. We have wonderful pauls they keep coming in. A brand new rasmussen poll has us leading by five points nationwide. [cheers] on november 8, we are going to win this state and we are going to win the white house. We are going to take on the big we are going to take it back. We are going to take on the big donors, and big business, and big media we are going to take on the rigged system that has shipped americas wealth to other countries. And they keep doing so. We are going to replace our failed and corrupt establishment with a government that serves you, your family, and your country. My economic agenda can be summed summed up with some very powerful words. Jobs, jobs, jobs. [cheers] we will cut taxes for all working and middleclass households in america. We will reduce regulations, which will put more money into the hands of our poorest workers and bring thousands of new companies to our shores. We will unleash American Energy, creating millions of new jobs and lowering energy costs. [cheers] we will repeal and replace obamacare. [cheers] president obama promised his plan would reduce premiums by 2500 a year. Instead, they surged 5,000 more. That is true. Our replacement plan includes expanded access to healthcare savings accounts, with support for those who need it. It includes allowing americans to buy Health Insurance across state lines in all 50 states, right. A dynamic and competitive new market. They will be competing for your business. Were also going to block grant a lot of those deals today you dont even know what they are going to be because they are going to get better and better with competition. Were also going to block grant medicaid so states can develop Innovative Solutions to make sure no citizen in poverty ever falls through the cracks. Never. Highrisk pools will also help to ensure that those with preexisting conditions will always get the quality coverage they need. On trade, we are going to end the international abuse, the foreign cheating, and the onesided rules that govern nafta what a deal that is. And the world trade organization. Right now, america eliminates its tariffs, but then other countries tax our goods with backdoor tariffs and close their markets. In other words, they tax us but we dont tax them. Not too good. You know how that is been working out. Its a one way out of this country for our jobs and our money. Our massive, chronic trade deficits are destroying the middle class and shifting money away from workers to large corporations who have no borders. Theres a reason hedge funds and wall street are giving tens of millions to my opponent. Hillary clinton is the voice for global special interests. I am running to be the voice of the forgotten men and women. [cheers] believe me they are forgotten. My opponent likes to say that for decades, she has been fighting for women. That she has been fighting for children. Why then are 70 million american women and children living in poverty, or on the brink of party and our country . Why has she provided no relief for the millions of americans in search of affordable, reliable Quality Childcare . For years she has been doing this and she is done nothing. You know the old saying, watch what i do, not what i say. At the trump organization, and in my campaign for president , women occupy some of the highest positions. I have employed thousands of women in my company. Women of different backgrounds. Women of many talents. And just last week, joined by my daughter, ivanka [cheers] i laid out my plan for childcare and eldercare. That plan has many great features, including taxfree childcare savings accounts. Lowincome parents are given tax credits they can put straight into those accounts, and then get a 500 per child match for those savings accounts deposits. Families can also deduct the cost of childcare from their taxes, a huge tax cut for the middle class. We have been talking a lot about improving education. My plan includes School Choice for every disadvantaged child in america. [cheers] of were going to get rid and and common core. [cheers] we are also going to bring down the cost of college. Universities get massive federal funds, and huge tax breaks for their endowments but then they dont spend those funds or those endowments on their students. I will work with congress to make sure these special federal benefits are not available unless universities begin to reduce tuition and student debt. It is too expensive. [cheers] this will get to the problem at and its right smack in the middle of the source. And reduce both the cost for students and the cost for taxpayers. Our students are drowning and were going to fix it. [cheers] women also value security. They want a commanderinchief that will defeat radical islamic terrorism [cheers] time. Going on too long. Now in 30 countries. Started off in a little area. They left the big vacuum, Hillary Clinton and barack obama. Now its in 30 countries, maybe more than that. We want to stop the massive inflow of refugees, protect our borders [cheers] and reduce the rising crime and violence in our cities. [cheers] we will build the wall, i promise we will build the wall. [cheers] in mexico will pay for the wall. [cheers] they will. As i Campaign Across this country, i hear so many stories and pleas from women especially, about drug addiction and opioid use. They are doing their best in their communities and for their families to provide a safe and nurturing environment. But even the bestlaid plans cannot always protect our youth, and increasingly, many adults, from the scourge of drugs. This is a scourge. We lose thousands of our fellow americans every year to opioid use. I will stop the drug inflow from our borders. Believe me. [cheers] these terrible drugs come over the border and make their way into our urban and rural communities, and into our suburbs. This must change. And the people that are there now, your socalled Leadership Group will never change it. That includes hillary, believe me. Every change starts with a conversation. Together, we will have this conversation. And we will make this change. 100 . The change will start immediately. Here in virginia we are going to end the war on American Energy and on our miners. Hillary clinton says she wants to put the miners out of work. [boos] they also to shut down shale and natural gas. The clinton regulatory agenda what they have done is incredible. The clinton regulatory agenda will drive up electricity prices for virginia families and will cost the u. S. Economy over 5 trillion. By the way, less than a week after taking office, tim kaine proposed a 4 billion tax hike on your state. 4 billion. Including on people earning as little as 17,000 a year. One week in office and proposed a 4 billion tax hike. Hes not very popular. He won his election by a close margin. I said maybe that is bad for me. We are just about tied in virginia and we have not started advertising. They are spending a fortune. She made the wrong pick. We are going to open up all sources of American Energy and bring jobs wealth, and cheaper , electricity to virginia. Another major part of our agenda is safety. I believe every family in america is entitled to live in safety and peace. [cheers] today, the nation just opened the Smithsonian National museum of africanamerican art. Its a beautiful place. I saw it the other day and it looked beautiful and we are all very proud of it. I can tell you that. We congratulate and honor those involved with the project, and recognize today the incredible contributions of the Africanamerican Community to this nation. [cheers] africanamericans have given so much to our nation and sacrificed so much for this nation. Many africanamericans are succeeding so greatly in our country, and i will make sure their success is protected and supported. At the same time [cheers] too many africanamericans have been left behind and trapped in poverty. I will fight to make sure every single africanamerican child in this country is fully included in the american dream. [cheers] that includes the new civil rights issue of our time, School Choice. Democrats have run the inner cities for half a century or more, and produced only more joblessness and poverty. The jobs are leaving, the schools are failing, and crime is rising. So to those africanamericans and hispanic voters, i say vote for donald trump. What do you have to lose . [cheers] i will fix it. I will fight harder for you than anyone has before. The policies of Hillary Clinton have brought only suffering in our inner cities just like her bad judgment overseas unleashed suffering everywhere she went. She has bad judgment. Of course, she got rich through it all. The clintons made another 60 million in gross income while she was secretary of state. Think of that. Worst of all, she put her Public Office up for sale and then bleached her emails, and destroyed her iphones with a hammer, to try to cover her tracks following a congressional subpoena. Figure that one out. Theres a reason the Hedge Fund Managers are donating to Hillary Clintons campaign and not mine. Everybody getting rich off the rigged system, and who wants really nothing but keeping it the same . They want to keep it just the same and they are throwing their money at Hillary Clinton. I wonder why. My campaign is powered by my own money, and by small dollar donations from everyday everybody and all of our patriotic citizens. 90 of our donors are small dollar donations. We are setting records for the republican party. Every dollar helps us deliver your county, your country, your area, virginia. It all essentiallys goes back to you. We will make it a better place where we keep jobs and bring new jobs in. [cheers] our campaign is about breaking up the special interest monopoly in washington, d. C. [cheers] were trying to disrupt the collusion between the wealthy donors, the large corporations, and the media executives. Theyre all part of the same political establishment. They go to the same restaurants, they attend the same conferences, they have the same friends and connections. They all support the same ideology of globalism that makes them rich while shipping your jobs, your factories, and your wealth to other countries. In particular lately to mexico. I am not running to be president of the world. I am running to be president of the United States. [cheers] i am for america and America First always. America first. [cheers] together, we will rebuild this country beyond of our dreams. We have such unbelievable the potential in this country. Ive gone all over the country. The crowd, everything. The people are so incredible. Our leading leaders are leading us down a deadly path. Whether its the military that is so depleted. They had depleted equipment. Everything is wrong. Vets are being so badly treated. How many veterans to be have today . [cheers] have Illegal Immigrants being treated better than our veterans in many cases. That is not going to happen. That is not going to happen anymore. Government will start working again. Fixing things is what i do. Just look at my projects in new york city where i turned rundown , spaces into new centers of business, activity and opportunity where others saw only problems, i saw only potential. We turned empty lots into homes, offices and living memories for thousands of workers and their families. Thats what i want to do for our country but on a very big scale. I want to go into the neglected neighborhoods the failing schools, the , forgotten stretches of this nation, and unlock their potential for all of our people. Ive made a living for years looking at unused spaces and imagining what they could be. Politicians look at blighted neighborhoods and offer only excuses. All they want is the vote. In the inner city in particular. Give us your vote and we will see you in four years. They do nothing. I look at those same neighborhoods and offer solutions. Everything broken today can be fixed. All we have to do is to an out the doubters, the cynics and the naysayers and there are plenty of them. We are a nation of strivers, dreamers, and believers and thats the spirit that will carry us to victory in november, and to great victories as a nation. Legal be respected again as a nation. [cheers] we will be respected as a nation. Its that same spirit of resilience i have seen visiting the floodravaged towns in louisiana, or meeting with the incredible but hardhit people in cities and towns like flint, michigan. What a shame. What they have done in flint. Spent hundreds of millions of dollars to destroy the water system. If they had left it alone, it wouldve been ok. Hundreds of millions of dollars and now they need hundreds of millions of dollars more. It used to be where the cars were made in flint. And you couldnt drink the water in mexico. Today, cars are made in mexico, and you cant drink the water in flint. No good, folks. Well turn it all around. But that means you need to show up and vote on november 8. You have to show up. You have to knock on doors. You have to pick up that phone. You have to campaign on the streets, spread the love we have. This is a Movement Like no one has seen in this country. Spread the love that we have in this room. To beat the system, you have to lift your voice, pound the pavement, and get out the vote. Get all your friends out to vote. [cheers] you have 44 days until the big vote. You have 44 days to make possible every dream you ever dreamed for yourself and for your country. You have one magnificent chance to deliver justice for every forgotten man, woman, and child in this nation. The arrogance of washington, d. C. Will soon come face to face with the righteous verdict of the american voter. Believe me, its enough. [cheers] this november we are going to show the whole world that america is back, bigger and better and stronger than ever before. [cheers] here is just some of what will happen starting in january of 2017. I am going to lower your taxes; hillary is going to raise your taxes substantially. I am going to eliminate every unnecessary regulation of which there are many. Hillary will keep it going worse than ever before. We are going to unleash American Energy. Minill be so good to our ers. We will get those miners back. Illegal immigration and yes, we will build the wall. [cheers] we will rebuild your depleted military. And again take care of our veterans. [cheers] and we are going to support and cherish our Police Officers and firefighters. [cheers] we will save our second amendment, which is under siege. Appointre going to justices to the Supreme Court of the United States who will uphold and defend the constitution of the United States. [cheers] we will rebuild our roads, bridges, tunnels, highways, airports, schools, and hospitals. We will rebuild the infrastructure of our country which is crumbling like never before. It will be rebuilt. American cars will travel the roads, american planes will soar the skies, and american ships will patrol the seas. American steel will send new skyscrapers into the clouds. [cheers] and i will keep saying it because i love to say it, we will put our great miners and steelworkers back to work. [cheers] donald trump american hands will rebuild this nation. American energy harvested from american sources will power our nation. American workers will be hired to do the job. [cheers] donald trump we will put new into the spine of our country. I will fight for every neglected part of this nation. I will fight to bring us all together as one people. Imagine what our country could accomplish if we started working together as one people under one god saluting one american flag. [cheers] donald trump it is time to break with the bitter families of the past and to embrace a new inclusive and prosperous american future. We dont have that now. Were a debtor nation. We owe 20 trillion, our debt has doubled since president obama assumed office. [booing[ donald trump doubled, all those hundreds of years and is 7. 5 years our debt has doubled up and our country is a mess. Our roads are bad our bridges are that our military is depleted. It is one thing if it doubles. You want to see everything in tip top shape. But it is not. It is a mess. Hillary clinton has a three word iaign pledge and it reads m with her. I have a different pledge mine reads im with you, the American People. Applause]d and donald trump to all of our people i say these words to you tonight im with you i will fight for you and i will win for you and we will win together and win a lot. [cheers] donald trump once more we have a government and by and for the people. We will make america wealthy again. We will make america strong again. We will make america safe again. You know what else . Well make America Great again. Car bless you, thank you everybody. Thank you. And applause] whatyou cant always get you want by the Rolling Stones playing] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] donald trump and Hillary Clinton face each other tomorrow our live coverage begin to 7 30 p. M. Right here on cspan. The debate follows at 9 00 you can also watch it at cspan. Org or listen on the cspan radio app. This evening here in cspan we look at the debate strategies for both candidates with a former debate moderator and capable of prepare past president ial candidates for the debate stage. That is tonight at 9 00 eastern here on cspan. Meanwhile on abc we heard from the managers of both president ial campaigns that talk about the expectations for the debates. Although were asking it if donald trump lies that it is pointed out for some it is unfair to ask for hillary to play traffic cop with trump, and make sure that his lies are corrected and also to present her vision for what she wants to do for the American People. I think donald trump is special we havent seen anything like this. We normally go into a debate with two candidates who have a depth of experience and rolled out clear concrete plans and you ast lie as frequently donald trump. We see this is a special circumstance. Hillary should he give it some time to talk about what she wants to do to make a difference in peoples lives not spend the whole debate correcting the record. They are afraid Hillary Clinton is not a good candidate. The majority of americans dont much like her according to your own poll dont trust of the Donald Trumps leading her on the at two bit of who is more honest and trustworthy in your own abc poll that came out for some i think they are worried about many things. Hillary clinton should be in a much better position. She is not known for her abundance of selfawareness or being nimble or resilient. The never saw barack obama in 2008 or took Bernie Sanders seriously earlier this year. The trump anticipated come back weve seen over the last few weeks. Go to cspan. Org for the president ial debate on your desktop phone or tablet watch live streamed of the debate and videoondemand of every question to the candidates and their answers. Use our video clipping tool to create clips of your favorite debate moments to share on social media. Not able to watch . Listen live on the cspan radio app it is free to download from the app store or google play. Live coverage monday evening on cspan. Org and the cspan radio app. Our cspan campaign 2016 bus is in ohio this week. Asking students and voters what questions would you ask at the debate. Representative in dayton, all myra to me the most important issue in the election are all the Higher Education and other issues that affect millennials. As the youngest elected official in ohio i think our federal to make sure our officials are credit card education and is affordable for students. Also making sure we dont leave my generation with 13 trillion in debt and a Social Security medicare system that wont be there for us when we needed. My name is jeremy and my important issue this upcoming election is education both at the k12 level and the republican diversity level. I believe k12 Education Needs to be more equitable. Benefit all students regardless of their zip code or socioeconomic status. We need to find a way to make college more affordable. I am a medical science major. For me the most important issue of the upcoming is science and health care and with distraction will be going. Junior and i think one of the most important issue to candidacy is the fact that education most of that is from a young age that is really important. There are some discrepancies between the two candidates we do expound candidacy upon to see we to offer here. At us from the road on cspan. His mother wells fargo agreed to pay fight after the great unauthorized accounts the customers consent. Wells fargo cea ceo appear this past week answering questions from lawmakers. More than 5000 employees have been fired as a result of the disclosures. This persevering just under three hours. This portion of the hearing is just under three hours. The committee will come to order. Today, we will learn more about the events and the circumstances that led to the enforcement action against wells fargo by the Los Angeles City attorney, the occ, and the cfpb. But first today, we will receive testimony from john stumpf. Hes wells fargos ceo and chairman who is with us today. Welcome, mr. Stumpf. We will then hear from the Los Angeles City attorneys deputy chief, whose office was the first to commence an action against wells fargo on this issue. And finally, from the occ and the cfpb. We look forward to hearing from both panels because much remains unclear about what transpired at wells fargo and the regulators response. It appears that wells fargos own analysis concluded that thousands of its employees opened more than 2 million accounts that may not have been authorized. Subsequently, wells fargo terminated approximately 5,300 employees and has agreed to pay 185 million in fines and 5 million in customer remediation. Sales data show that wells fargo has been an Industry Leader in its ability to crosssell products such as credit cards, checking accounts and home equity loans. A number of former wells fargo employees have described their Work Environment characterized by intense pressure to meet aggressive and unrealistic sales goals. In a 2010 letter to shareholders, mr. Stumpf wrote that wells fargos goal was eight products per customer because eight rhymed with great. The result was a Corporate Culture that drove Company Team Members to fraudulently open millions of accounts using their customers funds and personal information without their permission. Ive often said that banking is based on trust and that trust was broken at wells fargo. While much has been written about these events, i believe there are several questions that warrant answers. First, when did this conduct start at wells fargo and why were the regulators unaware of this growing problem . Second, when did mr. Stumpf and his Senior Management become aware of these activities and how did they respond . Third, have all the appropriate wells fargo employees been held accountable and to what extent . Finally, where were the federal regulators while certain wells fargo employees were taking advantage of unsuspecting customers over a period of many years . Heres what we do know. Wells fargos internal review only covers unauthorized accounts dating back to 2011. News reports and Court Documents suggest these problems might have existed long before then. The 2013 Los Angeles Times articles led to the l. A. City Attorneys Office investigation into wells fargos sales practices. Thousands of manhours by a dozen dedicated l. A. City attorneys culminated in a lawsuit filed against wells fargo in may of 2015. This timeline begs the question where were the federal regulators during these years . If the occ and the cfpb were aware of these issues before the l. A. City attorneys lawsuit, why did they wait until 2016 to bring an enforcement action . Why did it take an l. A. Times reporter to uncover what should have been uncovered by wells fargos regulators . If there were ever a textbook case where consumers needed protection, this was it. How many millions of unauthorized accounts does it take before the cfpb notices . And while the bureau is billing this as the largest settlement in its history, its unclear whether it had any significant role in discovering or investigating the banks conduct. Just as it is fair to ask mr. Stumpf what he knew, when he learned it, and what he did about it, its also fair to ask those same questions of wells fargos regulators. These simple there are simple facts and circumstances, questions that both the occ and the cfpb should be able to answer without violating any confidentiality restrictions. I look forward to todays hearing as both congress and the American People especially, the aggrieved consumers, have been kept in the dark for far too long. Senator brown . Sen. Brown mr. Chairman, thank you for calling this hearing. I want to commend the city of los angeles, the occ and the cfpb for their actions and in the l. A. Times for bringing this to light. I was stunned when i learned of the breadth and duration of the fraud committed by wells fargo. I hope today we can begin to understand what went wrong and what needs to be done. I call it fraud because i got tired of the euphemisms a long time ago. I think the American People did, too. This is not a matter of customers who received products and services they did not want or need, as wells fargo puts it. That makes it sound like there was a mixup under the Christmas Tree and i got the righthanded baseball glove that was meant for my brother charlie. This is 5300 employees, wells fargo calls them team members, 5300 team members forging signatures, stealing identities, Social Security numbers and customers hard earned cash, so as to hang onto their low paying jobs and make money for the high paid executives at wells fargo. And they did it for at least at least five years. Wells fargos reaction has been remarkable. It did not treat this as a big problem until it appeared in the newspapers. It did not begin to make customers whole until this year. And we dont know whether the bank chose to do so or was told they had to do so. Wells fargo is taking out fullpage ads claiming it is accountable and accepts responsibility. It has not admitted to responsibility for a single misdeed in the dealings with the city of los angeles and the federal government. Wells fargo claims to have made things right with its customers, but its efforts have been incomplete. For example, its not clear the pwc calculated the cost of a lower credit score which might be paid every month for 30 years. At times, the bank has been down right hostile to aggrieved customers. Rather than letting fraud victims have their day in court, wells fargo forced customers to abide by the mandatory arbitration clauses in their real accounts. You heard that right. The bank invoked the fine print on a real account to block redress on a fake one which wells fargo had created. Wells fargo team members, many struggling to support a family on 12 or 15 an hour, my understanding is wells fargo tellers make about 11. 80 an hour. Wells fargo team members struggling to support a family on 12 to 15 an hour followed their managers guidance to do whatever it took to make their quotas. Some may have worked off the clock. Others cut corners to avoid being fired, for missing goals, goals that wells now admits were too high. Theyve been accountable, these lowincome workers. The workers lost their jobs with no parachute of any color. And its not just 5300 team members who paid the price, because many more were fired when they couldnt meet the quotas, still more chose to quit rather than cheat. By contrast, ms. Carrie tolstedt, the Senior Executive Vice President for Community Banking, has done quite well. She knew of this problem at least five years ago and is retiring with a package that may be worth more than the cfpbs record fine of 100 million. So 5,300 team members earning perhaps 25,000, 30,000, 35,000 a year have lost their jobs while ms. Tolstedt walks away with up to 120 million. Despite firing thousands of team members, ms. Tolstedt apparently decided it was not important enough to alert the head of the company, mr. Stumpf, or the board of directors or anyone else for two years, if ever, even though you both sat on that banks board. Senior management and the board of directors apparently agreed once the scandal became public, remedial actions were stepped up against Front Line Team members, but the praise and performance bonuses continued to be lavished upon ms. Tolstedt until as recently as two months ago. You would think the lessons of the financial crisis, which came at such a high cost to our country, would change the way that banks do business. And to be fair, many banks did take the lessons of financial crisis to heart, but for the largest banks in this country, every week we hear of a new lawsuit or enforcement action against one of them, week, after week, after week, after week. What are some of these lessons . First, the culture in these banks needs to change. That starts at the top. Second, there must be a reliable way for legitimate complaints to end up in the c suite, rather than a circular file. Third, in the wake of the ramp ant robosigning fraud that we saw at wells fargo and other places, banks need better controls. Fourth, if you pay people on the basis of how many products they sell thats what theyll do, whether its in the interest of the customers or not, and based pay needs to be increased. Finally, change the pay structure, at least make incentives deferred so its clear that customer and company interests are aligned and enduring. Wells fargos come up short on all five counts. That conclusion is not just based on this, its latest scandal. Last year wells settled with the occ, for among other things, 11 years worth of deception about deceptive practices and selling enhanced Identity Theft protection. So at the same time, think about this. The same time the bank was stealing customer identities, it was charging for protecting them. In the wells if the wells id theft product, that they sold, didnt discover the fraudulent wells accounts, perhaps some refunds are due. This april, wells settled a false claim act suit for 1. 2 billion, in part because it has used bonus to get staff quote to churn out and approve an ever increasing quantity of fha loans. And applying pressure on Loan Officers and underwriters, to originate and approve more and more fh loans fha loans as quickly as possible unquote. Thousands of americans we know so well, although, unfortunately, far too few of us know any of these people personally, thousands of americans lost their homes through mortgage foreclosures as a result. So i hope mr. Stumpf, you will level with this committee and the public, words that come like a San Francisco fog on little cat feet, wont cut it. These were not magically delivered unwanted products. This was fraud. Fraud that you did not find or fraud that you did not fix quickly enough. Instead of focusing a damage control, you need to admit to the problems and fix them and treat your customers, in real life, like you do in your vision statement. That would be the best damage control of all, for you customers, for your bank, for your industry and for our country. Thank you. Sen. Shelby mr. Stumpf, will you rise and be sworn. Raise your right hand, do you swear and affirm, that the testimony that you are about to give is the truth, the whole truth and nothing but the truth, so help you god . You may be seated. Mr. Stumpf, your written statement will be made part of the hearing record, you proceed as you wish. Welcome to the committee. Mr. Stumpf mr. Chairman shelby, Ranking Member brown and members of the committee, thank you for inviting me to be with you today. I am chairman and chief executive officer of wells fargo, where i have worked for nearly 35 years. It is my privilege to lead this company, which was founded 164 years ago. And has played a vital role, in the financial history and development of our country. We employee more than 268,000 team members, 95 of whom are in the United States. One in every 600 working adults is a member of the wells fargo family and we have a presence in all 50 states. I am deeply sorry that weve failed to fulfill on our responsibility to our customers, to our team members and to the American Public. Ive been through many challenges at wells fargo, but none of which pains me more than the one we will discuss this morning. Wrongful sales practice behavior, in our Retail Banking business goes against everything regarding our core principles, our ethics and our culture. It runs counter to our vision of helping our customers succeed financially and it is not representative of wells fargo as an institution. Im here to discuss the situation today. Tell you about the actions we have taken, and our commitment on how to move forward. Our entire culture is centered on serving our customers, and in this case, we let our customers down. Our Retail Banking practice issues its sale issues, are not a reflection of our hard working, Intelligent Team members, who deserve thanks for helping our customers with their financial needs. I want to make very clear, that we never directed nor wanted our team members to provide products and services to customers that they did not want. That is not good for our customers and that is not good for our business. It is against everything we stand for as a company. That said, i accept full responsibility for all unethical sales practices in our Retail Banking business. And i am fully committed to fixing this issue, strengthening our culture and taking the necessary actions to restore our customers trust. And senators, let me tell you here today, the wells fargo board is actively engaged in this issue. The board has the tools to hold Senior Management accountable, including me and Carrie Tolstedt, the former head of our Retail Banking business. Any board actions taken with our named executive officers, will be appropriately disclosed. And i want to be clear on this, i will respect and accept the decision of the board. Under new leadership, weve already began taking steps to insure that the sales culture in our Retail Banking business, is wholly aligned with our customers interests. On september 13th, 2016, we announced a major decision, that we will end Product Sales goals for everyone in our Retail Banking business. Because we want to make certain that nothing gets in the way of doing what is right by our customers. The new Leadership Teams primary mission, will be to provide the best possible service to our customers. Im also announcing, today, three new initiatives that will re enforce our commitment to our customers. First, were expanding the scope over our account review and remediation, to include both 2009 and 2010. Second, we will be contacting every single one of our deposit customers, across the country, using the same process that we agreed to with the city of los angeles, for our california customers. And third, we have begun contacting hundreds of thousands of our customers with open credit cards, including those for whom weve already refunded fees to confirm whether they need or want their credit card. In addition, weve recently started sending customers a confirmation email with one hour within one hour of opening any new deposit account and an acknowledgement letter before submitting a credit card application. We recognize now, that we should have done more, sooner, to eliminate unethical conduct or incentives that may have unintentionally encouraged that conduct. We took many incremental steps, over the past five years in an attempt to address these situations. But we now know, those steps were not enough. In 2011, a dedicated team began to engage in proactive monitoring of data analytics, specifically for the purpose of rooting out sales practice violations. In 2012, we began reducing sales goals that team members would need to qualify for incentive compensation. In 2013, we created a new corporate Wide Enterprise oversight for sales practices. In 2014, we further revised our incentives compensation plans, to align pay with ethical performance. In 2015, we added more enhancements to our training materials, further lowered goals. And began a series of town hall meetings, to reenforce the importance of Ethical Leadership and always putting our customers first. Throughout this fiveyear period, we identified potential inappropriate sales practices. We investigated those and we took disciplinary actions that included terminations of managers and team members for sales policy violations, the 5,300 terminations over the five years that have been widely reported. Despite all of these efforts, we did not get it right. We should have realized much sooner that the best way to solve the problems in the Retail Banking business was to completely eliminate retail bank Product Sales goals. And one of the areas that we missed was the possibility that a customer could be charged fees in connection with accounts opened without their authorization. Because deposit accounts that are not used are automatically closed, we assumed this could not happen. We were wrong. And we took steps to refund fees that were charged and made changes to this could not happen again. In august 2015, we began working with a thirdparty consulting firm, pricewaterhousecoopers, which conducted extensive largescale Data Analysis of all 82 million accounts deposit accounts, and nearly 11 million credit card accounts that we had opened from 2011 through 2015. Of the 93 million accounts reviewed, approximately 2 , 1. 5 million deposit accounts and 565,000 Consumer Credit card accounts, were identified as accounts that may have been unauthorized. To be clear, pwc did not find these accounts had been unauthorized, but because it could not rule out the possibility, these accounts were further reviewed to determine if any fees had been charged. Pwc calculated that approximately 115,000 of these accounts had incurred 2. 6 million of fees, which have been refunded to those customers. Even one unauthorized account is one too many. This type of activity has no place in our culture. We are committed to getting it right 100 of the time, and when we fall short we accept responsibility and we will do everything we can to make it right by our customers. I will close by saying again, i am deeply sorry that we have not lived up to our values in this way. I also want to take this opportunity to thank our 268,000 team members who come to work every day to serve our customers. Today, i am making a personal commitment to rebuilding our customers and investors trust, the faith of our team members, and the confidence of the American People. Im happy now to address your questions. Thank you. Sen. Shelby thank you, mr. Stumpf. Mr. Stumpf, according to your testimony, wells fargo began making internal changes in 2011 to address the opening of unauthorized accounts. Did these problems start in 2011 . Or could there have been unauthorized activity before then . Why 2011 . Mr. Stumpf i think we all know that not every team member will do everything right every day of every minute. And we do a lot of training of our team members, coaching. They each sign an annual ethics statement. And i cant guarantee it did not happen before that time. We are trying to manage it within the business. And thats why i announced today that were going back to 2010 and 2009. Because at that time, as you might recall, we were putting the wachovia and wells fargo teams together, and we just thought we dont want to leave any stone unturned. Sen. Shelby wells fargo fired approximately 5,300 employees in connection with these practices. What was what were the criteria for termination . And were any personnel actions taken short of termination . And if so, what were they . In other words, im sure you didnt fire everybody, but did you discipline some, and why, and so forth . Mr. Stumpf correct. Yes, so senator, thank you for that question, and its a good one. We have a number of triangulations around how to understand when there might be improper behavior. If some customer, for example, all of a sudden shows up with three savings accounts, they probably dont need that. Or we have ethics lines, we have a culture in the company if you see something that you dont think is proper, raise your hand, talk to a manager. So we looked at a number of situations, and some of them were perfectly legitimate. But for those who broke our trust, were dishonest, put customers at risk, we drew a very bright line. And after all, we are a regulated institution and we have a fidelity bond. And people who behave in this way simply cant work here. Sen. Shelby mr. Stumpf, your testimony also does not address when the violations were brought to the attention of Senior Management. Specifically, when did you find out that thousands of your employees were opening unauthorized accounts or fraudulent accounts . Did it take that long . When did you find out . Mr. Stumpf thank you, again, senator. The business has their own audit and investigations and sales practices efficacy and so forth contained within the Regional Bank or the retail bank. After they had been working on this issue for a couple of years, and again this was way too many people, but it was one percent of our people. Theres at any one time 100,000 team members in our banks. And after notice after the business was dealing with this for a couple of years, it was then brought to the Holding Company and corporate assets, corporate audit, corporate compliance, the socalled second line of defense got very active. And thats when i became much more aware of the issue. Sen. Shelby does it bother you as the ceo of such a large bank that systemic fraud was not brought to your attention sooner by your employees . Mr. Stumpf if i could turn the clock back, and ive thought about this a thousand times, of course i wish i would have done we all wish we would have done something more earlier. We didnt get on this fast enough. Again, recognizing that this was, you know, the vast majority of people were doing the right thing. Sen. Shelby when lets go back to the question of a minute ago. I dont believe you answered it specifically. When did the Senior Management, you and others you deemed Senior Management, learn about this fraud . Mr. Stumpf i can speak for myself, and i know that other Corporate Executives at the at the corporate area outside of the business, i can speak to myself, and i believe others, it was 2013. Before that, it was being dealt with with the audit and compliance within the Business Unit. Sen. Shelby mr. Stumpf, the board of directors of wells fargo has awarded the thenhead of the Community Banking, Carrie Tolstedt, millions of dollars could be 100 million, as senator brown says, or more, in incentive compensation for, quote, success in furthering the companys objective of crossselling products, and quote, reinforcing a strong risk culture, according to the 2015 proxy Statement Issued by your bank. Explain to the American Public today here what accountability at a large bank looks like when an executive departs with millions of dollars in compensation after thousands of employees defrauded customers . This question was raised by senator brown in his opening statement. Mr. Stumpf ok. Ill try to get to all of those. And if i dont, please, but its a good question. And Carrie Toldstedt as leader of the Community Banking business had a lot of requirements and things that that her performance was measured on putting the wachovia and wells business together. Branding, making sure customers were treated properly. And throughout that entire period from 2011 until 2016, Customer Loyalty scores continued to improve. Today, theyre top of class even by independent studies of large banks. Our Team Member Engagement we do a study every year. And today, we have 15 people who are engaged in that business for every one thats disengaged. Balances and customers had grown. Now, in this particular area, she did not do enough. Weve been and and we decided that the chief operating officer that she was reporting to at the time, with my consultations, decided that we would go in a different direction. But i also want to be clear, carrie was eligible to retire when when she was told that were going to go in a different direction. She chose to retire and she got no retirement severance benefits and and her compensation that she received in the past, some of it which is not which has been granted but not yet vested and other compensation will be considered by the board of directors in an independent process that they have. And i will respect and accept whatever decision they make. Sen. Shelby have they call back you have ability at the bank to call back, do you not . Mr. Stumpf you know, im im not an expert in compensation, but i will get you whatever. Are you the chairman . Are you the ceo of the company, right . And so youre are you the chairman of the board . Im the chairman of the board. And the buck stops here, so to speak . So are you going to look into this seriously about what this person did, her responsibility, and the big reward that shes getting that happened under her watch . Senator, we will the board of directors, the compensation committee, and theyll refer to the board. Im not part of that process. Thats a very independent process and nothing that i say would prejudice their deliberative process. But that is their decision, and they have all the tools available to them, whether she would have retired or she would have been fired. Sen. Shelby mr. Stumpf, is isnt a lot of banking based on integrity or trust by your customers in the bank itself . They do business with you, they put their money there, they they trust you. Whats happened to the Banking System . Not everywhere, but what has happened to the Banking System . Mr. Stumpf you know, senator, you think about it exactly the way i think about it. Trust is the core element of any relationship, and surely in the Financial Services business. And we know we have work to do in that area. And i intend to do all i can to help in that area. Sen. Shelby do you believe you violated that trust . There is no question with some of our customers we have violated trust, and we have to work hard to reearn that. Senator brown . Sen. Brown thank you, mr. Chairman. Mr. Stumpf, i ill make my questions short and ask you to be as concise as possible. Thank you. I to start with, your response to senator shelby, you made you became aware of the widespread fraud in 2013. Could you be more precise than that . When in 2013 . Yes. Well, i became aware that the problems the local business was working on in rooting out this behavior by one percent of our team members, give or take and i dont want to minimize that that we were not making enough progress. And when did you become aware more precisely . Yes, later in 2013. Well, i had i had actually, i dont remember the exact timeframe. I can get back to you and staff. But it was sometime in 2013. Thank you for that. You mention that the wachovia merger, that youre willing to go back before 2011, 2009, and 10, in part because the wacho wachovia merger. The emphasis on crossselling dates back at least to the norwest merger, right . I mean this has been this has been a wells fargo Business Plan for a number of years. What year was the norwest merger . The norwest merger with wells. Yeah, that was 1998. And so this, while wachovia merger there clearly was some we are going back to 2009 and 10, youre offering to do that. Why why why stop at 2009 . We hear from people that its gone on longer than that with the crossselling, and the pressure, and the sales goals. Why are you only willing to go to 2009 . Mr. Stumpf well, i senator, i would tell you this. We want to make it right by any customer. And and we were ready. We agreed with our regulators in our agreements to go back to 2011. We made a decision to go back to 2010 and 09, and we want to make it right by any customer. Sen. Brown does that mean youre willing to go back earlier than 2009 . Mr. Stumpf well, i dont i cant tell you that today. I have to talk to our folks. I dont know about about records and so forth. But i want to make sure any customer who has had harm of any kind, that we will do right by them. Sen. Brown well, you have records before 2009. Is that a pledge from you to go back earlier than that, if in fact there are customers that were harmed by unauthorized accounts. Mr. Stumpf i will take that under advisement. And i accept your good intentions that youre going back to 2009 to to give restitution to those, to provide restitution to those customers. But why stop there if you know that you say you have to go back and talk to staff . I mean if youre if you really do want to make sure these customers are made whole, you should go back as long as you possibly can. Mr. Stumpf and, senator, i again i think thats a you know, weve considered that. I will take that under advisement. Sen. Brown well, i hope you more than consider it. Thank you. Talk about senator shelbys, chairman shelbys, discussion on the claw back. Understanding i think you minimize your influence. To us at least you minimize your influence over chairman the board. Youre the chairman of the board. Understand that the board goes through a process and i respect that. You i would assume are more familiar with with both the pros and the cons of performance from from miss tolstedt. You were aware that she is getting, she is slated to get some news reports say up to 120 million. Youre also aware that most of the 5,300 people, team members that were fired, were lowincome workers, as well as eleven something an hour, maybe up to 16 or 17 an hour. But were generally low income workers, low paid workers. So youre more familiar with that than probably any board member, at least as familiar. So will you, with your knowledge, and your stature, and your position on the board make a recommendation to this board that they should clawback a significant amount of her compensation . Mr. Stumpf ill answer that question. But i just want to put something in perspective. The lowest paid worker we have, our entry level in our least cost area, is 12 an hour. Our lowest paid worker in our high cost area is 16. 50 an hour. In addition to that, about 6 per hour is also that doesnt include the benefits around health care, which we pay virtually all of it for low paid people. But most of the people who lost their jobs because they violated our code of ethics, they were dishonest, were not those were good paying jobs. People lost their jobs who were bankers, Bank Managers, managers or managers, and even an area president. These were good paying jobs, jobs that were the average is i think were in the, you know, 35,000 to 60,000 area, if you just want to take an average. But with respect to your question specifically, im not on the Human Resources and compensation committee. Thats an independent committee. And they will take that under their deliberation. I dont want in any way to prejudice their activity, and im going to accept and and respect any decision that they make. Sen. Brown thank you for saying that. You are not willing to make a recommendation, based on the how this looks to the public, that call them good paying jobs at 16 or 17 an hour or not, compared to what, but put that aside. But whatever these workers were making, they were in the bottom some percentage of the work force. Whatever, they they made mistakes, they were dishonest, they apparently deserved to be fired. I wont i wont dispute that. But i mean just youre not willing as a ceo of this bank to make a public recommendation that you think to make a Public Statement that you think miss mr. Stumpf tolstedt. Sen. Brown tolstedt. Youre not willing to say publicly that to this committee or to anyone that that some of her compensation, over 100 million when she announced her retirement in the last several weeks, that any of it should be clawed back. Mr. Stumpf im going to let the process proceed, and the boards already met. Affirmative comment in my testimony. Sen. Brown thats unfortunate. You said in your testimony in august, if august 2015, your words, we began working with pwc, unquote, to locate and reimburse customers who incurred fees. Was that your decision or were you directed to do so by the regulators . Mr. Stumpf that was in consultation with with regulators and with the city Attorneys Office. Sen. Brown so, you did not on your own, after finding out in late 2013 of these problems you through the rest of 2013, month to three months of 2013, through all of 2014 and then into the first seven months of 2015, it never occurred to you that you should bring in somebody without the regulators suggesting it or pushing or in consultation. It never occurred to you to bring in somebody to really find out who was hurt, what kinds of issues were going on, how do we find these customers to reimburse them . Mr. Stumpf senator, thats a good question. I thought about that a lot about why. It was early in 2015, about the time that we were considering or talking about who we would bring in that we finally connected a dot, and theres no excuse why we didnt connect it before. What happens when an account is opened that is not funded, the system eliminates it within a couple of months. If it doesnt get funded, its not used, its not started, its truncated or closed. It never dawned on us and again, no excuses and we were wrong. It never dawned that there could a 30day cyclee would have been completed and there could have been a Fee Associated with that. Sen. Brown i appreciate your candor about this, but i in 2011, 1,000 employees were fired. 2013 was the peak number. 2013 was the l. A. Times article, 2015 throughout the year nothing happened. It seemed to never occur to management to any of this when i its just and then today i dont question your integrity. But then today, you come in and make all of these announcements. Its been five years since at least five years since all of this has been happening. Today, you make announcements that youre doing you apologize, we appreciate that. You make announcements youre doing the right things, we appreciate that. It just sort of begs the issue of of where was management when these so many thousands of people were fired. Stories were written. Regulators were starting to come in. I understand this a huge Profit Center for wells, the Retail Banking writ large in terms of the unauthorized accounts and everything else. But it just doesnt seem quite right that that, it didnt occur to anyone on the board apparently or at least that had your ear. Didnt occur to the ceo. Didnt occur to top management that they should do something more affirmatively until that august 2015 date when the regulators sort of helped you suggest and come to that conclusion. Thank you, mr. Chairman. Senator corker. Sen. Corker thank you mr. Chairman. Mr. Stumpf, thank you for being here. Just as an observation, i know that you have a whole host of people here with you and im sure one of those people is a communications person. I would just make the observation, look, i know you talk daily with board members, and you know, been on boards before myself. I would suggest, just again as an observation, that to not invoke some degree of claw back for yourself and others involved would be committing malpractice from the standpoint of just public relations. So at a minimum, im sure that is going to take place. I would be surprised if it doesnt. Let me just you found out this through reading the l. A. Times is that correct . No, i dont recall back in 2013 exactly the time frame, but i learned about it later in 2013. Sen. Corker but its sounds like it really was brought to your attention after a story in a newspaper. Well, thats when the focus really began. Im not criticizing that, im just asking. Mr. Stumpf no. Only thing i want to make, senator corker, is that we had dismissed a number people, and thats what caused the l. A. Times. Sen. Corker the story. So you all had taken some actions. You know, i know public boards today, you know, intense scrutiny, this all kind of committees that are set up. When did the board realize that you had a unit that was committing fraud . It seems to me that thats one of those things you flag pretty quickly or at least a committee of the board. Mr. Stumpf yes. I just want to say, these team members, youre absolutely right. They did not do us right. Sen. Corker i didnt ask that. Im asking you when the board became aware that you had a unit that was involved in committing fraud . Mr. Stumpf yeah, it would have been later 2013 and then 2014 and on. Sen. Corker so, they they werent even aware of the l. A. Times story . Mr. Stumpf i think that was later in 2013. Id have to go back and check my records. And its to best of what i remember, but it was sometime later 2013, surely in 2014. Sen. Corker i read a story about ms. Tolstedt today. I dont know her. Actually sounds like she was an incredibly hard worker. Got to work early, rode a bus, you know, micromanaged, signed leases herself. I dont know if any of this was true. But how do you when you have somebody thats that involved in sort of micro details, is this a case of not raising their head up to 5,000 or 10,000 feet and understanding the kind of culture that was being created by slogans like eight is great and those kinds of things . I mean, its just hard you know, it seems to me that within a bank with all the data you use to contact customers and i mean, you can, with algorithms, i mean you guys can pick this stuff up so quickly. Its hard to believe that there isnt some report within the bank that would cause cause this to jump out at people and Say Something really bad is happening here. Mr. Stumpf senator corker, i think that is thats a good question. And in a Retail Business, where you have 100,000 people in seats at any one time in our 6,200 branches, there is a lot of turnover. Sen. Corker but theres an officer, theres a compliance officer. Mr. Stumpf absolutely. Sen. Corker and all banks have these. I mean, you all are regulated to death, and thats their job. This is something that i you would think would be flagged and jump out at someone who was in that job. Mr. Stumpf thank you, and thats what i was trying to explain. That, in her business, surely she was, i believe, reporting situations where there was ethical breakdowns. Sen. Corker but not to the board . Mr. Stumpf it got to the board level it got to the corporate level in 2013 because progress was not being made. And the board level in 2014, as the Corporate Resources started to, and weve been actually seeing improvements since that time. Sen. Corker it does seem like, just in fairness again, there does seem like a big disconnect there. So, she left after 27 years. And i think it would be good for the audience at some point, not during my time, to explain the entire compensation. I think its a little different than most people think based on some of the comments that have been made. But i assume her departure after 27 years was based on this issue. Is that correct . Mr. Stumpf it was based on a number of issues. This was one of them. We want to take the business in a different direction. Sen. Corker so she, in essence, was terminated over this issue . Mr. Stumpf no, carrie chose to retire. Tim sloane, our chief operating officer, with my consultation had discussion with her, and it was sometime in june or july, and said we want to go in a different direction. We want to put an end we want to put more focus on this issue. But it was a variety of things and she was eligible for retirement and she decided to retire. Sen. Corker well, my time is up, and out of respect for other members, i will stop. I have numbers of other questions. We thank you for being here. Senator reed. Sen. Reed well, thank you very much mr. Chairman. And thank you, mr. Stumpf, for being here. Let me try to clarify a bit more your position Going Forward with respect to the issues of compensation. Not just ms. Tolstedt, but even your own conversation. Will you formally recuse yourself from board deliberations . Mr. Stumpf im not even involved in board discussions around what the hrc does with anything respect with me and or as they recommend to the board. So theres no recusal required. But if but im happy to do that, but im not even involved with that. Sen. Reed it will ultimately come up, though, to the board for a vote of affirmation of the compensation committee, correct . Mr. Stumpf it would and im not part of that. Thats done in an executive session without me. Its always been done that way. Sen. Reed all right. In 2013 when you learned of this, what did you do . This has been asked several different ways. Did you inform the regulators or instruct someone to inform the regulators of a growing problem . Mr. Stumpf thank you, mr. Reed. Yes. And i should have mentioned that earlier, but yes. The our primary and prudential regulator was informed that that time. Sen. Reed did you inform the board at that time . Mr. Stumpf yes. I cant recall the exact meeting. And i know in 2014, various committees of the board were made aware of this. The risk committee, the audit and examination, the corporate responsibility. Sen. Reed i cant recall the exact did yoy steps to internally notify your employees of this type of behavior which going back was 11,000 people going on. Including an area manager, did you communicate that . Or did you get these discussions internal to the board . Mr. Stumpf i do a team member iwn hall every quarter where go to one of our various cities and there will be a couple thousand people in the audience and we webcast of that broadly across our company. About ethicstalk and doing what is right for customers. In this case, the vast majority do it but i was trying to really bring home sen. Reed there was specific evidence of techniques used to essentially defraud customers. Practices were not focused upon and made clear that they were not tolerated. It seems to be generic discussion of follow the rules. Again, senator reid, reed, at the time the escalation happened in 2013 there were many different meetings. But reducing goal talking about sales efficacy. Talking with leaders putting more controls in place. The emphasis on meeting sales goals was unremitting. You have examples of things that should be happening but were not happening. What im hearing is more or less a generic make those sales, and by the way, we have these ethical rules in place, too. I think you have said it, and it is obvious that the tone, emphasis, what the leader does, what the leader says, is sometimes more important than anything else. For a period there, this was recognized, but there was no specific stop stop this stuff. Mr. Stumpf i can tell you, we said stop this stuff, and the thing about cross sell is, i would rather have a customer with two products that they use and they need and they want and they value, then for products that are not used in valued than four products that are not used or valued. In the first case, we all win. In the second case, we lose money, it does not help us. We tried very hard, and we were not as effective as he could have been the goal here is not products, the goal is deep relationships. We have the wrong tool for too long to make that happen. Took just seems that it too many months, years, for some simple steps which a should have been taken to be taken, and it was only, i think, as a result of what ultimately Los Angeles County and the regulators and others did that forced the issue. Thank you. Toomey thanks for calling this hearing. Is soe have been learning deeply disturbing on so many levels. First, we discovered that wells fargo had a sales culture that was blatantly antithetical to what is best to customers. Management had far too few controls in place to prevent the kind of abuse that customers were subject to. We discover wells fargo executive completely out of touch. Article, wellss fargo was rated the best at cross selling its products. Discovered, as we wells fargo was not always crossselling. Signing up customers for products when you know the customer does not want the product, failing to notify customers about these sham accounts this is not crossselling, this is fraud. , way toowe discover little done to prevent it from continuing, even after it was discovered. So wells fargo employees continued for years to literally forge customer signatures, including my constituents, on documents to open up accounts. In the case of kerry told that tolstedt, something in order of millions of dollars in bonuses to her were awarded because of strong cross sell ratios. Cases, she, in some was hitting numbers by these fraudulent accounts. Do you acknowledge that the employees who engaged in this activity work invading were committing fraud . Officer,t a criminal and im not a lawyer i do not know the legal term. I know this. They broke our code of ethics. There are dishonest, and we did everything we can support Law Enforcement. A lawyerey im not either, neither are most adults in america. But i think most people understand the roles of fraud. Blackwells dictionary does provide a useful definition. Fraud is a knowing misrepresentation or knowing concealment of a material fact made to induce another to act to his or her detriment. How does falsely signing a customer up for an account they do not want how does that not meet that definition . Mr. Stumpf again, if that is the definition, then i can tell you this. It is absolutely wrong. We found this out, we got rid of and that behavior has no place in our culture. If that means fraud, then that means fraud. At what point did you alert regulators and Law Enforcement that you probably had criminal activity happening on a large scale . Mr. Stumpf it was 1 of our people. Sen. Toomey 5000 is a big number. Mr. Stumpf it is bigger than my hometown, i do know that. But we also have the vast majority who did the right thing, so lets talk about those. We made a very bright line if it happened one time sen. Toomey i have only five minutes. Mr. Stumpf to answer your question, we did everything needed sen. Toomey you referred to Law Enforcement . Mr. Stumpf when it was required, we did everything according to the rules. Sen. Toomey when did you begin to disclose in sec filings that you had this potentially adverse circumstances that could have huge damage to your reputation . Mr. Stumpf i dont i cant answer that. I would have to get to her legal team, i do not have that in front of me. But this was not i would have to get back to you on that, i do not know. Sen. Toomey we have not been able to discover such a veryosure, and the sec clearly requires disclosure of material adverse circumstances. I do not know how this could not be deemed material. I think the market cap lost 9 over the last few weeks. It is pretty material. Mr. Stumpf from a financial andtive, 2. 6 million it is 2. 6 million to much and 185 million was not deemed get thoseomey i dollar amounts may not qualify as material to a bank the size of wells fargo, but the reputational damage done to the bank clearly is material, and that has been manifested by this huge, adverse movement in stock prices. Let me raise one other issue. You mention in your testimony, you state unequivocally, that there is no orchestrated effort or scheme by the company, but when thousands of people conduct the same kind of fraudulent , it is a stretch to believe that every one of them independently conjured up this idea of how they would commit this fraud. That it very probable there was some orchestration that happened at some level. Im not suggesting it was you personally by any means, but doesnt it defy common sense that there was not some orchestration of this . Mr. Stumpf i dont know what motivated or why people did this. But we did fire managers and managers of managers, and in the case, an area president. Many i doy too not want to minimize it but i also want to make sure that we recognize that the vast majority of people did exactly the things we wanted them to do to help Deepen Customer relationships, help them succeed financially, and also, we have put a number of other controls in place besides taking sales goals off the table. We now have we do not open any account today without a signature. Casesthere is a couple of where they will have an ada notice, we are also doing Mystery Shopping, and we are also giving customers a onehour notice about email or letter to make sure that we know exactly if they know exactly what they have opened. Sen. Toomey it seemed like it took an awfully long time to impose those basic controls. Icm out of time. I see im out of time. I appreciate you holding this hearing. , i am personally appalled by this size, the scope, and the duration of the scandal. Im shocked and disappointed by the response of wells fargos Corporate Executives. In the last week, you and your chief Financial Officer have taken to the press and laid the blame squarely on lowpaid retail bank employees. While i do not excuse what they did by any stretch of imagination, i find that despicable. Wells fargo touts to its investors that and its customers that it will never put the stagecoach before the courses. I will tell you what, the bank recklessly rolled over 2 million in whats nomers way can be viewed as other than a largescale scheme to boost your growth and whatever that meant for your shares and whatever that meant to your shareholders. So you did not fire 10 employees you do not fire 500 employees you fired 5300 employees. Is that right . Mr. Stumpf yes, they did not honor our culture. Sen. Menendez and they were located across the country, is that for to say . Mr. Stumpf that is fair to say. Sen. Menendez shouldnt the actions of the employees reflect the values of the institution, no matter what part of the country they are in . Mr. Stumpf i absolutely agree with that. You believez do Senior Executives like yourself are responsible for nurturing a companywide culture for your employees and your employees actions . Sen. Menendez so this is not the work of 5300 bad apples, this is the result of sowing seeds that rotted the entire orchard. Tacitly through sales guides and employee training manuals some of which i have reviewed or more explicitly through demands from harddriving managers, you and your Senior Executives created an environment in which this culture of deception and deceit thrived. I see this as a toxic combination of low wages i know that in response to senator browns question, what is an average banker at wells fargo make, you said between 30,000 and 60,000 how much money did you make last year . Mr. Stumpf 19. 3 million. Sen. Menendez now that is good money. Of low a combination wages, punishing sales quotas, and a grossly misaligned compensation centered throughout the banks organizational structure. When you were holding these ethics sessions, did you ever specifically, seeing this information begin to blip up on your radar, and then more significantly, did you ever specifically say in those sessions, we do not want to open thatnts for our customers they do not ask for. Did you specifically say that . Mr. Stumpf i will get to that question, but i want to go back for a second. When a team member opens an account that is not used, that does not help the customer and does not help us, and the vast majority did the absolute right thing. And i specifically said, yes, we do not push products, we sit down with the customer, we have a needsbased analysis, and based on what we hear where the customer is in their Financial Journey sen. Menendez did you specifically say that in fact, i do not want to see accounts open for customers that they did not ask for . Mr. Stumpf absolutely. Sen. Menendez when did you say that . Mr. Stumpf i have said that many times in many town halls. Tedtme ask you, ms. Tols made about 9 million in salary last year . Glassdoor, the average Wells Fargo Bank or tell her salary is 24,000 year, and the average salary for a wells fargo personal banker is 37,000 a year. Do you know what the poverty wages for a family of three . Mr. Stumpf i do not have that in front of me. Sen. Menendez i did not think you would. It is 24,000, 300. ,300. Imagine you are a single parent, working with Young Children as a banker and wells fargo. Lets say your base salary is somewhere in the 30,000 range. You have a harddriving boss breathing down your neck to meet rigorous sales quotas. A calle got to call into center when you do not meet those quotas, and if you do not meet it one day, it gets carried over to the next, so you have an even higher quota. You are being told, forget about the incentive of making more money, this is about losing your job. You think that environment was the appropriate environment to protect your customers and to have the culture that you portray here that wells fargo had . Mr. Stumpf senator menendez, i get your question. Been reducing sales goals and bringing other goals into place, even before we decided to get rid of the sales product goals. The vast majority the vast majority love wells fargo. We go to our Retail Banking , 15 of our people in a sense is done by gallup every year love the environment of wells fargo, and they put customers first. I cannot excuse the behavior of the 1000, i know it is too many, but the culture is a very caring and collaborative culture. Sen. Menendez i know my time is up, but let me ask you a final question. Did you or any Senior Executive at wells fargo suffer any financial consequence as a result as what of what has transpired over the years . Today, have you suffered any financial consequence . Gonetumpf the board has through, and yes, people have been held accountable. Sen. Menendez Senior Executive management. I would like you to classify for me what that is. Mr. Stumpf people that are in charge of risk in the retail bank, people that are in charge of sales efficacy, regional president s, who do not meet ,heir goals around proper sales yes, people are held accountable, and they will be held accountable. Mr. Chairman, thank you for holding this hearing, and our witness, i appreciate it. Of nevada the people have struggled to regain what they have lost in the aftermath of the housing crisis, and we all know this housing crisis was called by greed and excess. For too long, that has had the unfortunate distinction of having one of the highest rates of unemployment, foreclosures, underwater homes, homes sold off short sales and personal bankruptcies. The central, is relationship with the business, and i assume it is the same, and wells fargo has broken that trust. I consistently fight to make sure nevadans retain the protections of their personal privacy, i was shocked to hear the reports that the employees of wells fargo open to millions of Bank Accounts and credit cards without customers consent. The actions of employees directly took money from americans pockets in order to artificially inflate company quotas. Config u. S. And i have had a number of constituents, office this one happened to be from henderson nevada. She said she was affected by wells fargos tactics. She was insulted that leadership at wells fargo was unaware of these policies. Given the behavior some of your employees exhibited, taking responsibilities, refunding customers, and internal investigations should only be the first step as we plan to fix this mess. Reform, andty, putting your customers first should be wells fargos top priority. That, just a couple of questions. Do my constituents have a right to be insulted . I have heard a number of comments, probably more directed that you take the Sergeant Schultz position, that you knew nothing as this was moving ahead, that perhaps even took i heard this from one of my constituents the Hillary Clinton approach, the what difference does it make attitude. Let me tell you why they are talking this way. I have got your letter to your valued customers, as you try to explain to them some of the problems. You may have seen news recently that some wells fargo customers receive products and services they did not need. You did not tell them you are sorry in your Customer Service letter. You can to this committee and told your customers you are sorry, but you did not tell your customers. To have a right to be insulted . Mr. Stumpf let me tell you, i had a number of Media Contacts last week, one broadcast and four in print. , i am accountable when we do not do it right 100 even ie, and i was think misquoted or misunderstood and one, where i blamed team members. We do notike accept behavior that is not consistent with our culture, that i do accept responsibility, and i am sorry. Sen. Heller this letter appears that you are downplaying some of the concerns. You said that some wells fargo customers we are talking almost 2 million accounts that were opened up. Let me ask you this question. Was anybody on your board or yourself did any of you have any opened unauthorized accounts in your names . Mr. Stumpf i do not know that. I have not seen a letter on my and i was not refunded any of the dollars. Sen. Heller what would you have done if you had an unauthorized accounts if somebody forged your own name . What would you have done about that . Mr. Stumpf i have had that before, where people have forged or stolen my identity, but of course, i would be very disappointed, and i can surely constituentsr disappointment, and we have a lot of work. Nevada is an important state to us, we have been there a long time, and i apologize to all of the American People and our customers, and we will make it right. Sen. Heller can i go back to Carrie Tolstedt for a moment. You said you are not on the compensation board, but if the for to send board you a recommendation to approve a 100 million compensation package for her, would you support that . Mr. Stumpf im not on the board, and if i could just take a second, because i understand, and i get to and i will get you the information about that 100 million, part of it is stock she has either purchased in the open market or owns for 27 year career. Dollars that are options that she has not yet exercise, and finally, there is part of a future grant that will be vesting over a few number of years, and the board will consider all of those things. They will consider her entire situation in their deliberations. Sen. Heller would you approve that . Mr. Stumpf again, senator, i want to be respectful of the committee and respectful of their process, and not any way biased their decision. Sen. Heller my time has run out. Tester i have been on this committee for nearly 10 years now. You have done something that has never happened in the last 10 years and uniteds committee on a major topic, and not in a good way. Credit card accounts were opened, folks did not know about them. There were fees charged, potentially finds charge your charged. If customers were unaware these accounts were opened, there must have been many instances, since there were 2 million accounts opened up, that negative information was sent to credit viewers. Is that accurate . Mr. Stumpf the part that is accurate is that there is 565,000 credit cards that were opened up that were never activated. About 400,000 of those have customer signatures on them, and 5. 7 less than 6 of those counts that we opened her in that time were not activated, which is a pretty standard industry, we are going to go back to each one of those customers now and find out if that was a legitimate signature, and if it is not, well make it right. Sen. Tester but if that is not but that is not what i asked. Was negative information turned into the Credit Bureaus because of these actions . Mr. Stumpf i do not know the algorithms of how Credit Bureaus i know that when a Credit Bureau is requested, it has an impact on your credit score. Sen. Tester this is a big deal. Mr. Stumpf yes it is. Sen. Tester i could ask you for the age breakdown on these 2 million accounts that were opened up, but im telling you that if information was sent into the Credit Bureaus because of these falsely opened accounts, the impacts on this are far, far, far more than the fees or finds that could be associated with that. What is wells fargo doing about that . Where did that information not get reported to the Credit Bureaus . Mr. Stumpf when we call a credit sen. Tester just ask me, just tell me. Fees and fines involved and if the Credit Bureaus requested it, or even if they do not, did that information get forwarded to the Credit Bureaus . Mr. Stumpf im trying to work with you. Sen. Tester yes or no works. Mr. Stumpf yes, we pulled a Credit Bureau for each one of these cards. Sen. Tester what is wells doing about fixing these problems . Be concise. Mr. Stumpf we are calling each credit card customer to find out if this truly was a card they wanted. If they wanted it, we do not want to take away their credit. If they do not want it, we are going to go back and make sure that it is made right by the Credit Bureau and made right by the customer. Sen. Tester what is the timeframe for that . Mr. Stumpf the already started that process. Sen. Tester this took five years, it has been documented 2011 till fairly recently. If i had had a credit card , andd in the first volley in the meantime, i decided to buy a house, and that information was reported to the Credit Bureau, it could make you probably could know the figure that may be. 5 or maybe more than that, and on a 500 thousand dollar mortgage, the difference between 3. 5 and 4 as 50,000 over 30 years. What is being done about that . Mr. Stumpf we will look at each one of those and determine sen. Tester you are going to back in and find out, even if they did not do business through wells, and if they bought a house and what wells did impacted their Credit Rating, youre going to go back and find those folks . Mr. Stumpf we have committed to go back to all of our credit card customers sen. Tester what about the ones that got you refund all their fines, all their fees, you go back to the Credit Bureau and reestablish their Credit Rating as of today, what about the folks that may have bought a house through chase and got a higher Interest Rate because of it. How are you going to find those folks . Working on we are that. I have told our people, go back and make it right. As we start going through that, im happy to have our team come back and report. Sen. Tester i think it is really important that you understand this is a big deal. I know you feel that about it. We feel bad about it, but the truth is, there is realworld applications here on young families and all families that are going to be put into a poverty situation because of this, even though we think it is just a few hundred bucks and fees. In it is more than that. You found out in 2013 did you find out that they were actually setting up accounts with fraudulent signatures in 2013 . Mr. Stumpf i learned that some of our team members were not doing the right thing, and they were opening accounts on customers, and then we truncated those. Sen. Tester it would seem to me that if you guys know about that, a simple edict would have been pretty helpful do not do this, if you do this, you are gone. Mr. Stumpf we had even more than that. What we should have done is get rid of our incentive program. Thattester i can tell you you have said multiple times here that 5300 people went basically 1 of your workforce every time you say that, you give ammunition to the folks who want to break up the big banks. 5300 people are more people than live in most towns in montana. 2 Million People is twice the population of the entire state. This is a major screwup that went on for far, far, far too long, and i think you know that, but man, there is going to be a lot of work that has to be done to rectify this situation, if it ever can be rectified. Thank you, mr. Chairman, and i want to followup on the line of questioning that sen. Tester s just discussing. A couple oft to add questions about data. Their privatect information is going to be protected at their bank, and not used to open an authorized account. Thirdparty analysis that you engaged in determine if these unauthorized accounts were created uniformly across the United States, or were there areas where they were more heavily created . Mr. Stumpf yes, there was a heavier biased for the southwestern part of the country. Sen. Crapo the information i have indicates that that even more specifically includes california and arizona. Mr. Stumpf that would be correct. Sen. Crapo i also have new jersey. Was new jersey more heavily impacted . Mr. Stumpf i have numbers by state, and it typically related some over as people did more wrong things, but it was more associated with the size of the business. A much larger bank in southern california, arizona, new jersey, there are places where we are larger, and the pattern was the size of our organization in those communities. Sen. Crapo it was not necessarily that the management in those communities were potentially the ones who are driving this more aggressively, but simply the size of your business in those communities . Mr. Stumpf senator, it was a bit of both. Sen. Crapo obviously, one of the questions that my constituents and constituents across the country have, mi one of those who have had an unauthorized account created in my name . You indicated that right now, wells fargo is calling every customer. Mr. Stumpf we are contacting all of our deposit customers virtually all of these accounts came on the books and were closed within a 60 day your bama so the60 day period, and 2 million counts that could not be eliminated i think i said that in my old testimony we ,ust could not eliminate them but we are calling all of our credit card customers and contacting all of our deposit specials, and we have a number, we are asking people to come into our banks and talk to our people sen. Crapo if there is somebody who does not want to wait for the call, what can they do . Mr. Stumpf theyre going to get a notice, and say you can email us, we will call you, we will do whatever it takes to make sure that i know our study was very conference it. On thed to air err side of the customer. We are getting people coming into the bank is saying, i got a 25 check, but i wanted this service your service. We want to make sure that we do not heard any customer, and if they want to credit, they have it. If they do not want it, we will try to make it right by them. Sen. Crapo getting back to senator testers question about the credit impact, this simple opening of an account causes and impacts to a Credit Rating doesnt it . Mr. Stumpf it does. Im not an expert in this field, but i know on the credit card a bureau, and depending on how many bureaus , itow that is a strike lowers your credit score, depending on how many requests are in that time. There is also a positive impact, and im not here to justify we will do what is right to make that right. Sen. Crapo that is what i wanted to get at in the last minute i have my questioning. You said to senator tester and he just said to me that you are going to make it right. Have you do that . You said the calls are being made. I assume that in the calls, they are finding customers, some, who have unauthorized and unwanted credit card accounts. Right withmake it regard to the impact, and potentially charges on that account, have caused to the Credit Rating of the cardholder . Mr. Stumpf senator, that is a very good question. We are just starting the process. I do not have enough to give you right now, i would be happy to come back to the committee and tell you what we learn as we do that. Sen. Crapo and the little bit of time i have left, i want to shift topics. My understanding is the primary regulators you have been dealing with our the city of los angeles cf the occ and his cfp be pb. When did each of those notify you, or did you notify them at some point . What order do they get involved and when . I. Stumpf i dont know that have the precise dates, but i will give you a general timeline. The city of l. A. Lawsuit was ofetime in the may timeframe 2015 2013, maybe it was. Im sorry, i am missing on dates here. Was involved,occ we shared with them, and when we we d of their lawsuit, it was actually in 2015 time 2015, im sorry and then we share that information with the cfpb. But the occ was involved in the 2013 timeframe. Sen. Crapo so that was cc was involved first, even before the city of los angeles . Mr. Stumpf they are our principal regulator, and then yes. Sen. Crapo and the cfpb. Would have been the last entity. Ourstumpf someone from Legal Department called them, i believe in the may timeframe of 2015. Sen. Crapo my time is well over now. Warren the wells fargo vision and values statement, which you frequently cite, says we believe in values live, not phrases memorized. If you want to find out how strong a companys ethics are, do not listen to what its companies says, listen to what its people do. Lets do that. Since this massive, years long scam came to life, you have said repeatedly, im accountable. But what have you actually done to help yourself accountable . Have you resigned as ceo or chairman of wells fargo . Mr. Stumpf the board, i serve sen. Warren have you resigned . Mr. Stumpf no, i have not. Sen. Warren have you returned one nickel of the millions of dollars he received while this scam was going on . Mr. Stumpf first of all, this was by 1 of our people sen. Warren that is not my question. This is about responsibility. Have you returned one nickel of the millions of dollars you made while the scam was going on . Mr. Stumpf the board will take care of that. Sen. Warren have you returned one nickel of the money you earned while this scam was going on. Mr. Stumpf the board will do sen. Warren i will take that as a no, then. Have you fired a senior a single Senior Executive . I do not mean a regional manager or branch manager, im talking about the people who lead your Community Banking or Compliance Division. Mr. Stumpf we have made a change to lead our Regional Banks. Sen. Warren i just said im not asking about regional managers or branch managers, im asking if you have fire Senior Management the people who actually led Community Banking division, who oversaw this fraud, or the Compliance Division that was in charge of making sure that the bank complied with the law. Mr. Stumpf kerry told that Carrie Tolstedt sen. Warren did you fire any of those people . Mr. Stumpf no. Not warren did have returned your earnings, you have not fired a Senior Executive, instead, your definition of accountable is to push the blame to lowlevel employees who do not have a fancy pr firm to defend himself. It is gutless leadership. In your time as chairman and ceo, wells has been famous for crossselling, which is pushing existing customers to open more accounts. Of the maing is one reasons that wells has become the most valuable bank in the world. Wells measures crossselling by the number of different accounts a customer has with wells. Other big banks averaged fewer than three accounts per customer, but you set the target at eight accounts. Every customer of wells should have eight accounts with the bank. And that is not because you ran the numbers and found that the average customer needed a spanking accounts, it is because eight banking accounts, it is because eight rhymes with great your great. That was your rationale in your crossselling report. Crossselling is not about getting customers what they need, if it was, you would not have to squeeze your employees so hard to make it happen. Crossselling is all about pumping up wells stock price, isnt it . Mr. Stumpf no, crossselling is shorthand for deepening relationships. Sen. Warren you are saying no . Here are the transcripts of 12 Quarterly Earnings calls that you participated in from 2012 to 2014, the three full years in which we know this scam was going on. I would like to cement them for the record, if i may, mr. Chair. These are calls where you personally made your pitch to investors and analysts about why is a great investment, and in all 12 of these calls, you personally cited wells fargos success at crossselling retail accounts as one of the main reasons to buy more stock in the company. Let me read you a few quotes that you have. We grew our Retail Banking crossselling ratio to a record 5. 98 products per household. Wear later, april 2013, achieved record Retail Banking cross sell of 6. 1 products per household. We achieved record Retail Banking cross sell of 6. 17 products per household. ,he ratio kept going up and up and it did not matter if customers use those accounts are not. And guess what . Wall street loved it. Here is just a sample of the reports from top analysts box those years, all recommending that people by wells fargo stock , in part because of the strong cross sell numbers. And i would like to submit them for the record. Thank you, mr. Chair. When investors saw good cross sell numbers, they did, while this scam was going on that was very good for you personally, wasnt it . Do you know how much money, how much value you are Stock Holdings in wells fargo gained while this scam was underway . Mr. Stumpf first of all, it was not a scam, and cross sell is a way of deepening relationships sen. Warren we have been through this curator i asked a very simple question. Do you know how much the value of your stock went up while the scam was going on . Mr. Stumpf all of my compensation is in our public sen. Warren do you know how much it was . Mr. Stumpf it is all in the public filing. Sen. Warren you are right, it is, because i looked it up. While this scam was going on, you personally held an average of ex. 7 5 million shares of 6. 75 million shares. The share price went up by about 30, which comes out to more than 230 million in gains, offer you personally, and thanks, in part, to those crossselling numbers that you talked about on every one of those calls. Now, here is what really gets me about this, mr. Stumpf. Took aof your tellers handful of 20 bills out of the cash drawer, they would probably be looking at criminal charges for theft. They could end up in prison. Like you squeezed your employees to the breaking point so they would cheat customers and you could drive up the value of your stock and put hundreds of millions of dollars in your own pocket. Youwhen it all blew up, kept your job, you cap your multimillion dollar bonuses, and you went on television to blame thousands of 12 and our employees who were just trying to meet across the cell quotas that made you rich. This is about accountability. You should resign. You should give back the money that you took while this scam was going on, and you should be criminally investigated by both of the department of justice and securities and exchange commission. This just isnt right. A cashier who steals a handful of 20s is held accountable, but wall street executives who almost never hold themselves accountable not now and not in 2008, when they crushed the worldwide economy the only way that wall street will change is if executives face jail time when they preside over massive fraud. Tough new need it laws to hold Corporate Executives personally accountable, and we need tough prosecutors have the courage to go after people to go after people at the top. Until then, it will be business as usual, and giant banks like wells fargo, that seems to mean cheating as many customers, investors, and employees as they possibly can. Thank you, mr. Chair. Vitter what astounds us so Many Americans and virtually all of us is how significant this fraud was, how widespread it was, or how long a period of time. That, im very concerned about this timeline of when top corporate leadership, like yourself, new about it. You have been talking in general about 2013. Is that when the issue was a focus of board discussions, or was that the first time you knew and theseent activity unwanted accounts being opened inst customerss wells customers wills. Mr. Stumpf as i testified before, people and our Regional Banks knew that not every team member would do everything right every day, and they tried to root it out at the business level with their compliance and so forth. Sen. Vitter when did you and folks at your level, like board members, no of this activity on any significant scale . Was it 2013, as you have suggested, or was it earlier . Mr. Stumpf 2013. Sewing 2011, about 1000 employees were fired over this. That is about 1 of the whole Retail Business. Of1 of a whole big part your business was fired over fraud, and you were never told about that. Mr. Stumpf that was dealt with in the Business Unit at that time. Sen. Vitter is it normal for 1 of a Business Unit to be fired over fraud . Not high turnover, not incompetence fraud. And this never is mentioned to you . Mr. Stumpf in a large Retail Business that has other turnovers and so forth, if i could go back, i would have spent more time this crystalwhy is clear proof that an entity as big as wells is not only too big to fail but too big to manage and too big to regulate . 1 of a big part of your business is fired over fraud, but that does not rise to your level . Mr. Stumpf that is a good question, and ive thought about that. This is a problem of focus and not of size. Sen. Vitter lets talk about Corporate Culture. You have often referred to people not living up to the wells culture to the culture. Culture is not something written in a handbook. It is an atmosphere and what is lived. Practice in fact, by the numbers, part of the wells customer by definition, because it was so widespread for a period of time . Mr. Stumpf i think this is not part of our culture. Number, the a large vast majority of our people do it right every day, they provide great value and they live according to our culture. Sen. Vitter it was a widespread practice for many years. I will just make a statement. That makes it part of the culture, in my opinion. It seems to me, your challenge is to change the culture, not to enforce the culture. Finally, what level of 100 , you, from 0 to have that this type of fraudulent activity does not exist in other wells business lines . Mr. Stumpf we have looked at other things, other businesses. And i dodifferent, believe this is the situation in our Regional Banks. Differents have levels of compliance and different volumes and different requirements, but we have looked across the number of things. I have confidence that we have this one salt, and we have made a lot of changes. Sen. Vitter as an example, wells is the biggest participant in the sba loan program. I am a chair of the loan committee, so im focused on a lot of Small Business issues. Are you 100 confident that no fraudulent activity like this, or no extreme quotas and goals exist in that 7a program . Mr. Stumpf we do not have product goals, to my knowledge, in any one of our other business days. In part, because of this situation, we have doubled down on compliance and review and a lot of our businesses of the board. Sen. Vitter i am writing several of those compliance folks to urge a look at anything Small Business related, program, the ya 7a since wells is the leader in that activity. Onnely mr. Stumpf, you had previously talked to me about wells fargo values. Look at the mess were in. A Community Banker from my state called the office, unsolicited, and just sick, and he said, here ando again, where my bank the local Community Bank is going to be slandered because of what these guys are doing. And he said, if my bank had a widespread practice of opening unauthorized accounts and moving customer money without permission, i would be in jail, my bank would be sold, and my entire Management Team and board would be sued by the regulators for a lack of oversight. And he is sick to his stomach about what has happened here. So am i. And over 5000 people from indiana 5000 hoosiers, as everyone is talking about from their own states, every day, these people work nonstop to try to pay the bills, take care of their family, make sure they can make ends meet, and they hope that they can. Over 2 million plus across the country, but over 5000 hoosiers who had unauthorized accounts opened. Now, the second many of these credit cards are opened, these folks credit was immediately dinged. Senator tester was talking about it. Then you go to take out a mortgage, and you have got a mortgage that is half a point or a point higher because your credit has gone down. Will you pay back every single extra dime that these people are going to incur over the 30 years because of the fraudulent action of the people at wells . It wasnt sam or judy who works at the mill, who was hoping to get a payment they could afford, it was that their account had fraud committed to it, and now they have to pay more every single month for the next 30 years. Have you pay that back . How do you pay them back . Mr. Stumpf we have been thinking about that. We are starting to make those calls to our constituents. I do not have a final answer to you, but our intention is to make it right every customer. To. Donnelly do you promise pay back every single extra dollar these people are going to incur over the next 30 years . Mr. Stumpf i want to work with you and im trying to be cooperative, i just dont have all the answers for you today. I get the issue, and my instructions have been to make it right by every customer. Sen. Donnelly one of the things that rubs everybody wrong around here, and around the country, is americans are fair people. Everybody in this country tries to make sure that there is a square deal done. It is not a square deal when the people that are fired by the tellers who make 15, and he senior execs walk off with a hundred million dollars. Americans can smell an unfair deal a mile away. Theseen this teller 5300 tellers, they did not come up with this scheme on their own. This is the only way they could keep their jobs, because of what was going on. And you call them dishonest. Is, carrietion tolstedt, the head of all this, is she dishonest, and how do you fire someone making 15 and not the person that is like firing the guy throwing coal in the engine and let the captain stroll off to a 100 million new ship. How do you do that . Mr. Stumpf that is an important question. First of all, most of the people who are bankers who are not making 15 an hour, managers of those and managers of those, and there is something very different about violating their quota metrics and putting customers address and being dishonest. First is someone who did not spend enough time making sure that this issue had been closed. I see a very big difference. Sen. Donnelly one of the things that the American People are disgusted about his it seems it all flows downhill. And the people down the hill get fired, do not even know if they can pay their mortgage does the job they had is gone. The people up at the top of the health make 20 million, 10 million. The fellows who started wells fargo stagecoach, this was not their plan. This is not what we do. And the only last question i have, and i apologize, mr. Chairman for five years five years. And so when folks say, it is too big to fail for five years, you are not able to end this. , for five years, americans were taken advantage of and were cheated, had their Credit Ratings ruined, had accounts opened that they never bank,new about, and this either you didnt know, or you knew and it was great for the story. Under any circumstance, none of the conclusions is good. Mr. Stumpf i couldnt agree with you more. We do not move fast enough, we should have done better, but i also remind you that the vast majority of people also have families to feed, and they did exactly the right thing. But we are sorry and we need to do better. Thank you. Sen. Scott as a senator, im frustrated, angry, and really unhappy with what appears to be a toxic culture and parts of your sales organization. Customer, with two or three mortgages, a couple of accounts, i am disappointed. I am disappointed in my financial institution. I have put so much confidence and trust in. However, thankful for the real heroes that we have heard so little about this morning the heroes, the employees who went to the press, the customers who went to the occ, bringing oxygen to a very important conversation, and hopefully, resolution. , and perhaps rita merlot is me the answer, why did not these employees find a safe haven up the chain . If you remember, i owned a couple of agencies, and so the sales culture that was so toxic is also incredibly important for folks looking to support their families, who are working paycheck to paycheck, and anyone who suggests that folks who make just a little money must cheat the system is an inconsistency gesture. Inconsistent suggestion. I know a lot of folks who are poor who would find that comment quite disrespectful. Have stronglks integrity, and would never put themselves in this situation. I would suggest that perhaps the higher you go in that chain, and the sales organization, the more you find a problem, not the person making the 15 an hour. My question is, why was there not a safe haven, and have you created safe havens for employees who see things that are just running amok . Do they have a safe place to go, and not to the l. A. Times, not to the occ, but is there a culture that is being established . I know you are limiting some of your sales goals, which have unintended consequences, but is there a culture being established where the average employee feels empowered to come forward and speak and be heard in wells fargo . Scott, if senator really appreciate that line of questioning, because it is absolutely i shouldve mentioned it each team member, no matter where you are in the organization, is encouraged to raise their hand if something is being asked of them that they think is not right, not consistent with our values and our culture. They are asked to raise their hand, they are asked to go to a managers manager in hr. We also have an anonymous ethics line. They can speak up and show us and talk to us about anything they want. We want to hear from them, because we do not want this behavior. I wish we would not have this behavior, but we have also instituted some things today you mentioned getting rid of the sales goals, but we also today have an email we send within an hour of opening accounts. Onaccount can get open today the deposit side were credit card without a signature, and we are also doing a big Mystery Shopping program by an independent third party. Sen. Scott it is important for me to finish my line of questioning. Mr. Chairman, i would love for the record to have a better understanding of the culture of checks and balances that were not there that are now there that will help customers thousands of customers throughout South Carolina have more confidence in all financial perhaps,ons, and having done it wrong, you become a model for doing it right. The second question i have goes back to the question we have heard from crapo, tester, donnelly as well when you look at the impact, you would think that would be flagged and jump out at some point. You open an account i apologize for going over my time you have an account. I have an account with your bank. I hope to keep them this is what we are doing to restore customer confidence. Like senator scott, i am one of your customers. My family is. Youre not doing what you need to do to restore customer confidence. Youre also not doing what you need to do to restore confidence with this committee and the American Public. You want to talk about changing culture, there is nobody on this committee believes that 5000 people independently acted with impunity and dishonesty. No one here believes that. If they do, i have done Law Enforcement. This is a behavior that was of folksy a whole lot saying lets do it this way. This is not i get what youre saying, this wasnt just the lower level. Person, the one person was responsible directly, rather than yourself, for making sure this does not happen, is not in front of the committee today. In fact, she walked off with a pretty good deal. And hoping all of this blows over. And the other thing, when you say you did not act quickly enough, the board should have already acted. If you come here and said, the things, now doing these you would be in a lot better position sitting in that chair right now. And so i will tell you, you have not done enough to restore confidence today. And this dialogue will continue with this and so i will tell you, you have not done enough to restore confidence today and this dialogue will continue with this committee and with the American Public. Now, with that said, i wanna, i wanna turn to the 5,000 people and i wanna, wanna say maybe they deserve to have their reputation restored. Maybe, they deserve to not be that person whose now resume , says fired on a resume. Maybe, instead of just focusing on your customers, you ought to focus on the 5,000 people who im pretty sure did not unilaterally decide to be dishonest. And so its an issue that hasnt been raised here. But i think its a critical issue because when you punish the guy at the end of the line and you dont punish in any way someone at the top, we end up with an attitude, frankly this , is a Corporate Culture that doesnt care. Theyre just trying to get through the day and i dont think that your day yet has ended. And so i wanna thank you for appearing but its not enough and its not nearly what i had hoped you would come with today. Thank you. Senator moran . Rep. Moran thank you. As i understand the circumstances the factual , circumstances, many of the problems, while they were systemwide, many of the problems were focused in the Los Angeles Area within your Banking System, is that true . Mr. Stumpf yes. Its true that thats the largest part of our business but they were also focused there, yes. And is, have you analyzed sufficiently to determine what was different about los angeles than places elsewhere in your Banking System that would suggest that the number of times, the volume of fraudulent acts that occurred there, how do you explain that . Mr. Stumpf well, as senator heitkamp said and if i did not share this, i wanna make sure, i also agree 5,000 people dont just do 5,000 random things on their own. Im sure there were people talking to one another within a branch and so forth but that analytical work is being done and has been done. I dont happen to have it here, ill have our team work with your staff to make sure that you have whatever you need. Moran i would appreciate that. Im interested in knowing if you see this as a customer issue, a more vulnerable population of banking customers. Or, as the word culture has been used here a number of times, was there Something Different about los angeles, which i assume, again, i think illegal behavior, immoral behavior, breaking the rules is wrong wherever it happens, but our goal in management, your management of a financial institution, is to diminish the chances of that happening. Mr. Stumpf right. Rep. Moran so you never condone bad behavior, but we want to make certain that the circumstances in which it is discouraged and never encouraged, and i dont have a feel for that circumstance. I dont know what really is the facts within the banking leadership that may have encouraged this behavior. Weve seen this before. I serve and a number of my colleagues, including senator brown, on the veterans committee, where we saw the consequences of a system that rewarded appointments for veterans who needed medical care. We saw a scandal across the country in which veterans were put on a list suggesting they had an appointment, they didnt. And the circumstances in which those individuals, those individuals were listed as having an appointment, the allegation certainly exists that there was death as a result of the failure of the the a system the v. A. System to provide Necessary Health care. I think the point that senator heitkamp made i would make to you again. Theres a number of us on this committee and in congress who work to try to find the right regulatory balance for Financial Institutions, and just to stress with you the importance of then having our Financial Institutions behave, their behavior, conduct be a certain level, otherwise it undermines the efforts for that attempt to change the Regulatory Environment for Financial Success and we particularly focus that on Community Banks, but we care about those Financial Institutions that have a relationship with their customers. And one of the arguments that has been made is those relationship bankers can rely upon the relationship. And what were hearing from the circumstance that we find at wells fargo is that relationship was taken advantage of. It didnt accrue to the benefit of the customer. Mr. Stumpf you are right for that portion. And what hurts so much is that we spend so much time trying to do the right thing and when a customer gets a product thats not used or not benefiting them, that hurts them and it hurts us. We have no interest, and if i could just take one second. I want to correct, mr. Chairman, or share something that i wasnt as clear on. On deposit account fees, none of those were reported to Credit Bureaus. So the Credit Bureau impact relates exclusively to credit cards and were going to run each one of those down. Thank you. Rep. Moran mr. Stumpf, let me ask a final question. So i dont think you provided us with a precise timeframe in which regulators were notified, but id be interested in knowing what regulators were notified, when, who, and what steps they then took as regulators in response to the information they had. Mr. Stumpf ok. And again, my recollection is that our credential regulator, the occ, was involved and notified and active in the 2013 timeframe. At about the time of the lawsuit from the city of los angeles, we informed the cfpb. And so i can tell you what we did. And i know you have a panel later with them, but thats what my recollection is. Rep. Moran none of these actions at wells fargo came to light as a result of the regulators finding that behavior. It was reported to them subsequent. Is that true . Mr. Stumpf again, i want to be, i dont want to speak for them and i dont know what part of this is confidential supervisory information, but my recollection of what we did was deal with this issue, terminate people, inform our credential regulator, and after the city of l. A. Inform the cfpb. Rep. Moran finally, i would say in my experience in dealing with the department of Veterans Affairs and their circumstance, in way too many instances in my view the employees became the scapegoat for what i saw as actions or encouragement behavior by their supervisors. And i would encourage your circumstance, in your circumstance to make certain that the employees are not the scapegoat for behavior at higher levels. Mr. Stumpf i think thats a great point, senator. And i am, you know, the 268,000 that come to work every day of our team members, theyre the most fabulous people, you know. And i just love them and what they do, but i, the 5,300 for whatever reason, they were dishonest, and im not scapegoating, but that is not part of our culture. And some of those jobs, many of those jobs, most of them, were very Good American jobs. Rep. Moran thank you. Mr. Chairman senator merkley. Thank you. Mr. Stumpf, did wells fargo create a Pressure Cooker sales culture that put personal bankers and tellers in a possible situation between a rock and a hard place . Mr. Stumpf i do not believe that. You know, the vast majority. Rep. Merkley that may continue. You got your answer, thank you. So rita murillo, a branch manager, says, regional bosses required hourly conferences on her florida branchs progress toward daily quotas for opening accounts and selling customers extras, such as overdraft protection, an issue that hasnt been addressed yet. Employees who lagged behind had to stay late and work weekends. Then came the threats, anyone falling short after two months would be fired. We were constantly told wed be working for mcdonalds. If we did not make the sales quotas, we had to stay for after school detention, it felt like, or report to a call session on saturdays. Is that a pressure culture situation, putting tellers and personal bankers in an impossible situation . Mr. Stumpf senator, that has no place in our culture. Ive actually read that, and it hurt to hear those words. And people like that do not belong there. Rep. Merkley eric estrada, former wells personal banker and business specialist, said managers coached workers on how to inflate sales number. Employees opened duplicate accounts, sometimes without customers knowledge. They used a database of customers who had been preapproved for credit cards and ordered them. They were coached on it. Is that a setting in which a pressure culture, Pressure Cooker culture really puts the personal bankers in an impossible situation . Mr. Stumpf that has no place in wells fargo. Theres nothing that we did to encourage that. Rep. Merkley nothing you did, but Bank Managers were being coached on how to coach their
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