Thank you for your patience. Without objection, this hearing is entitled holding wells fargo. Agree just pattern of consumer abuses. I recognize myself for four minutes to give an Opening Statement. Today, we receive testimony from Miss Elizabeth duke, and mr. James quigley, who until later this week served as chair of the board of directors of wells forego and company, and Wells Fargo Bank respectively. Both have resigned after a call for the resignations. Following the release of a scathing majority staff report on walls far goes compliance failures, and their individual failures as Board Members. The resignations dont absolve meant them of their failures. Directors at wells fargo and institutions across the country must understand that they are the last line of defense when it comes to protecting their companies shareholders, employees, customers. While missed duke and quickly state they resigned to avoid distraction and quote let me be clear, this is not a distraction. We are examining misconduct and direction of duty. Over the past decade, wells far goes forward, managers, regulators have failed to reach the companys internal witnesses that cost enormous harm to many consumers across the country. The staff report examines well far goes compliance, management required to clean up the systemic abuse, and compliance breakdowns, as Board Members, miss duke and quickly are responsible for ensuring that wells vargas ceo and upper management executed and Effective Program to manage those risks. However, the majority of staff report that wells far goes board, feel to ensure that they can be efficient, allowing employees, prioritize financial considerations over fixing consumer abuses. Didnt hold Senior Management accountable for repeated failures. The majority staffs report also revealed attitudes and failures on the part of miss duke and quickly that are just name. The Consumer Protection Financial Bureau concludes the letters request action, from the bank. She responded by asking and i quote, why are you sending it to me. The board, as opposed to the department manager. Unquote. This was surprising to see. It gives the appearance of a evil mentality. And unwillingness to exercise the oversight required of her as the member of the board. Mr. Quickly also did not appear to understand the gravity of his board responsibilities. In the office of the control currencies scheduled in meeting with the banks directors to discuss quote high risk and accountability, quote mr. Quigley told other Bank Officials that he was quote currently scheduled to be away on vacation on some islands. During those states. And quote. Commented that the sense of urgency is surprising unquote. These statements were made after several public Enforcement Actions against walls forego for massive abuse complaints, while they have resigned, they need to be held accountable for their actions. I recognize Ranking Members of the committee. The gentleman from north carolina. Thank you. The legislators proposals attached to the hearing would make ron a manual. Proud he said you dont want a serious crisis to go to waste. Nic make no mistake, wells fargo has been in crisis mode for a while now. Well hear more about the crisis from witnesses. You will see they are part of the problem in many respects. In that spirit, the democrats followed their advice. Rolled out policy advisers did everything from expanding their scope of authority, downsizing certain banks, and from those proposals it has complete lack of evidence in the case of wealth pharco. Its not that they lacked authority. Cfpb ignored. Its not that it was difficult to manage because of its size, its that it was mismanaged. The standards to which we should hold Board Members will be discussed. How about we start with the proper legal framework. The standard the shareholders use. Lets work through those. Under the law members of corporate Board Directors have three fishery duties, those concepts arent very complicated. Directors must be diligent. They must subordinate their personal interests beneath the interests of the company. They have to act in the best interests of the shareholders. Those standards makes sense because at the end of the day directors represent the interests of the shareholders. Shareholders expect the board to do three basic things. First, hold management accountable. Second, pushback when management provides incomplete or overly optimistic information. Third, make sure that the company has the right to leaders in place. Based on what we heard yesterday from scharf, the board might have gotten that last one right. Question of leadership. But, we have a lot of questions today about everything leading up to the boards decision to elect mr. Scharf. We need to hear why the board feels from the inside to lead wells fargo from length 16. We need to hear why the board didnt recognize that management wasnt fixing the companies problems. Why they stood by that Management Team for so long, until the trump administrators regulators forced change. I think there is a lot that we can learn to ensure that new decisionmakers deliver on much needed changes in this institution. I look forward to hearing from you, i look forward to hearing the questions. I recognize the chair of the subcommittee on oversight and investigations. Mr. Green you have one minute. The evidence speaks for itself madam chair. 35 bankers were sent to prison for their crimes. Bankers can go to jail. They can go be held accountable. This is from cnn business on april 28th, 2016, many of these crimes involved relatively small amounts of money and smaller banks. Smaller banks pay a price. Big banks pay off the government. Three billion dollars in fines paid by wells fargo. They have demonstrated that they will commit fraud. For 21st, 2020, i have an article but styled violation track summary, this is from the, jobs the total number of penalties that wells fargo has paid since 2000 amounts to 17 billion to hundred 96,835,944 dollars. The evidence speaks for itself. Wells fargo has been running a criminal enterprise. I now recognize the subcommittees Ranking Member for one minute. Thank you. Mr. To talk, quickly, you will testify in this committee today in your capacity as former Board Members of wells fargo. Let me be clear about two things. First, its clear that the board made some mistakes. Yesterday we heard how important leadership is to the company. We benefit from fresh perspectives. Second, decisions about Certain Directors ability to continue to serve is up to the discretion of stakeholders, the call for this director to resign was inappropriate. Sorry to be here under these circumstances. There have been a series of missteps doesnt 16. I will address those in the questioning shortly. I wish to emphasize what the Ranking Member said yesterday. There are pressing issues affecting the economy that the committee is focused on. Its but instead we are spending resources, time, speaking to former directors of a Company Whose ceo testified yesterday. I yield back. I want to welcome todays witnesses. Until earlier this week, Elizabeth Duke was the chair of the board of directors with wells fargo and company. Miss duke served a number of positions, including a member of the board of governors in the Federal Reserve system. Also earlier qugly served as the independent chairman of the wells fargo independent back. Mr. Quigly continues to serve as the chair of the hesco and a pharmaceutical company. They no longer serve on the board of wells fargo, its still my expectation they will be forthcoming in response to questions today. Their written statements will be made part of the record. Before we begin, i would like to swear the witnesses and. Miss duke and mr. Quigly please stand and raise your right hand. Do you solemnly swear to affirm that the testimony that you will get before this committee in matters now under consideration will be the truth, the whole truth, nothing but the truth, so help you god. Thank you. Let the record show that the witnesses answered in the affirmative. They sit now. Each of you will have five minutes to summarize your testimony. When you have five one minute remaining, the yellow light will appear. At that time, i would ask you to wrap up your testimony so we can be respectful of the Committee Members time. This duke, you are now recognized for five minutes to present your oral testimony. Thank you for inviting us to testify for todays hearing. With heightened volatility in financial markets, a strong wells fargo is needed more more than ever. Finish changes are gaining traction in the company, strong leadership and management. I believe that today the company has the right team and path forward to be fully deserving of the trust customers place in us every day. Over the past several days however, it became clear to my colleague jim quigly and me that the leadership in the board would hinder the ability of the company and its new ceo to turn the page and focus on the new future. The company must move forward. For this reason last sunday we informed our board colleagues of our decision to resign effective immediately. Were comforted that the board has the skills to smooth in the leadership transition. When i look at wells fargo today, i see a Community Bank that under mary mac focuses on customers rather than sales. I see a fully transformed board, with structural changes, that improves the boards governance and effectiveness. I see an executive Management Team that balances a new approach with institutional knowledge. I see a risk Management Team at risk platform thats under construction from the ground up. I see a ceo with the ability to execute on this significant remaining work necessary to meet the companies regulatory amendments. Ever since the board learned the truth about what was going on inside wells fargo, it has been continuously and deeply engaged and understanding the problems and solutions, insisting on action. I served on the Board Committee that investigated sales practices. Not only was i appalled by the customers, but i was also second to hear how the employees were treated by the managers. I started as a teller and you cant representative, and i identify with those employees. Our investigation of sales practices was thorough and unfettered. Our tories conducted 100 interviews, reviewed interview notes from 1000 more. Elected 5 million documents from over 500 custodians. We instructed them to breathe regulators, government agencies, the staff of the committee in investing in our own, we provide investigation of our findings,. The work to sustainably address the root problems that exist in the company has taken time to implement. More to anyone anticipated, more time anyone us, especially those on the board of directors would have liked. I get the frustration that everyone has, very clear in the report. I can assure assure you that no one is more frustrated than you are that we havent been able to adhere to the Consent Orders weve been obligated to. Jim and i reviewed progress reports in management about every detail on a monthly basis. We are confident that the board will continue to hold management accountable until the trump is finished. We remain mindful that the board cant supply select a wall qualified ceo. In its twoday today execution order requirements. Recognizing the critical importance of the responsibility to select a well qualified ceo. I pointed jim to continue the ceo search that resulted in the hiring of charlie. We heard from him yesterday about his plans and timetables going forward. We know that our former colleagues on the board are determined to provide him with a space and support to complete the work. We are no longer able to speak on behalf of wells fargo or address the companies are also constrained by the scope of regulators, weavers of the supervisory. Privilege within those limitations, we are here to answer your questions to the best of our ability. Thank you. Thank you. Mr. Quigly. Youre now recognized for five minutes. Chairman waters. Ranking member mchenry, im here to share about the banks commitment to its customers, focusing on its future. I think that we have a deep conviction and confidence in our customers. I learned that from a schoolteacher. I took that with me to delight. Were i rose to become the ceo. Restoring Customer Trust and confidence and wells fargo was our most important priority. After we learned of the egregious sales practices, they have detailed many of the transformational change is that the board has overseen in our efforts to see everything doesnt happen again. Well there is more to be done, undeniably, i believe that wells fargo is making progress. I would like to highlight two changes that are important to me. 4300 employees have been added. Nor than doubling the size of that function in less than three years. Second, the board encouraged and supported the changes in Senior Management of the bank. Bringing new capabilities, stimulating cultural change, since 2006 wells pharco has hired a new chief operating officer, chief risk up for sir, chief auditor, head of hr, head of technology. I personally devoted much of 2019 to leading the search for a new ceo. Im confident that we selected the best candidate to leave the bank. I believe deeply in the Critical Role of culture in an organization like wells fargo. I was especially supportive of the culture that mr. Scharf is working to establish. With clear standards and integrity. Unified bank with clear line of sight across the business. Accountability of management. Most important of all, a renewed commitment to completing the work of doing right by our customers, and satisfy our regulators. The cultural and structural changes necessary to address the banks challenges are farreaching. We believe that getting those things right, and in a way that would provide lasting change. It ultimately serves customers and employees better and doing them quickly. I believe the changes that we oversaw will make wells fargo more strong, reliable, more deserving of Customer Trust. While there is still more to do, i am confident that the company is moving in the right direction. Because im no longer a member of the company sport, i cant speak for the board today. I have my personal reflections, including the importance of distinct and separate rules. The board must oversees these. It cant replace or do the job of management. That principle was critical to me during my tenure at wells fargo. In my testimony today, i must also respect the limits on my ability to disclose Confidential Bank supervisory information. The regular viewers havent provided full weavers, i need to be careful to stay within the limits of the waivers weve received. Within those restraints, i look forward to answering the committees questions. Thank you very much. I appreciate your presence here today. Let me start by asking how many years have you served wells fargo on the board . Five years. Mr. Quigly, how many years . Six years. Are you compensating for serving on the board . How much is . It compensation in the last year is somewhere around 630,000 dollars. 630. And yours . 470,000 last year. Thank you very much. I want to get into the majority stance report. How did you prepare for the hearing . Did you read the majority staff report . Mr. Quigly how did you prepare . Did you read the majority staffs report . Yes. Miss duke and mr. Quigly you stated that you resigned from the board out of continued lie to pigment meant to serve our employees and clients, to avoid distraction that could impede the banks future and progress. Miss duke and mr. Quigly, notably absent from your resignation announcement is any acknowledgment of the multitude aboard failures documented in the staff report. Do you disagree that as board chairs you are responsible for the boards approval of poor quality consent submissions, and failure to hold ineffective leaders like him sloan accountable . Mr. Duke . Thank you chairwoman. I believe wholeheartedly that we spent the time, use our judgment, did the inquiries, did our job as thoroughly and as completely as we possibly could. I made decisions according to our best judgment about what the best course of action should for the company. Our role for reviewing the Consent Order submissions was in reviewing them from a very high level. Any of the deficiencies that were in the details of those submissions are the responsibility of management. Thank you. Are you will wear that wells fargo has paid out 17 billion dollars since 2008 i believe on settlements . This is because of fraud, wrongdoing, the kinds of problems of the bank. Are you aware that . I would take that to be true. I dont know the total dollar amount. Mister quigly, how are you made aware of each of the problems . They ended up in the hands of our regulators. Wells fargo had to pay out these settlements. How did that come before the board . Gee nobody should them . Its i was aware and informed as a result of being a chairman of the audit commit. The judgments that are required in providing timely financial formation. The need to be able to test estimate when it obligation is probable and measurable, needed to be recognized in those financial statements. Also a member of the Risk Committee, Regulatory Compliance committee. Management was transparent with us as those items were moving forward. Were you shocked when time time again you are confronted with these scandals that were being presented to the board . They continued right up today. The sales practice abuses were troubling to me. Shocked is perhaps not a overstatement about how i felt what i was made aware that in fact those practices were far more than had earlier been provided to us. But so doesnt the majority staff report direction as duty as board chairs to ensure that the committee had submitted comprehensive plans that met the requirements of the orders. Do you take responsibility for . That i agree with what Ranking Member mick henry pointed out, what is the duty of care . Whats the business judgment rule . How can a board member be properly informed on matters that are clearly management responsibility. I emphasized in my Opening Statement that i believe Effective Governance requires clear separation between management and the board, anytime those lines get blurred, i believe that the enterprise becomes less safe and say. And are you saying to me you consider it a dereliction of your duties to the shareholders and customers of, wells fargo in talking about these orders, you are trying to talk now about there are clear lines between the board and management. Separate yourself from some of the management responsibilities. Dont you think it was a dereliction of dutys not to be a pop of all of this . I know what ive done as a board member in wells fargo. I am comfortable with that work, and the way that i have perform that role. I do my best. Thank you. My time is up. The gentleman from north carolina, mchenry is recognized for five. Minutes so you are in charge of the committee, theres no question of the quality of the Financial Information provided. Theres severe negative consequences, and board decisions as it relates to management . Miss, do your chair of the, board i want to start with. The terminology that i use for frigid judiciary duty is approximately right. Do you agree . I do. So the boards responsibility under the Consent Orders that waters mentioned. What were the responsibilities under the Consent Orders for the board . Review and make sure that the submissions were submitted. Review quarterly progress reports for submission to the regulators. The occ and the fed. The frequency was a little bit different. Some responsibility. What does it mean when a submission was rejected from a bank from deficiencies . It means that the bank has to correct those deficiencies. Has to address those issues. So both cfpb in december 2019, and the occ in july 2019 was based on deficiencies, quality of the submissions. So did the cfpb ever reject the bank submissions . The answer is yes. Yes. They rejected. Theyve never been a submission to cfpb that was accepted. Not objection . Thats the regulatory term. So there were deficiencies inequality submissions, is that correct . Material deficiencies is the term. The answers yes. Did the occ ever reject the decisions of the cfpb . Herein lies the problem when the board in the borger cant answer this question, either Consent Orders of the federal government that the board had a requirement to refute these plants, i am asked you a very basic question, my hope was that i could get to high point here. You wont even answer yes when it was clear that the board decision here that there are material deficiencies from every one of your regulators, in the submissions you have, but we move. On the Federal Reserve also rejected your submissions. Im not going to ask for a response, the answer is. Yes we will move on. Since you are a formal governor of the Federal Reserve, i think that is a particular concern. What efforts to the board make to remedy the deficient submissions . We reviewed the submissions, we discussed it with the regulators, what the deficiencies. Were management began to work on resubmission. We review those three submissions. Resubmission to the Federal Reserve was submitted. It came back with the submissions being submitted into three buckets. With respect to paragraph two, the paragraph that covers boards effectiveness, they were all generally acceptable with the exception of three which were partially acceptable. On paragraph three, there were several that were partially acceptable, one that was generally acceptable, two or three primarily around clients and operational Risk Management that were not acceptable, currently under resubmission. Paragraph, to resubmitted in early february. Was there ever a sense of a question of the urgency of management to respond to the regulatory orders . No question about the importance of the work. Was there a concern from the board about the speed by which management was responding to those orders . There was a great deal of concern from the board about the speed by which people on the board were being respond, to also the Risk Management of the company, the quality of that work. So how do incomplete and late submissions. The how does it reflect on your former institution . Doesnt reflect well. So wells fargo entered into a 180 Million Dollar settlement. Can you help us understand the basis for that settlement . Let me help you with that. The banks executives made rep misrepresentations and omissions about the banks practices. There are many questions that i was not able to get to, i have deep concern not just about the responsiveness of the board. We have the same findings of facts. Severe deficiencies in Management Practices unique too wells fargo, and this board. Thats why were having this meeting even though you resigned. Thank you for this hearing. Thank you very much. The madame from new york miss valasquez is recognized. Yesterday i questioned scharf about the Consent Order. Listening to your answers to the Ranking Member, i just cant help but question the fact that you reviewed those plants, that were materially deficient. You concluded that they were acceptable. Then you sent it. Excuse me. Im sorry. The fact that you sent acceptable but deficient materials, that plan that he sent to the fed, did you do that on purpose . Now. Paragraph two of the scent degree requires wells fargo to submit a plan that enhances the Board Effectiveness in carrying out its oversight and governance of the bank. Until sunday night, miss duke, you and mr. Quigly were longtime members of the bank. Dont you think that submitting inadequate plants to the fed shows the boards focus on profit, not on addressing the core operation of Risk Management issues at the bank . I think that the board and the company have been focused very intensively on the operational Risk Management of the bank. The requirements of the board. So then explain how the fed Meeting Minutes state that the fed staff concluded, you were primarily concerned with lifting the acid cut. Even, though you are unable to evaluate the degree of actual progress made by the bank on risk identification. Do you understand why this calls into question your commitment to the consent decrees of requirement . My focus was on getting the work done to meet the requirements for operational Risk Management. After the Federal Reserve rejected the 28th submission of wells fargo, the director at wells fargo sent you a email and questioned whether the plan missed the mark. Wells fargo and i quote rush the job to clear this hurdle. Meaning the asset cap, given the comments on mr. Cravers can you understand why legislators, consumers, dont find this to be genuine . I do. And mr. Quigly . I said i also find that disappointing. What action have you taken to ensure, paragraph two of the federal Consent Order requires significant changes in Board Effectiveness, Committee Efforts what specific actions can you point to the two have taken to show that you are in fact committed . We really wrote the charter for the Audit Committee, we transferred Risk Management over say that was causing some confusion between the Audit Committee and Risk Committee, we moved those paragraph to the Audit Committee charter. Are the regulators satisfied . With respect to paragraph two, which was related to Board Effectiveness, the Federal Reserve has said that we have been responsive there. Thank. You change the committee structure. Miss duke and mr. Quigly, i think its clear to me, staff at the Federal Reserve, even other executives within wells fargo, that the priority of the two of, you and the focus of the board was on lifting the asset cap. Exiting the consent degree, not actually fixing the Risk Management problems at the bank, or holding Senior Management accountable. Thats why youre here. I will dear to say that she will probably have to come back. Especially if you dont change the culture in this institution. I yield back. The gentlewoman from missouri, miss wagner is recognized for five minutes. Thank you madam chairwoman. Miss duke, can i ask you to adjust your mic. Were having difficulty hearing. You mr. Duke and quigly, thank you for coming before the committee today to testify. Yesterday we heard from wells fargo, the new ceo, mr. Scharf about what steps hes taken in his first approximately six months to address the banks deficiencies. Well i remain cautiously optimistic that scharf is the right person to move this business in the right direction. My questions today will be regarding your actions, and in some cases laughter of to address the myriad of deepseated issues within wells fargo. The Committee Reports found that the things that the regulators talk about are unacceptable. I dont view them as acceptable. On the resubmissions and the feedback on them, these are big pieces of work, i think of them as the exercises, as well as the submission of plans under the living will provisions, these plans have gone through several iterations, including wells fargo, whose original plans werent acceptable, they had to improve. Them missed duke, was the board aware of the number of extensions that the bank requested in order to submit plants under the Consent Orders . The board was aware of any change and the plans for the Consent Orders themselves. I believe some of the cons questions about the orders had not just to do with the Consent Orders, but also other work concerning the agencies. Did that raise any concerns for the board . It did. We spent, in our Board Meetings, now consumed with regulatory issues. We have now reporting, not only to the board, but a number of committees not just the status of Consent Orders, matters that require attention. Also subject to regulatory. That was a red flag that the Consent Order program wasnt working . Let me give you this as an example. When charlie came to the bank, and we were reviewing the agenda for the first Board Meeting. And protect in particular the ones having to do with Risk Management, we had a new chief Compliance Officer, weve been through for chief Operational Risk officers. So, if we were changing at the people looking for the people who could actually. The people that can get the plants written in a complete fashion. Miss duke, the documents show he preferred regulators to provide feedback directly to the heads of business lines. Help us understand why you didnt want to hear it from the regulators directly . I would like to address that piece of the report. Ive been in a regulator industry for of my career. Ive been in a regulatory agency, ive got an enormous amount of respect for the work they do. Ive been in Constant Contact with the regulators at the Federal Reserve, and the occ, the regulator there, we met with him on numerous occasions, i found him difficult, not knowledgeable and what was going on in wells fargo. I found that he did send us letters on details that belong somewhere else. I shouldve never said why are you sending this to me. I know better than to do that. I apologize for that. Thank you for that admission, i yield back, madam chair. Thank. You the gentleman from california. The chair for the subcommittee on protection, entrepreneurship, capital markets, recognized for five minutes. The nation was shocked by the behavior of wells fargo. Whats equally shocking is that wells fargo seems an interested in atoning for what it. It was there any discussion at the board miss duke, of being on the right side of history. Instructing your lobbyist to lobby in favor of the overdraft protection act, so you can do something good for the consumers of the country, having ripped them off by the tens of millions. Was there discussion of supporting that act . In the Board Meeting, weve discussed overdraft programs. You never discussed what your lobbyist do in washington, which affect not just to customers which could be one in 20 or 20 americans, you dont discuss the idea of being on the right side of history for all consumers . Did you discuss whether you should assert the right under the arbitration provision, so that the arbitration provision kept someone out of court for the phony account when the only signed up for the real account . Was that discussed in the board . We did not. It sounds like the board is terribly disinterested in atoning far the harm done to consumers in general in the country, economy. We could have a third that is no more less likely that Something Else that you did the stress test for whitaker. Every dollar of dividends you pay, stock buybacks you do, makes the bank less able to deal with these catastrophes. You testified that America Needs a strong wells fargo in todays economy. You put together at the board level, back in july, a stock buyback and dividend program. Did that program anticipate which you would do if the program had call it when and a half catastrophes that could affect the bank and economy . Could very well have another one. I believe that the design of those stress tests does that. Within the stress test, there are not only changes in the economy, economic variables, but also, plugged into it our assumptions about different risks. The board, were you on the you are on the board when the coronavirus hit, a couple of days ago. You. Believe a strong wells fargo is needed for a good economy. You have a National Duty to provide a strong wells fargo, and after the coronavirus broke that you have discussions of ending or scaling back your stock but buy back program . Ive not attended a Board Meeting since then. I would assume this be a national, icing this was about the actions taken by the company internally. What about the Stock Buyback Program . The weakening the bank. Endangering the nation because youre too big to fail, in order to enrich the management by keeping the stock price up. No discussions of that since this epidemic arose . The design of the stress test on capitol are to include the effects of unforeseen effects . Once you have one unforeseen effect, that its much more likely that you will end up with several, once he planned for one or two or three, but you have one, one in four increases. You already have one. You are saying this coronavirus, you never thought about doing anything diminish the payments to shareholders. I joined the Federal Reserve in 2008. Im aware of the risk to banking. I know what it looks like. I know once it starts how difficult it is. I know how difficult capital is, and how difficult liquidity is. You know these things that wasnt somewhat amused by white colleague, the wells fargo would come back to the committee, im amused because you both have designed from the report as of last sunday. You are not in a position to make changes at the bank. I think its clear that the majority wants only to embarrass you, and continue their persistence defamatory anti base rhetoric. Since you are here, lets look to the past. Lets look to your service on the board in the past. I think you can testify about that. The republican report provides evidence that the Board Members understood the frustration with mr. Slope, yet he remained in place. Let me read to you specifically from that report, the report says that the evidence says that slowed and his Company Provided exceedingly optimistic information to the board of directors in congress. Wells fargo was no closer to complying to the Consent Orders when sloan resigned in 2019, what his team took over in 2016. What troubles me the most is that the report finds facts between 2016 and 2019, the company routinely submitted plans, submissions were frequently rate, or incomplete, or both. My question is why did mr. Sloan remain a ceo for so long during that course of an incomplete Compliance Program . It wasnt relied solely on representations he might make. I acknowledge that he led as a Glass Half Full type of. Leader with a sense of optimism. I have many times during the past year, Daily Communications with a regulators. I understood what theyre thinking was. That helped me in my oversight of tim and his performance as our ceo. Also the hrc committee, they were concerned about driving accountability deeper into the culture, revised management system, so that in order to qualify for a bonus if you had to have made significant progress and regulatory matters. Let me move on. Let me ask you this. The republican report also shows very clearly that there are violators under the Obama Administration were asleep at the switch. The regulators identified issues including practices from 2009. I personally took an l. A. Times article to ghetto their attention years later, and even then under the direction of portray and other, they drag their feet, they have taken Decisive Action to correct mistakes that the Bank Including implementing a unprecedented asset cap and calling for sweeping changes to the banks Risk Management. Do you believe that the actions from the financial regulators of trump including the liquidation of the asset cap were appropriate and fair given the gravity of the abuse and the need to send a message to management . I dont disagree with any of the actions of our regulators. I was encouraged to hear yesterday mr. Trump talk about the urgency of dealing with the consent. Borders he testified yesterday that was all in regulatory matters resist top priority did feel it was the case . I feel like resolving issues that led to these and operational and compliance Risk Management where the priority but i do applaud and appreciate emphasis on getting this forth done and its not going to be easy. And its the full support of the port he needs fitness full attention on doing that. I was impressed by mr. Sharps testimony as well. More than just this testimony that the fact that hes making less changes and bringing in outside leadership theres been dramatic reese i yield back. For the subcommittee of Consumer Perception protection in federal institutions is recognized. You have accountability right . His accountability correct . Yes. Mr. Mckinley said that responsibility the skin care loyalty in good faith. If first question i have is there any loyalty loyalty to customers . Is there loyalty there . To the stockholders and those individuals who were employed by the company . Any loyalty to those customs . Duty of care, to give loyalty business of judgment will all of that is grounded and relates to the Companies Back in the relationship between the board and the shareholders who elect us to represent them but im asking im asking you as a member of the board in a sense of loyalty and sensitivity related to all stakeholders at an empty price level. My question and up until when you first act the company when you are on the board. I want to talk about those things that took place when you are on the board. You were on the board if im not mistaken and september of 2016 correct . That is correct. So you were there when there was the fake account scandal . You are on the board at the end of 2016 when i was improperly repossessing service you were on the board and december 16th you are on the board in march 2017 when there were more fake accounts. You were on the board again when community lyndon test you are on the board in april 2017 on the whistleblower when a 5. 4 Million Dollar decision and got his job back. You are on the board in august 2017 overcharging Small Business retailer. We were on the board in february 2018 when the Federal Reserve you were on the board in 2018 wells fargo timid discrimination, you are on the board on march 18th when the Wealth Management youre on the board april 2018 and a one billion Dollar Settlement from pot alone issues. They were on the board on may 2018 altering Business Information with our client now. May 2018 when 480 Million Dollars to settle security lawsuits you are on the 40 june 2018 and the ftc fine for lending investors you are on the board and july 28 on the funds like pet insurance and legal insurance is you are on the board in july 2018 i could keep going on but im running out of time im gonna run out of time before he took all of the things that took place at wells bar go and supposed to have some accounted ability and doing all this my question would be in the december 2015 up when the feds came back with changes made to the composition for the changes made to the position by the wells fargo board back then . I know there was no you dont have to answer except for one board member. To an entire 2015 born reelection in 2016 when this was going. On the wells fargo changed a sea of. The board change . Ill answer for. You know. Jon schiff the chairman of seal retired a year later in october 2016 in the wake of the sale sports scandal unsatisfactory testimony before us. That might be why you resigned before you came to us. How about the chief risk officer did you did wells fargo find a new officer to respond to the feds concern about the we culture at the company . Nope wells fargo did not. He continued to serve through that role in his retirement and mid 20 teen and claim the Company Company should not donate to charity unless regulatory acted more favourably towards will forgo. In response to the concerns back in 2015 wells fargos culture made no changes wells fargo made no changes and you made no changes. Gentleman from missouri will be recognized. For five minutes. Thank you madam chair i would like to with regards to public in report and information in there. Id like to go back to what i think some of the problem started here for the fact of not being able to recognize it and it really concerns me from the standpoint that he can go back already 2009 when shows its regulators there was a problem with some of your employees, sales tactics. In 2013, Los Angeles Times ran a story leading to ethical breaches at wells fargo. And in 2014 in december they broke the story that eventually broke everything out so the question you on the board when was your reaction to the new story at that point we were appalled by the claims not story what options did you take find out information or stop the practice the leader of the Community Bank and come to the committee and explain what had been asserted. When mr. Stelter person here and i asked him point blank because he was firing about 1000 people a year and kept it up i kept asking him why have you not changed the culture in your thank because you keep firing people in your senior fixing no youre not fixing the firing people of. We are sure to fix this so you didnt have to fire anybody. That notley some red flags free when he kept firing people and nothing changed . The board was not aware of what youre referencing until the referencing we have the materials that he was going to be providing to this community became something to the board and the board acted decisively and not so and we condensed the special investigation and the Compensation Plan in the Community Bank was then terminated as was the leader of that bank. Thats fine but in our report it says that they he join wells fargo in 2018 the company had did not have the capacity to fix its problems compared to its competitors which means he had a different Business Model the different business styles this was not working to the board concern according to our report here, the concerns were dismissed by the individual. You hear executive officer over Risk Management Committee Report apparently, that not strike you as kind of concerning that they said we need to be changing the amendment style that theres. A conflict there . Im sorry but i sort of lost the track. You have a different management style than most banks your size. I was concerned about that style with regards to we hired in 20 team who currently resigned in 2019. That not concern you at the time that there was a pulling out of this problem and yet the executive officer said well the style is fine. You took sides in the situation and chose the executive officer over the Management Team and saying we need to change how are doing this machine. Can you give me the rationale on why you did that . There is no question that we had to build independent Risk Management Management Structure as we were transitioning from and trying to make part of what the old wells fargo was on the Risk Management stopped inside that line of business we did not have effective Risk Management i am pleased with the progress that was being made subcommittee of the Risk Committee the chief Compliance Officer and the significant traumatic edition of resources and capability that was coming to the bank to build back independent Risk Management function. My time is out believes me wanting more i yield back. Thank you. Gentleman from georgia is recognized for five minutes. Thank you charlie. This has been an interesting and yet very disturbing hearing and let me tell you why something is rotten in the cotton here. You all are not coming with the truth yesterday we spoke with your chief executive officer. He had an excuse hes only been around for four weeks. But you to have been on this board for the entire determination of the attack on the trust and confidence that the American People in your bank. Now first of all, while you were on the board, you allow the banks management to repeatedly submit material that was deficient. In response to the consumer. From our regulators. You did that. You did not hold your management accountable. Dont you know, if i was sitting on the board of directors and i am making 400,000 dollars as you, 600,000 as you with this money. I would be much more plan for. What . You mean the Federal Reserve is coming in and laying the blame . They did. Directly at their feet. Of the board. Saying youre not Holding Management responsible. Who came up with this idea to make up accounts make them up false accounts not one or two people millions, and you are all sat on that board and said nothing . You did nothing . The answer has to be up, we have to find the answer. Why did you allow this rabid conflict in our Banking System to permeate while you are sitting there all these years . Whose idea was it . To place this on the backs of your employees and your employers . To make up these accounts . Somebody had to do it. Your chief executive from yesterday cant be health responsible for that. But you altered. Who came up with this idea to do this . Tell us right now. Somebody had to. You are sitting there on the court. Coming up with this, and you all did not hold your management responsible. What is sorry excuse for board. That you said nothing about this. This is what is amazing about disappearance. Why . Who made that decision . They said let it go on. Why did you do it and say nothing . Answer that for me. Why did you not hold your management responsible . Why did you allow them to give these up an flexible reports to our banking regulators. Why . Whose idea was it . Come on, tell us. Come closer and tell us. We made that decision to make up these accounts . Falsely. Who . Tell us. There and therein lies the problem, and i hope and i pray that the people of this country see your stone silence when you will not even answer this question. You will not even respond to the regulators. This is an and pardon novel spend that wells fargo has and banked on the American People. Thank you, the gentleman from colorado mr. Stanton is recognized for five minutes. Thank you madam chair and i appreciate your coming here. Voluntarily coming in to be able to address the screen committee. I think a lot of our job needs to be looking for it as well in terms of rules of regulations ought to be applied in terms of actually wells fargos and some of the board compliance is as. Well one of the issues that weve had a lot of conversation on is in regards to the cra march 2017 wells fargo received a rating that it needs to improved the, press release came out and march 2017 stating the performance aspect lending tests, investment test, service tests, wells fargo earned an outstanding are highly satisfaction rating. It needed to improve security rating up from the nonsea are a performance factors. The circumstances of this rating downgrade in your past movie on board is that accurate . Yes sir it is. Under those test. The Company Received hires horse, but as a result of the issues there were some other issues icc allowed to double downgrade there. What was your your reaction to that reading . I understand the reason that actually did appear that way and the reason for that i think the cias a really important part of our system i think its important that they be used for the purposes that horse and tended, that i recognize and the behavior that led to the stubble downgrade. I questioned the issue to deal with the other problems of the company. As a former former regulator you had different capacities. Do you think its important with cra ratings that theyre less subjective and more objective in terms of some of the performance . I no longer i think my opinion is not im just curious as a regulator. I think cra is important. We also need to find ways to measure and knows what the needs of communities and individual communities are be their urban or rural and we have an important responsibility especially for modern community. Wells wells is big banks that small Community Banks within my district as well, general what federal there is an appeal process but that appeal is the night, i would say the issues its much harder in a Community Bank to be able to find investments that to meet the requirements of the cra and to have this complete a picture. I think Pay Attention to the resources and the ability of the different institutions and cases where the Community Gather rather than individual. Have you dealt with small banks, big banks, you feel that to the regulators, make a determination, no real chance to be able to turn it over. That occurs to me that there ought to be some independent measures to be able to have some of that actually be able to address in terms of Board Performance you probably reflected back just a little bit in terms of how the board ought to be able to react management decisions do you have some thoughts looking at legislation, reflecting back what could be done better . Theres no question about the i think there is no question about the fundamental approach to Corporate Governance and having the opportunity to play that hand and do what you need to do in the best interest of your shareholders. Now in the world as we think more broadly than just shareholders, thinking about all of those stakeholders, we absolutely were appalled by the sales practices abuses. As soon as we were aware, we took immediate action. The witnesses have requested a brief break. The committee will stand in recess for five minutes. Thank you