On Thursday, Wells Fargo CEO John Stumpf went before the House Financial Services Committee to testify on the unauthorized accounts scandal. Wells Fargo has already fired over 5,300 employees after an estimated two million unauthorized accounts were created.
Initially, Stumpf and Wells Fargo tried to blame the scandal on bad actors and praised the megabank’s excellent corporate culture. When nobody bought it, Stumpf retreated from that position Thursday, instead saying he understood the bank had serious problems. He reiterated the bank would drop the controversial program that pressured employees to hit sales goals, which subsequently led some to create fake customer accounts.
Information also surfaced that the more honest employees who did not create fake accounts had also been fired for not hitting their sales goals. Damned if you do, damned if you don’t.
But perhaps the most interesting dynamic of the hearing on Thursday was the spin and lamentations from Republican committee members, who both tried to blame the Consumer Financial Protection Bureau (CFPB) for being “asleep at the wheel,” and, in a less scripted manner, castigated Stumpf for giving their opponents ammunition for the fight over regulating Wall Street.
— AFR (@RealBankReform) September 29, 2016
The CFPB attack, clearly premeditated and coordinated, has its own logical problems. Republicans (and some Democrats) have hated the CFPB since its inception as a matter of principle, let alone the animus CFPB naturally has engendered from the Wall Street donor class. But criticizing CFPB for failing to properly regulate Wells Fargo is not exactly a great talking point for getting rid of Dodd-Frank or deregulation generally.
It is also worth noting that it was CFPB along with other regulators that brought the case and $185 million fine against Wells Fargo. So the Republicans want more expansive and aggressive financial regulation? Yeah, didn’t think so.
The less-controlled outrage for Republican members of the committee was over Stumpf giving progressive Democrats justification for further banking regulations. Ranking committee member Maxine Waters even said during the hearing she believed Wells Fargo was too big to manage and should be broken up. Could the Wells Fargo unauthorized accounts scandal be the last straw for ending Too Big To Fail?
Wells Fargo and other mega banks have yet to provide an acceptable breakup plan to the Federal Reserve. Earlier submissions by JPMorgan, Bank of America, Wells Fargo, Bank of New York Mellon, and State Street were rejected by the Fed in April.
While the battle lines are drawn for the fight over reining in Wall Street, there was one thing every member of the committee seemed to agree on: that John Stumpf should resign as CEO of Wells Fargo.