Wells Fargo CEO John Stumpf’s grilling by bipartisan members of the Senate Banking Committee this week followed revelations of a sales culture run amok for years at the giant bank.
The hearing was a public take down of the silver-maned farm boy from Pierz Mn.
Stumpf’s reputation has taken a big hit in the ignominious aftermath of a $185 million settlement disclosed earlier in September by California and federal regulators over allegations, which followed Los Angeles Times reports dating to 2013, that thousands of Wells Fargo employees, driven by management sales quotas, opened a couple million new accounts for retail customers without their knowledge. And they incurred millions in related fees for the huge bank. The head of community banking and a top compliance executive left weeks before the settlement announcement.
But it will be the Wells Fargo’s board and big shareholders such as Warren Buffett, , not the Senate, who will determine if Stumpf loses any of the tens of millions he’s made over the same period in compensation, or his job. Wells Fargo stock is down billions in market value in September. Regulators, former employees and senators used words like “fraudulent,” “illegal” and “toxic” to describe the bank’s sales-crazy culture.
“Buffett will leave Wells Fargo alone if he thinks that the company is doing everything it is asked by the government and everything needed to make amends,” Bill Smead, portfolio manager at Smead Capital Management, told Bloomberg last week. “If he concludes that more is needed or that there is no way to be confident in management’s integrity, he will get involved.”
Jaret Seiberg, an analyst at Cowen & Co, said Stumpf's guarded responses to senators and deferral to the board was “a losing argument” and “just further inflamed the populist dislike of megabanks.”
At best, Stumpf has presided over a financial and reputational mess. He is the latest public poster boy for big-banking excesses.
Wells Fargo’s value-losing stock has been eclipsed by that of titanic rival JPMorgan Chase. CEO Jamie Dimon had his own near-corporate-death experience several years ago over a mortgage debacle and an institutional securities-trading scandal that cost the bank several billion. But that didn’t involve retail customers.
Stumpf, 63, CEO since 2007 and board chairman since 2010, joined then-Norwest Corp. in the Twin Cities in 1982 from then-First Bank. The graduate of St. Cloud State University, who earned an MBA from the University of Minnesota, succeeded Dick Kovacevich as CEO in 2007.