of your stock. you opened 2 million funny and -- itnd then went had to be material because were bragging about it to the people investing in your stock. that you had higher penetration rates, more accounts per customer, that the number of bank customers that had credit cards had growing from the mid-20% of the 42%. it had to be material you are talking about. the peak firings according to your own documents was 2013. you knew you had a problem that. why did you not tell shareholders that are penetration rates are phony and when we tell you we are keeping our relationship with our customers, we are doing so by putting them through the ringer. what internal audit system did you have that assured you that you did not have a material problem? >> i have to push back. this is the behavior of people we found that we did not want

and the vast majority of everything we do is right. firing the highest number of people in 2013 but bragging about your presentation -- penetration rates in 2014. you knew it was material to shareholders and you knew it was a funny number that you fired people -- phony number that you five people for falsifying. fired people for falsifying. >> we did not know if those were good accounts are not. we looked at 20,000 credit -- >> you fired 5300 people. he took 5300 could americans and turned them into felons with a system that you created, benefited from and drop your stock price up by bragging about your levels of new accounts. >> i disagree with that. >> i'm not surprised.

we have institutions that are too big to fail. we found that they were too big not to bail. eric holder has told us that they are too big to jail saying he fears for bringing equivalent indictment. we now learn they are too big to manage, too big to regulate. it is time to break them up. >> the time has expired. the chair recognizes the gentleman from missouri. >> thank you. confront a total travesty and a financial market. consumers in this case were failed on all accounts. the financial institution failed them. federal regulators who were charged with overseeing the protection failed them. federal regulators failed to stop ripping off consumers and the consumers lost. slapping a bank with a fine will

not make that go away. 25% will go to consumers were harmed. getting back to your bonus that will not get it away. more rules will not make it go away. the fact is that regulators did nothing. thousands of employees are being fired for bad practices yet nothing was changed. the regulators need to do their job as well. instead, the institution push forward with the whatever it takes approach between sales targets and regular tourists idly by oblivious even after reported in the news. thelators neglected to filter enforcement obligations after the fact. instead, they often -- opted for a quick settlement. wall street needs to be held accountable. so does washington. that is will be here today. , how manyn to you regulators do you have a daily

basis? there -- maybe 80 for example. i don't know the number on that. just kind of curious, as a former bank regulator, this is a really disappointing situation for me. >> i cannot agree more. dismayed that and the bank let this to happen. he did have a culture in place that allowed this to happen. i'm shocked that regulators set on the thumbs this long and did nothing. while you are being fined i think is appropriate, the regulators ought to be fined as well. for them to take the five and keep it, they need to be fined and let the money to buy consumers. there is so much went to go around. it is unbelievable. >you made the comment that you

have a good culture. this should not be happening. your own testimony says you her firing thousands of people a year. ofyou are firing houses people a year. there's only one with i can happen and that is it there is a culture that allows it to happen your after year. there is a laissez-faire approach to what you are doing call a timeout, enough is enough. this cannot continue. it's you are firing people -- you are firing people hoping this goes way and the lakers are watching it. these actions must have consequences for not only you and for you leaders as well. -- regulators as well. >> we did things. in 2011, within the business, they moved the compliance -- concern for this issue into a compliance area. 2012, we were reducing goals

and doing more ethics training. the 2013, corporate resources were brought in. we worked with the occ. in 2014, more reductions in bowls. oals.-- g this does not represent the culture. >> i respectfully disagree. i've been in business like this. you can tell me when have the fire people year after year after year that there is not a problem. for a year or two, that is one thing. but for 4-5 years. throughout testimonies of an exam that bank and found a teller skimming money rawer. her cash for -- d the president said, she is a good employee and the feisty against him and him will be ok. my doctor the floor. hit the floor.

as long as we keep to a minimum i think he will keep it ok. i,, have you reported this to your insurance company that has a clause on it? do you have a bucket bond or self-insure? >> fidelity bond. when people do the wrong thing -- >> when did you report this action to your budget -- blanket fund? >> i can have our people get to. >> this is a big question. if you did not report that immediately when you found this going on and you allowed your after year to have a thousand people -- your company will go bonkers over this. we will have a request for that. >> time has expired. the gentleman from new york. >> i can't believe what i'm

hearing here. let me understand, you have been the ceo since 2007. you have been the chair of the board since 2010. is that correct? >> that is correct. >> in the time you have been the chair, avatar here that shows you have been penalized, systematically every year since you have been in charge. every year. april 2000 63 million, october. 4 million, june. 5 million, september. i could go on and on. -- you were the ceo. you're good to tell me that there is not a culture of something wrong at wells fargo?

sco whenou get credit you bring in all this money because that is how you get your bonuses. is that not correct? you get a bonus from your board because x amount of dollars coming. in your are telling me that heather's possibility of losing your position when you have a culture of being fined and cost in the bank year after year, month after month. the responsibility. -- no responsible to. -- responsibility. >> as her at the pleasure of the board. >> than the whole board needs to go. if they're going to allow someone to be in charge. you fired 5300 employees. when he found out they were doing something wrong, they were fired. going wrong at this bank.

you are the head of it. admission, if the buck stops with you, as you said, i apologize, the buck stops with me and you also have to admit that criminal activity was going on in your bank, then you should be fired because it stops with you. >> the board has that power. my energies to lead this company forward. started out by saying i apologize. if walked into wells fargo ororrow and robbed your bank defrauded your bank and after the court they say, i'm sorry, i'm good to take full responsibility for robin this bank and i'm sorry that i robbed this bank. please, don't prosecute me because i am sorry that i robbed this day. would you allow the person to walk out after robbing your bank

because he is now sorry that he robbed the bank after he took the money? >> i see something very different between being honest and breaking our code of ethics and taking -- >> you did not break code of ethics? do you realize that you have not -- not only did your tank have a black eye, your bank, wells fargo, has given the entire industry a black eye. agree, he wants everyone to come in here. , hugh, ceo, chairman, what has been a criminal enterprise, when i look at consistency, time after time after time and time again, you have to get fined. easier to pay the fine when you

know nothing else will happen. you pay the fine, get away and make a lot of money. i'm from new york. i believe in financial institutions. that's why i'm so mad. i believe they make our country better. until they rip us off. and they ripped us off and took advantage of customers and consumers and have the financial crisis guide individuals right now who are on the street, not back in their homes, they had these fraudulent mortgages. nobody said i'm sorry i didn't these market district will put you back in your homes and make sure everything is ok. no one has done that. there is no question we don't do everything right. we have made mistakes. we are upping our day. accountable? >you're vice president made $125

million bonus. we're making over $22 billion. who is paying for it? don't tell me you are sorry. >> we are taking care of everyone of our customers impacted. every one of our customers impacted. >> the gentleman from wisconsin. >>, 20 or customer from wells fargo. -- i am a 20 year customer from wells fargo. i've had a good experience with your bank. have dealt with have treated me incredibly well. that is why i'm there. what appeared today is incredibly disturbing. i would to make sure we are on the same page. how can you classify what wells fargo did with this potentially 2 million account holders? >> the 2 million account holders pdc --counts -- the

>> was this fraud? hr problem? how do you see this? >> the 2 million accounts could not be ruled out -- >> how do you classify when you take 22-20 five dollars, one million, 2 million, how do you classify that? >> i think it was dishonest. broker code of ethics and the people who are responsible -- >> was it theft? did you steal? i want to know if we are on the same page. did wells fargo employees deal from 1,000,000-2,000,000 other customers? >> in some cases, they did. >> they did. stealing fromis

the customers, baking is based banking is based on trust, i don't care if it is a half a percent of people, if you are stealing from them in 2011, a thousand people are fired for stealing and what do you do? you don't fix the problem. 1000 people fired in 2012. you don't fix the problem. 2013, 1200 people fired. we still have a problem. you are stealing from people. bank intee you that any my community, if they were stealing from someone, fired and fix the problem. they won. -- day one. we are five years on. >> let me say something, as we understood this problem, when somebody would open an unauthorized account, it was not

when an account gets opened and not funded, it is important, it gets auto closed. we did not believe as we look at that until 2015 that there could be the possibility of a zero account that could affect a customer. >> you have to be kidding me. saying, the board members knew in 2011. they were looking at this. if they are looking at a thousand people fired, they don't know why they're being fired. if they don't look in and say what were these people doing that caused them to be fired. pull the curtain back and say, whether you want to call it defrauding or stealing, wells fargo has a big problem. 2015,ll me it took one---

i don't buy it. it's wells fargo was making a lot of money off of what you are doing. i think you are hoping he would knock a copy it is a risk of doing -- you would not get caught. it is a risk of doing business. fired a couple people trying to make it right. practice and played because we were making big profits. is this over? how could you stop it now but not 2011? >> we should have done more earlier. fees thatillion in were on accounts that these accounts we could rule out, it cost us $10 million to open those accounts and close them. theet even the cost of dismissal, this is a loser for us. it only helps customers >> it is a loser for you.

>> i would rather have a customer have two accounts that you stand for they do not. >> i like wells fargo. i've been there 20 years. you turned a blind eye to your customers were being stolen from. people who cannot afford $22. you did not fix that problem. an institution based on trust with your customer, you did not take it seriously. he did not remedy it. fargo.n wells i wanted to testify as to how b employees were embedded at wells fargo. >> gentleman from massachusetts. >> thank you. i want to thank you particularly for doing something here today that no other person has been able to do. you have brought true bipartisanship to congress.

[laughter] we are all together on this. you're not happy. minutesthe last few they're been running a graphic in the back and my colleague went there one of them. it is important to know what some of the other things you have done. screwed student loan holders. credit unions. mac,e mae, freddie mortgage holders. hispanicsericans, it's, -- hispanics, health care workers, on and on. i understand this is not material. paidfive months ago you $1.2 billion in a fine. this is only 15% of that.

who cares. be sorry empire tiresome workers. we will get through this. who ran enron-- or arthur anderson, they felt the same thing. we are not your problem. we can criminally prosecute you. you can -- you are your own boss. you are the ceo and the chairman. hold yourself to accountability. you have been bad, you have not. that is ridiculous. your problem is coming. not today, it is coming. when the prosecutors get a hold of you, you're going to have a lots of fun. . wanted to thank you for that you have the graphic appear. guy -- dow this

you know this guy? this is simple internet research. that is all i'm capable of doing. go it. wells fargo. whole bunch of stuff shows up. this is mr. robert holmes. he rubbed your bank in lancaster, pennsylvania. he did not use a weapon. and they got all the money back. on a in jail as we speak $750,000 bail. you, on the other hand, have running enterprise that has a culture of corruption, you encourage subordinates to abuse existing customers by opening fake bank accounts, you charge those victims legal fees, interest and late charges and then you send some of them to collection agencies because they did not pay them. an i-5 5300 workers as if

you care to cover everybody's tracks. in my opinion, you and your entire leadership team are clearly guilty of at least conspiracy to commit fraud, conspiracy to commit identity theft, racketeering and to a lot of my friends do something about, and probably a dozen other crimes. what the heck is the difference between you and mr. holmes? why should you not be in jail? he did not use a gun. he said he was sorry. what is the difference? thatngressman, i think when you do see something unethical or dishonest which i have tried to exercise my duties as -- you have not done a good job.

you have had six and of ideas. that is a good job? this is the seventh largest fine you had. you have six others a lot bigger. that is a good job? i forgot, you're the one touching yourself because you are the chairman of the board. i think i'm the greatest congressman in the history of the world, i should be speaker, president and maybe emperor of the world. does that sound good? >> there is no question that we have done things that wouldn't to improve on. we are trying to get better. few few dollars, based on the money he stole and the victims he had come you think he should be let out and have no control record? >> being dishonest and breaking the law is something very different. >> not breaking the law stealing identities? >>, culture is about not doing that. we take for that not to happen. -- train for that not to happen.

time has expired. the gentleman from california. mr. royce. ofmr. stump, the idea cross-selling eight products target is part of a long-term practice at wells fargo. going back at least to your predecessor because in 1998, fortune magazine quotes, doubling the average product purchase to eight as your predecessors quote current obsession, morphing the goal to a mandate here seems to be a big part of the problem. i say mandate because it people are fired for not hitting the goal, it is a mandate. that seems to be at the center of a toxic sales culture that you have overseen. i would ask you, was the goal of

a cross sold products something understood and embraced by management and salesforce? >> it was a rallying cry to help work together the average consumer household has about 14 financial products. >> understand. , do you think that that target contributed in some way to the negative change in your sales culture? >> we never had a target. aspiration. we had team members who would work with customers on need-based selling and when they did that right, the customer won and was good for us. >> did you read the l.a. times article when it came out? was a discussed at the board level? >> we did discuss the article. >> did the information in the article give you pause about reporting cross-selling metrics

or ratios in your annual reports? here by faketed accounts generated by your salesforce. >> it helps -- >> i understand your argument. here is the question. if you know fake accounts are going into that ratio, why would you keep reporting that ratio? i have a copy here of your quarterlies.our you turn to mr. duffy here when he was asking a question and you are saying, it isn't that material in terms of our bottom line. in terms of the fee income. what you are reported on your products per household is a constant upswing quarter by

quarter. it certainly is material in terms of the stock price. when you are doing in constant reporting these ever-increasing numbers was driving your stock price up and the point i'm making is you have this story in 2013 that shows how much of that is based upon fraudulent behavior. that becomes material. about thatalk specifically. if you include all 2 million accounts in that. we know we can because we are finding out that left than 25% in the did not order it or do not remember. quarters andon the to hundreds of one product impact. it is immaterial. >> the california company. you have a lot of california customers.

people dependent on this customer. you have your employees and from what i understand, a year connected to this. 1000 being fired a year enacted to this. rebuilding the trust will take a course of action that have yet to see you set. through open and unauthorized accounts or play in the shell game with a person's money, your employees and company negatively impacted the credit of many people in this country. only to think for a minute about what that meant to think about for their ability to qualify to get a home or get a terms of thein student loans to stand -- send that center dot at university. not to mention again working americans wrongfully terminated tor company for refusing

break financial laws, refusing to break ethical laws. that is what we have to come to grips with your -- here. this is the very least the result of actions over the last five years. that did not happen by accident. >> time has expired. the gentleman from massachusetts. i have a unanimous consent request to metric into the record a letter sent by ranking member cummings of the oversight committee. a question related documents by october 13. >> without objection. >> thank you. i would also like to ask the chairman to consider doing a hearing at a later time with a number of the employees, both whistleblowers who were fired and others who were fired for

italian tory attempts -- retaliatory attempts to provide information on the fraudulent conduct being conducted at wells fargo. i'm aware of at least three u.s. attorneys that have also issued subpoenas in this case. i'm hopeful we may eventually get to the bottom of this. and while the city of l.a., the city attorney there and the cfpb and the o.c.c. have done good work in this case, the findings thus far are pathetic, really, total inadequate to try to bring wells fargo into compliance with the law and that is certainly reinforced by the way, mr. stumpf, you have diminished the offenses going on at your bank. it is really, you know, proof positive that whatever the ocpf -- excuse me -- the o.c.c. has

done is not adequate to make you realize the level of your offenses here. again, 5,300 employees were fired. up to two million fraudulent accounts, and this has gone on for at least five years. and i want to point out here -- and mr. duffy hit on this. this is the banking industry. this actually it exists based on trust and what your employees did, at least -- well, as many as 565,000 fraudulent credit cards were secretly opened by your employees using the social security numbers of your customers. so they opened fake credit cards so they could charge them for that. they assigned fictitious pin numbers when the customer didn't even know that was going on. they put pin numbers. and then they assigned email addresses so they could comply

and get the account open and these are your customers. now, we had credit card companies up here who have sent credit cards to noncredit worthy borrowers and seniors who didn't understand what they were getting. in this case, these are your customers. these are the people that they became victims because they did business with your bank. that is unbelievable. and i know that mr. meeks and mr. capuano before they have made comparisons to criminal activity, but i do want to note that under the racketeer influence and corruption act, you've satisfied that. you've satisfied all the elements of that. two of the predicate offenses under rico, number one, is fraud. and there's no question about that. mail fraud. securities fraud. you've done it all. you covered basically every

aspect of fraud in your bank over the last five years. and secondly, in many cases these employees, these whistleblowers were intimidated or fired in some cases. you got an h.r. employee here who says you have a system to retaliate in your bank against whistleblowers and that's another predicate offense under rico. so let me ask you. as the c.e.o. and chairman of the board, you had a responsibility to file sars, suspicious activity reports. mr. stumpf: correct. mr. lynch: right. you have up to two million separate accounts being opened, up to 565,000 bogus credit cards being opened by your employees in secret against your customers and yet when we ask the treasury department for the suspicious

activity reports that you filed, they don't match up. you're not in compliance. mr. stumpf: let me say a couple of things. we filed -- we did everything that was necessary to abide by every regulator and regulation issued. mr. lynch: you're saying you filed reports on -- mr. stumpf: i can't say on that because that's -- mr. lynch: well, that's your responsibility. let me read you the law. mr. stumpf: i know it's our responsibility. there's actually a prohibition -- i mean, i have to do what's right according to the law. mr. lynch: let me just say. this is my time. reclaiming my time. the board of directors, this is the anti-laundering statute. the board acting through senior management makes sure the bank maintain an effective bank accuracy act, including suspicious activity reporting and monitoring. mr. stumpf: and we do that mr. lynch: it's your responsibility.

mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from oklahoma, mr. lucas. mr. lucas: thank you, mr. chairman. mr. stumpf, while my day job is that of a congressman, my farmer is by trade and my university degree is in agricultural economics and looking at your resume, about the time you were entering into the banking industry 30-some years ago, i can remember taking a class on money and banking at oklahoma state. and we had a professor who was very enthusiastic about the market economy and we discussed how the banking model we use now went back essentially 500 years to italy and the concept that under a market economy, bankers were the individuals who determined what savings were worth and pooled those and by the same token made risk determinations. figure out what the cost of money should be and allocated that out through loans.

a glowing example. and he would compare western europe at the time, north america, much of the rest of the world how affective that was compared to the demand economy model of the old communist countries at the time. china, russia. all of those sort of places. a very glowing discussion. i don't know that i have a particular question for you about what's going on. i think between the other committee and my colleagues here, they've done an exceptional job of getting the facts and i suspect, as a number of my colleagues have discussed quite straightforwardly, this has legal implications far and beyond the activities of this committee or the other committee in the other body. but i'd say, mr. chairman, the most challenging things you've done, by actions of your company, by management of your

company, you have a hard time for those of us who defend the market economy, have a time to -- to continue to maintain the system that helped to drive the successful enterprise called the united states of america and the free market system. that's probably the most tragic thing about this. now, in those econs lectures, they used to lecture about the concept of enlightened self-interest. that's the nature of any consumer. that's the nature of any business person. but then there are the responsibilities of good corporate citizenship, about self-restraint, about not pursuing greed. i guess i just simply note to you, sir. whatever ultimately legally comes out of this process -- and clearly a number of my colleagues think something will,

or whatever your stock holders determine or fellow board members, you just made it really hard, really hard for those of us who want to maintain that concept of a market economy, who want to continue to make sure that bankers, not some bureaucrat somewhere, are the arbiters of capital to effectively move this country forward. i don't know how you correct this but i suspect, sir, when you interact with your peers within the industry, you're going to have some challenges for a long time to come. because the brush with which you will be painted will stroke all of them too. and i suspect that's blatantly unfair and that's unfortunate. but then, i'm just a farmer by trade. multigeneration debtor. working hard to service my debts every year. you have to think about that. you have to think about that.

what this episode has done to your industry and ultimately to me and all of my fellow consumers out there. it's just very unfortunate. mr. stumpf: may i make a comment? mr. lucas: please. mr. stumpf: thank you. we take this very seriously and i also come from a farm. i understand what it's like to be on a small farm. at least ours was small with large family. i know right from wrong. i know we have a lot of wrongs to right here. but i also want to tell you that wells fargo is a great corporate citizen. we employ 268,000 wonderful team members across the country. we have a culture based on ethics and doing what's right. not everyone does that. we made mistakes. we're one of the nation's largest taxpayers. we're one of the largest philanthropic organizations. we have a lot of work to do, there's no question about that. but i stand with the people who are doing the right thing, who honor our culture and our

ethics. they are terrific people and they're out there with our customers every day. we have work to do. i understand that. mr. lucas: disservice has been done to them. with that, mr. chairman, i yield back. >> that was just some of what the ceo of wells fargo had to say earlier today before the house financial services committee. we will show the second half, about two and a half more hours of his testimony before the house committee, in just a minute. we just want to take a chance to get your calls, your reactions, see what you think about the wells fargo fines. do they go far enough? we have the numbers set up a little differently than we normally do. if you think yes, the fines he is facing and the bank is facing 748-8920.h, call 202- if you think no, the number is 202-748-8921.

you can also check out the twitter feed on c-span and the facebook page. take a look at what the wall street journal is reporting. although the ceo is not out of danger, despite the pay clawback, $41 million that john stumpf will be getting back from his own income, along with another executive, $19 million. the "wall street journal" reporting it is not enough. 5300 employees fired. 185 movie dollars in fines. let's hear from you, on the line for "no," ann calling from port orford, oregon. what would you do if you were one of the lawmakers on the panel today? caller: i would just like to see people at the top be responsible. i'm trying to be hopeful that this is not going to be another case, just like with big pharma and the oil industry, where the

people at the top, the people at the bottom have consequences, and they just get a little slap on the wrist, a minor percentage of what they have profited from, and just go on, so what is the incentive, you know, to be honest? it's very discouraging. host: what would you want to see happen? jail time? caller: absolutely, absolutely. i mean, that's a no-brainer as far as i'm concerned. a lot of people, you know, are involved. he's known, clearly for some time, what has been going on, oh --ou know, he says, somebody pointed out, one of the congress members, that year after year wells fargo has paid fines under his head of the board, ceo, and he says, well, he basically said, the board could fire me, i serve at their pleasure. well, why should they fire him

when he's making all this money for stockholders? host: right. gon, alsoom ann in ore showing some action during the committee hearing. he was before the senate banking committee last week, and today before the house financial services committee. taking your calls. we want to know what you think, if the fines and what has happened so far with wells fargo has gone enough. williams: from new jersey, and he says no. caller: i believe he should get fired. in my opinion, this kind of thing, especially in a business like that, honesty and transparency is very important. host: william, it is a little hard to hear you. i want to put you on hold. try to turn on your tv -- your tv down, so we can hear you better. i will take another call and

come back to you. youesota, st. paul, sue, are a wells fargo customer. what is it like to come into the bank these days. are you on the line? caller: are you talking to me? host: i'm trying to reach sue. caller: can you hear me? host: now i can. have you been to your local branch lately? caller: i can hear you, go ahead. host: ok. i am a wells fargo customer, also a 37 year wells fargo employee. host: wow. caller: i spent 20 years in the retail bank side, and it is very sad to hear the employees talk about this,, this culture at the ban. host: it's not the culture that you experienced, in your branch? caller: no, it is not. who worked with me for years, we have code of

ethics training, we have always done what is right for the customer. i would like to hear other wells fargo employees come out and stand up for john stumpf. it's painful to watch him go through this, when he is a good man and does the right thing, and they are blaming him. it's really tough to watch. host: we have another employee on the line after you, so we would take her call in a minute. what you have been hearing from lawmakers, this does not ring true to what you have seen, being an employee there? caller: no. wells fargo is a large organization, and i think the good definitely outweighs the bad. host: let me get marianne on the line, walnut creek, california. you are actually able sort of customer. i think i misspoke earlier. caller: well, we have a lot of business with wells fargo.

our mortgage is with wells fargo, and, our accounts, retirement, whatever. i don't think they have gone far enough. i think the whistleblowers, those who wanted to speak out, all this compensation, which i'm not sure if it is for the whistleblowers or whatever,, should be compensated. i think that not only stumpf, but other members of the board, there should be more money, more in fines, more compensation for lost wages, more pay back to the, justifying what was taken. like, when you steal something, you give it back. these people should not be so inordinately wealthy. their stock went up with all these false accounts. the fines are not have enough. it's not enough. if you put this man in jail for five years, and he comes back, and he is still a multimillionaire, he can pass

all this wealth down to his family, all over, and win back respect with money. it's not adequate. more money should be given back, in lost compensation, in fines, and whatever it takes to make what was taken the given back. and i am embarrassed to be a wells fargo customer. i remember when some of the salespeople in the offices were particularly aggressive. i wondered what had happened to banking, when they just pounce on you when you walk in the door. it was kind of weird. that happened for years. i don't know what is in this game for banking these days. was, i believe the branch office that i was at was particularly aggressive, and the people were, the friendliness was way above the top. i think it was grabbing at people, and there are a lot of more vulnerable people than myself, so more fines, i believe. i'm embarrassed.

i'm ready to change accounts. ii'm ready to change accounts. i have another account at bank of america, so i may change if you. host: thank you for the call. here is somebody who does think that what has been going on so far, the fines and the lost compensation, does go far enough. nashville, tennessee, mary is on the line. mary, can you turned on your tv so that we can hear you ok on the line? caller: yes. we will get the tv muted. host: great. and then go ahead. caller: sorry about that, yes. i just want to say, you know, the fine part, you know, you're hitting a bank in their pocketbook, and i just don't know that hitting a bank in their pocketbook, when they hold money, is really the right way to go. i don't know, what is an appropriate fine? define will never win back safe, win back customers -- faith, win back customers, restore their

reputation back where they were. i do believe that sometimes, especially with people that have a compensation package in an executive leadership team, whether it is the ceo, the chairman of bp, where their stock is tied to their performance, compensation is tied with the stock price, that's not really a great stay integrit ative. a lot of ceo's of fortune 500 companies in the united states are making more compensation in a stock situation than they are in their salary. host: so what do you want to see happen? it sounds like you don't think this has gone far enough? caller: well, i think the fine, you are fining the bank itself,

and the bank is not just one person. it is a lot of people. i think you're looking at an industry in banking, one of the most regulated systems, but unfortunately they have not been able to regulate themselves, so you are causing the federal government to say, ok, another sock. we had socks at public companies after enron. so, i think, i think they're going to end up being regulated more and more, and it will force profit margins lower, and they will be forced into a boc. -- box. host: speaking of regulations, mary, $100 million from wells fargo will go to the consumer financial protection bureau, one of the largest awards ever since that bureau was created. virginia, from california, on

the line where you don't think the fines go far enough. what would you like to see happen? caller: everything that happens like this, nothing happens. he's having tons pay back is like nothing to him, where he still has that stock, and members of his family have stock. it seems everything that goes on, that went on in the 1980's and is still going on with these corporations and things, nothing ever happens, no one ever goes to jail, so, what, all we can do is sit here and watch another one, and another one, and another one. host: thanks for the call. this is the "washington post," talking about what options might be for customers of wells fargo. one of the options will not be

to sue the bank over fake accounts opened in their name. one major group affected by the scandal, the customers, as lawmakers pointed out, many customers are blocked from suing the company because of arbitration clauses, little-known contracts that often ban customers from taking part in class-action lawsuits that are regularly included in the fine print for checking accounts, credit cards, and other consumer products. on the line, a wells fargo customer in jacksonville, florida. earl, go ahead. caller: i'm concerned about fargo, they have been around since 1865, right? i got a checking account and a savings account. i wonder, i am a disabled vet,

too. should i take my money and put it in the navy credit union, or a savings account, one of the accounts? have they done this -- what they told me, the bank in jacksonville florida, ma'am, they are in california. i don't know. do they keep it in florida? hey usegressman said, t slickn numbers, a scheme, you know, and they made money off of it. my social security comes to my savings account, right? and, and -- host: i just want to interrupt you hear. take a look at this, an article talking about one thing that might interest you or affect you as well. $4 million was fined

in a separate issue for illegally repossessing service members' cars, and they will pay $4 million to settle that, plus $20 million on top of that for ther problems dealing with repossession of people who served in the military, repossessing their cars. a separate issue, but also tied in with problems currently facing wells fargo. nancy in north myrtle beach, wells fargo customer. what are your thoughts? caller: well, kind of simple thoughts. how do you know if you have been one of these affected people? loane a wells fargo auto and credit card. are they going to let people know, if they were basically taken advantage of, and maybe undo some things that were done? host: have you been to your branch since all of this has been coming out? caller: i don't go into the

branch. i do everything online. you know, paying my bills, my car payment. i don't ask a go into the bank branches. caller: right -- host: right. caller: how do we know if it was us? host: go ahead. caller: that's fine. host: again, we have been seeing the lawmakers questioning the wells fargo ceo. a lot of people probably have similar questions to you, probably checking their own statements, their own credit reports as well. we will take another call from troy, alabama, samuel on the line. you think the fines have gone far enough? caller: i don't think the fines have gone far enough. you know, here's where -- what i suggest. i suggest they should clean house, clean house. .ust make a new start

i'm taking all of my money out of wells fargo and putting it in another bank. it's the same, the way, you know, the way these banks do. if you don't have any money as it is, and then you get a bank ceo up there trying to screw it up. host: samuel, thanks for the call, calling from alabama. appreciate all the phone calls we got tonight. we are going to take you now back to the hearing. this is the second half. it's about two and a half hours, from today's hearing, the house financial services committee hearing from the ceo of wells fargo, john stumpf. mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from georgia, mr. scott. mr. scott: yeah, mr. stumpf. this is one of the most outrageous acts that any banking

executive has done in my lifetime that i know of. how in the world could you in good conscience set up these fraudulent accounts? what was going through your mind when you were doing this? mr. stumpf: congressman, i didn't set up any of these accounts. i -- our team worked together at the business level then at the corporate level to -- we found these accounts and we found these people and we said, that behavior is not -- mr. scott: mr. stumpf, you took advantage of unsuspecting loyal customers. people in almost every single district that's represented on this financial services committee. you did that. and you are the chief executive officer. you set the tone and you should be downright ashamed of yourself

and you should apologize right now if you have any strain of respect for the people of the united states, for the customers that you have defrauded with this, for the rancid example that you're setting. and not only that. for the damage that yourself with your action has done to the entire banking industry, because you know what, all this cross-selling, now you have caused an extraordinary spotlight to be focused on every bank in this country. you have done that. and you should apologize. mr. stumpf: congressman, i have said in my opening testimony, i am sorry. i am accountable for this.

i'm very sorry that we broke trust with our customers, our communities, the american people. i am deeply sorry for that. i'm going to do everything i can to repair that. mr. scott: and you know what hurts me so much? i'm one of your customers. i have an account at wells fargo in atlanta, georgia. i was on the phone with my district director about this and she has told me that -- and our constituent services, when it comes to the mortgage assistance, particularly with the bill that we passed here, the hardest hit bill, in which we're offering and helping those people with mortgages to be able to pay up to 24 months of free mortgages, and she says, we have no better cooperation from the staff of banks than we have from wells fargo. mr. stumpf: thank you. mr. scott: i'm your customer. mr. stumpf: thank you.

mr. scott: but the example you set is just absolutely terrible. now, what i want to ask you is -- because my number one concern is, my constituents in georgia. set up in the name without the consent? how many? >> i can get that for you if i have the right -- sorry. i'm using up your time. >> may be determined will give me a little extra. chairman will give me a little extra. this is important for us to know. 55,579eorgia, we had accounts that we could not rule out as possible.

>> 55,000. we finding out that on the credit card side, plus a 25% did not want those. ,ere's my commitment to you we're going to work with everyone of these accounts and make it right for every customer. our commitment. i'm interested in results. each account we will take care out. i don't care whether there was -- the biggest thing is secondary harm. we takeo make sure -- this very seriously. >> here is the fundamental question, it's the thing what you did was criminal? we take this very seriously. do you think? >> i love the custom me -- company with courage. >> if another bank president had

done this or chief executive officer, would not you say it is criminal? >> i did not break a code of ethics. >> thank you. >> talked about the 5300 that were terminated. get more than 5300 terminated. what percent of the terminations that that represent? i can work with the team. i don't have that. the 30,000this from i grew up on a oilfields inm

southeast new mexico, all the numbers that get thrown around i can't fathom that you cap 5300 people terminated and that does not come to the attention of the ceo. you get calls on the f saying we are doing unethical stuff, 2008 according to one of the other people, according here comments, people inside the company are breaking the law. criminal actsing and that does not come to your attention. you get $10.8 billion in settlements and that doesn't come to your attention. so what -- if i'm sitting here thinking about this stuff just coming in a clear, just quiet room, board, seeing these things, at some point somebody's going to say, houston, we got a

problem. but it doesn't appear that anybody ever said, houston, we got a problem. l.a. city attorney brings charges and nobody on the board says, houston, we got a problem. what, in your assessment looking back, what was it that would cause all those things to go under the radar and not be recognized, not be seen? mr. stumpf: thank you for that question. as we learned more about this issue, we made investments. we made investments in training. we reduced sales goals. we brought in regulator. mr. pearce: i understand that. you've been through that. what kept you from seeing? what kept this from rising -- i'm sure that today that you

probably consider the problem somewhat different than you did in 2011, 2012, 2013, 2014. why didn't you see the problems that you attribute today at any stage of the process? mr. stumpf: congressman, it's a good question. i said in my testimony -- mr. pearce: i did not see the answer. since you appear not to want to see it, i'm sitting here in a balanced scale as a business manager always there, do we want to clean out the well and we don't clean it out and we get a bad reputation, that's -- maybe we will. or maybe we won't. are we going to overlook the numbers of terminations? we're getting the calls, don't we really want to investigate? the stock price is doing ok. my compensation is ok. you get the balance is there. your compensation in that period of time is approximately $200 million.

that would cause one to say, i think things are running ok. yeah, maybe we got that little problem over there. but another thing on the side of the scale that says, i don't want to look at this or i can't see $10 billion in settlements, it just doesn't come to my attention. 5,300 terminations doesn't come to my attention because my -- we got 260,000 employees. obviously we're doing things 99% right. forget the two million people we defraud. mostly we're doing ok. and so i see size and complexity being a great problem when you can't see 5,300 being terminated, when you can't see $10.8 billion in settlements, then you got a problem in size and complexity. i would say there is no community banker in this country that would not have seen people doing illegal acts. and so maybe it was your stock compensation. maybe it was the size and

complexity but, sir, i think today listening to things that everyone has said, you have proved that you did not offer leadership in this. you have kind of shirked around and said the board can do anything it wants at anytime. i, sir, think you ought to submit a resignation and your board cannot hold off on action on that. thank you. i yield back. mr. stumpf: mr. chairman, can i make a comment about that? mr. hensarling: witness may comment. mr. stumpf: we did take accountability. we did invest in things to help reduce this. and we saw numbers coming down. mr. pearce: the problems continued, sir. the problems continue right through your actions. in 2011 you did this. 2013, did you that and the problems -- mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from texas, mr. green, ranking member of the oversight and investigations subcommittee. mr. green: thank you, mr. chairman.

i thank the ranking member as well. i'm grateful that you have given us a very positive response, and we are holding this hearing. mr. chairman, with $5.6 billion in earnings in the second quarter, wells fargo is not in this because of need. this is about greed. it's about the same kind of greed that created credit default swaps, that created negative amortization, that created no doc loans, that created prepayment penalties that coincided with teaser rates. the same kind of greed called exotic products that created the housing bubble.

this greed has caused this cross-selling to become the equivalent of an exotic product, a product that has now created a cross-selling bubble for wells fargo. the cross-selling bubble exists because you were marketing yourself as a company and a growth mode by virtue of the new products you were having with your customers. you had customers that were coming in and you were growing. this enticed investors. it enticed consumers to buy your stocks. when your stocks were bought, it benefited you and top level executives to the detriment of lower level entry employees. they get fired. top level executives get golden parachutes. and it's business as usual.

well, mr. chairman, this will not end by simply having some lower level employees go to jail. if top level executives go free and lower level employees go to jail, it doesn't end it because there is no reason for this to cease and for top level employees to be more mindful of what's going on. so we've reached a point now where the public expects to see more than lower level people punished. 5,300. 5,300 working people who, by what i seem to read, were encouraged to the point of having themselves coerced to engage in this activity. these were people who were trying to make a living, not trying to make a big bonus and a big payday.

these people deserve a fair day, not just an exit from your company. what do i mean by fair day? i think they deserve an opportunity to be heard in terms of what happened at wells fargo to cause them to do what they've done. i think that they ought to be given an opportunity to come before congress. they ought to be able to explain. and i would also add this. we have to find out how pervasive this bubble is. we have to. we do have to bring before the investigations committee, oversight investigations, other c.e.o.'s, top level executive and let them tell us. and i think we have to start with you. so tell me please, sir, how commonplace is this cross-selling in the banking industry? mr. stumpf: thank you, congressman. for our company, cross-sell is a good thing because it represents

the depths of -- greene i have to intercede. i'm asking you about the industry now. mr. stumpf: i have no idea. mr. green: you have no idea how pervasive the product is? mr. stumpf: i don't know if they're using -- mr. green: are you saying you have no belief or idea that other companies are cross-selling? mr. stumpf: i don't know that. mr. green: i must say i don't believe your answer. you're telling me you have no idea as to whether or not they even engage in cross-selling? mr. stumpf: i don't know. mr. green: do you know they engage in it? mr. stumpf: every bank, every retailer out there has some motivation, some way to make sure they recognize their people. mr. green: do they engage in cross-selling? mr. stumpf: well, i don't know their situation. mr. green: you don't talk to your colleagues, you don't talk to other bankers, you don't know whether they engage in cross-selling? mr. stumpf: i don't know what they use. mr. green: i thank you for your answer. let me finish. because, mr. chairman, this is the evidence we need to bring the others in.

we have to ask them what they're doing given that this gentleman refuses to give us what i believe to be a correct answer. mr. hensarling: the time of the gentleman has expired. the chair recognizes the the chair recognizes the gentleman from florida, mr. posey. mr. posey: i thank you, mr. chairman. mr. stumpf, members of this committee have already expressed outrage that we all feel that this atrocity was able to happen. it's absolutely deplorable that your customers were subject to this practice. and i'm sure the fine that wells fargo will pay will be insufficient to cover the customers -- more adequately compensate them. at best, at the very best, you and our federal regulators were asleep at the switch. you know, at worst, it's almost like a criminal enterprise. my biggest concern -- and i think it's the biggest concern of every member on both sides of

the aisle here is that we need to ensure that it doesn't ever happen again. that means we have a shared interest in understand whag caused and what -- what caused and what perpetrated the unprecedented level of fraud, and i have just a couple of questions i think will help drives us in that direction to understand it. first, mr. stumpf, i understand wells fargo sets goals for new banking products. each employee was expected to sell daily. is that correct? mr. stumpf: i don't believe that's the case. i know as part of our reward system and our performance management that products was part of their performance management along with customer service, customer loyalty, doing things right. as of friday we're getting rid of those goals. mr. posey: i read that this puts it in the range of five to eight goals per day compared to the industry standard of three to five per day. briefly, i was going to ask you how those goals were determined?

mr. stumpf: i don't know -- you may reference industry standard and what ours is. i wouldn't have specific. i can try to get back to you on that. mr. posey: are you aware that the expected targets is based on size, location, constituency? mr. stumpf: i believe that's the case. mr. posey: you i believe they did? mr. stumpf: i don't know when that was introduced but i believe in the past, you know, locations that would have more activity, we'd either have more bankers or more goals. mr. posey: thank you for the straight answer. did the bonuses associated with those goals or wells fargo use a single uniform system? mr. stumpf: again, that's a level of detail i don't know. i can try to get back to you on that. mr. posey: ok. now, so far in the investigation the bad actors, have you found any correlation between the

likelihood of employees committing fraud and the demographic or socioeconomic characteristics of the people being served? mr. stumpf: first of all, i don't know, i'm not trying to be careful on words. don't know what fraud exactly -- i know what's right and know what's wrong. i don't know what the intent of these people were. but to answer your question specifically there was no -- that i understand, ethnicity difference other than what the communities are. we try to have people in our banks that represent the communities. mr. posey: we'll take racial and ethnicity off the table here. as someone who also represents a district heavily populated by seniors i'm worried that wells fargo may have intentionally preyed upon those they saw as vulnerable. do you believe seniors were purposely targeted for employees stretching to meet their sales goals? mr. stumpf: because we actually capture that so we can tell that. there was no disproportionate -- it did not -- in fact, younger

people. not seniors. if there was any emphasis at all or any -- mr. posey: to be clear. dew point think sales goals are inherently evil. anyone who is in a business understands the need to incentivize employees to succeed. and reward their successes. unfortunately your company forgot the most important part of any business. more important than sky-high stock prices, year-end bonuses, or fat retirements. it's the people that you serve. i'm increasingly concerned this misguided idea of success that puts actual customers in a category of least concern is perpetrated more than just wells fargo. to the best of your knowledge was this practice of creating fake accounts exclusive to wells fargo? mr. stumpf: again. i don't know. i only know that what i know about our company -- i'd also like to make, in the few seconds left, the investment, reason

people buy wells fargo, is a whole lot more about our broad product model. it's about our -- mr. posey: one quick question. can you tell me any action the cfpb has taken that would stop something like this from happening again? chairman hensarling: brief answer from the witness. mr. stumpf: we worked with the cfpb. we made an agreement and will continue to work with them on this issue. mr. posey: any action that would stop it from happening again? chairman hensarling: the time of the gentleman has expired. the chair now recognizes the gentleman from missouri, mr. cleaver, ranking member of our house and insurance subcommittee. mr. cleaver: thank you, mr. chairman. mr. stumpf, thank you for being here. hopefully you understand -- i have a plane to catch. i may not finish my time.

i dare not get on a plane and go back to kansas city and conduct myself in a way that everything is fine and we'll all join hands and sing kumbayah and fix the problem. one of the reasons that everybody in this place is upset, each of us represents about 840,000 people. and probably every one of them is angry. especially those who had problems getting loans and people who were ripped off during the crisis from 2008 and 2009. and so i think many of them think that they had a preview of

this garden gecko, greed is good. greed is right. greed works in the movie "wall street." i think that's one of the problems we have here. now, you have already been warned before i had my opportunity, so i'm not going to warn you, but i do need to ask you a couple of questions. maybe just one. there were 2.6 million in overdraft charges that incurred on linked accounts and late fees. that were thousands of consumers on fire figuratively and your bank had tubs of water but the

people there decided to drink it. and let the people burn. including the people who had gotten fired. my question is how far up the chain have you been able to determine that this scheme, this fraud occurred? mr. stumpf: we know that 5,300 people broke our trust. were not honest. and we know that we're going to do a complete review of anybody who would have been part of this. and if they were dishonest and broke our code of ethics, they will be held accountable. we have returned that money with interest with an apology. mr. cleaver: i know. i'm trying to find how far up the chain have you determined thus far that this game wins?

mr. stumpf: first of all, most of our people do it right. and i -- this was just the opposite of what we train for. just the opposite of what we talked about. it's -- again, 1% of our people i know that's a lot of people given the size of our company, but -- we'll do a full review and we'll do a review of that. mr. cleaver: what i'm trying to find out is how far up the chain? mr. stumpf: we're not going to let the chain impede the board's going to do a review and the company to make sure everybody is held accountable. mr. cleaver: i appreciate that. how far up the chain? mr. stumpf: so far of the people that we have found is branch managers, their manager in some cases and a manager of a manager. so that's the work we have done so far.

>> the manager of manager would be what? vice president? mr. stumpf: i don't know the title, but i think it's called an area president. i think it was area president. mr. cleaver: have any of them been fired? all the vice presidents? mr. stumpf: i don't know if this person was a vice president -- i don't know what the title was. but i know it was anchor, then branch manager, manager of the bank managers, and area manager. mr. cleaver: no matter how high it goes, they are going to be fired. mr. stumpf: they are going to be held accountable. i can't say what -- i don't want to prejudge -- mr. cleaver: i understand. no matter how far it goes up they'll be fired? mr. stumpf: they'll be held accountable. whatever that means. chairman hensarling: the time of the gentleman has expired. the chair now recognizes the gentleman from pennsylvania, mr.

fitzpatrick. mr. fitzpatrick: i thank the chairman. mr. stumpf, i want to follow up on mr. cleaver's questions. first of all i represent a district outside of philadelphia, pennsylvania. i like probably most of my colleagues here have received letters from customers, from our constituents, from former employees of the bank. and they have a lot of questions. which we have to help them try to answer. first i want to ask sort of a foundational question. this is a question that you have been asked many times already today, last week in the senate about when you first heard of this situation, this so-called situation with your customer accounts. you have given us approximate dates, which we appreciate. first and foundationally, if you could tell the committee, tell the american people, when you first heard about the problem where were you?

who told you? what did they say to you? what did you do about it? mr. stumpf: i'll answer your question and thank you for that. i have always known as i think most americans know, that not everything does everything right every day. and we have 100,000 different people in this business. so we knew and i knew that this had to be managed. it must be managed in the business. some time later in 2013 before the l.a. story came out, because that did not surprise me because i had heard we were seeing an acceleration of this activity in a certain marketplace. i can't recall if my -- if chief legal counsel told me. i can't remember if it was in a meeting with the business leader at the time. or compliance. that's when i first knew that this was becoming a bigger issue. so resources were brought in to

bring corporate resources in to assist the business line. and then we spent -- the business and the corporate group called core spent time working on that issue and we saw the issue come down. it was not until 2015, and we should have learned earlier. mr. fitzpatrick: when you first heard where were you? who told you about it? mr. stumpf: again i don't remember where i was sitting, what i was doing. where i -- i recall hearing it sometime in the summer-fall time frame of 2013. i don't remember the exact minute. mr. fitzpatrick: there have been so many people who have been hurt by what we know right now. not just your customers you're going to lose many customers. never get them back. there have been lower level and

mid level employees who have been injured. you mentioned earlier in your testimony, 268,000 people went to work today at wells fargo to do the right thing. for the most part we all believe that. you also mention mentioned there were some 5,000 employees who lost their positions. as employers, we're responsible when you bring somebody young into an organization, somebody right out of high school or college, you have a special responsibility to that employee to train them, to make sure they are being trained in the ways of ethics in banking. how many of those lower-level employees were part of the 5,500 who lost their jobs? mr. stumpf: the vast majority -- i don't have exact numbers, but i believe about 7% or so would have been at the teller population. and the remainder, the other 93% were someplace, as i understand, were banker, senior banker, branch manager, and so forth.

we do give two weeks of training to all our team members before they go out -- you're right. we have a special responsibility to help them understand our culture. they sign a code of ethics and we -- mr. fitzpatrick: were they being told in those employee trainings about the so-called goals? quotas? mr. stumpf: they are told about all the responsibility of their job, including i have done town halls which i do every quarter. i did one in philadelphia just a couple months ago. i have been talking every one of those in general i talk about doing the right thing. putting customers first. mr. fitzpatrick: mr. stumpf, there have been reports from multiple whistle blowers from the bank that they provided information up the chain of command and were ignored. matter of fact, some were fired. are you familiar with those cases? mr. stumpf: i have heard about those. those are regrettable.

we have a nonretaliation policy on whistleblowers. mr. fitz patrick: being fired in the federal government being a whistleblower is a serious matter. hopefully you are taking it seriously? mr. stumpf: very seriously. we have a nonretaliation policy. chairman hensarling: time of the gentleman has expired. the chair now recognizes the gentlelady from wisconsin, ms. moore, ranking member of our monetary policy and trade subcommittee. ms. moore: i want to welcome our witness here today. i have learned so much here. i know when you go to the wells fargo website there your picture is, john g. stumpf. the vision and values of wells fargo. it features -- you say that you started with wells fargo in 1981? mr. stumpf: 1982. ms. moore: my math is not that good. and you succeeded, -- succeeded

mr. chevich, were you trained and knew the culture of this company, i guess there was a merger of wells fargo and norwest. so did you receive training or do you know if the employees were -- received training on this going for great program that we have talked about here today where most of your customers only had five accounts in your bank and that there was an effort to get at least eight? sort of accounts. for the customers. was that part of the culture? mr. stumpf: as i mentioned before that was an aspirational goal. most of our customers had -- ms. moore: i don't have much time. so as your predecessor noted, there is just abundant growth potential in the wells fargo customer base.

and that one of the axioms around that place was, hey, we inspect what we expect. were there constant monitorings to see if people were meeting these goals? we inspect what we expect. what does that statement mean? mr. stumpf: that statement means that we expect our people to live according to our vision and values our ethics and culture. ms. moore: i am so happy i'm going to congratulate you on draining the swamp of these 5,300 low-level employees. because they almost brought down one of the greatest companies that our country has ever known. i remember wells fargo, old wagon train days. i'm happy that you got rid of those employees. and i am sorry for your loss, your $41 million. i'm sorry for the loss of the investors whose stock dropped.

but i am wondering what the relief is for one of my constituents, and i have her letter and i want to enter it into the record, she worked at wells fargo -- >> without objection. ms. moore: she started making 13 an hour and ended making $15 an hour. she was one of those whistle blowers who complained to the manager. and then they changed her performance numbers and pushed her out. and so she's a person that lost her job. and other stuff that happens to you when you make $13 an hour. $15 an hour, sorry. and you're pushed out by people because you don't want to -- because you don't fit in with the expectations and the culture. what is the remedy, is there a fund for these employees? the good ones, not these 5,300. what is it $12 an hour?

$13 an hour employees? what is the remedy for my constituent at wells fargo? mr. stumpf: we want to know about every one. we'll review their files for anyone who had anything to do -- if they were -- ms. moore: she has a case with wisconsin equal rights division. how can she -- mr. stumpf: we have people she could talk to. ms. moore: the people she talked to fired her. mr. stumpf: we have corporate resources here. if you could give me that name, congresswoman, let -- ms. moore: i was very disturbed to hear about. you said the numbers weren't large enough to ride to the level of being material for security purposes. i don't understand that. would you as an investor invest in sort of the bernie madoff-type enterprises? these huge dividends, would you

make this kind of investment yourself? mr. stumpf: this is not -- this is a quality company who made some mistakes, but our investment basis is all about our capital, our growth -- ms. moore: one question. you have stated previously that you think the dodd-frank overregulates. do you believe that? mr. stumpf: i never said that. ms. moore: really? mr. stumpf: i don't recall saying that. chairman hensarling: time of the gentlelady has expired. the chair now recognizes the gentleman from indiana, mr. stutzman. mr. stutzman: thank you, mr. chairman. mr. stumpf, i'm a first loan from norwest bank for a motorcycle when i was 20. i have been a happy customer of wells fargo for over 20 years. and i have been frustrated with wells fargo as of late because of the new website. and i have voiced that. and i think part of this, i

think you need to do something about it, because the transparency on the website right now, i can't find some of my accounts. i think that there needs to be at this point a time where you can give customers confidence through the website to make sure that every account can be seen, because i got notices all of a sudden of accounts that i didn't recognize because i didn't see them on a daily basis. i found them after i called wells fargo and talked to them. but what my question is to you -- your story is remarkable. you came from a dairy farm in minnesota. if you had taken a different choice. i grew up on a dairy farm. still part of our family farming operation. i'm curious to know what you would do today if you had taken a different path and be a dairy farmer in minnesota and you had been trying to buy land and trying to buy more cows and you

realize your credit score, something's wrong with it and you have not been able to get your credit score up and you found out maybe your credit score was dinked because your bank was opening accounts. when accounts are opened, it dings your credit score, correct? mr. stumpf: that is correct. mr. stutzman: two million people potentially had their credit score dinged because someone else was opening accounts in their name, is that correct? mr. stumpf: that is not correct. there is about 5,65,000 credit cards which we have contacted 20,000 of those. and less than 25% saying -- i don't want to minimize the numbers. these are still big numbers. one is too many. but we're going to go back and my instruction is make it right for every one of those customers.

mr. stutzman: here's what i was surprised to watch a little bit ago when mr. cleaver was asking you what was the highest level officer at wells fargo to be fired. you didn't really know. you said area manager. mr. stumpf: i know the title. i know the functional title. i don't know if that person is a vice president, a senior vice president. i just don't know that. i do know that that's -- it's a branch manager's, manager's manager and we're also not done with our investigation. mr. stutzman: i understand. this broke for the public within the past month. you apparently knew about it 2012? 2013? mr. stumpf: we knew that not everyone does it right. it was sometime in 2015 we did our pwc study, those results came in in 2016. mr. stutzman: you are the c.e.o., when 935 employees were fired. in -- all you have to do is stand up for your company and say this is going to stop. and it should be stopping. i'm curious to hear from

employees who are fired what their experience was. i hope we do a hearing with some of those. but let me ask you this. wells fargo is a huge company. is it too big to manage? mr. stumpf: no, it is not. this was a focus problem. we do a lot of areas really well. like model risk and market risk and capital liquidity. we know we have work to do in operational and risk. we should have invested more today. i told our folks no stone unturned, no dollar unspent. get this right. we'll get rid of sales goals. mr. stutzman: where was the outrage from you a couple years ago when you first heard about it? there's outrage on this committee and rightly so. i'm outraged about it. but i don't sense the same outrage from you when you have -- when we're seeing your - the lady here, she's walking away with millions of dollars. the american people and your

customers are going to be very upset when they see exactly what happens here. final question i hope that you will -- i didn't hear the question from this committee, but will you get the number to this committee of cfpb regulators embedded at wells fargo bank? mr. stumpf: i can talk to our team and we'll be as cooperative as we as we can. i don't know whether that's covered under confidential -- i'll be as helpful as i can be. mr. stutzman: please do. not only have you and wells fargo let customers down and so have cfpb. people are mad at both. chairman hensarling: the chair now recognizes the gentleman from minnesota, mr. ellison. mr. ellison: i ask unanimous consent to enter into the record a report entitled banking on the hard sell. low wages and aggressive sales metrics. put bank workers in customers at

risk. i'd like to enter into the record. chairman hensarling: without objection. mr. ellison: i also like to enter a record an op-ed i wrote in the daily beast the other day entitled john stumpf's wells fargo racket shows why bank workers need a union. chairman hensarling: without objection. mr. ellison: i would like to note for my colleagues, progressive caucus held a june 10 briefing listening to the workers that we have been talking about today. we would be happy to do another one. but on june 10 we had workers come in and testify to the very thing that was -- that we have been talking about today. which is these high pressure sales techniques. mr. stumpf, if you are a work at wells fargo and you are expected to seek out and reach sales goals, you mentioned that, right? mr. stumpf: we had sales goals. mr. ellison: yes or no, sir. i don't have a lot of time. i'm not trying to be unkind but don't waste my time. yes or no. mr. stumpf: yes. mr. ellison: could you tell me,

do you-all have something known as prospecting calls that were expected for bankers to make? mr. stumpf: i don't know that level. mr. ellison: you don't know. do you deny there were prospecting calls? mr. stumpf: i do not know that level of detail. mr. ellison: were you aware each banker was expected to make 100 prospecting calls a day? mr. stumpf: that's the first time i ever heard that. mr. ellison: mr. c.e.o. chairman, are you aware that there were weekly meetings held by -- morning huddles to talk about these sales goals, are you aware of that? mr. stumpf: i know that -- mr. ellison: you got to answer yes or no. mr. stumpf: with an explanation. mr. ellison: morning huddles or not? mr. stumpf: yes with an explanation. mr. ellison: at these morning huddles, were there questions asked of workers how are they going to sell more credit cards?

and were they given goals for specifically selling a number of credit cards? mr. stumpf: i don't know that everyone holds -- i have to give you an explanation. mr. ellison: were they given goals -- mr. stumpf: i don't know that. don't know every branch held a morning huddle. i know our team works together. mr. ellison: were there publishing of charts on who sold how many products in your bank? mr. stumpf: i do not know that. mr. ellison: were they publishing charts who did not make sales goals? mr. stumpf: i don't know that level. mr. ellison: workers say there were. if a worker did not reach their sales goals, were they put on initial written warnings? mr. stumpf: i don't know the process. mr. ellison: if workers did not meet again were they given a second warning? mr. stumpf: i don't know that level of detail. mr. ellison: if they were not

reach second warnings were they written up, admonishments for making sales goals? mr. stumpf: asking me a question i can't answer. mr. ellison: were they given performance improvement plans if they did not make the goals? mr. stumpf: i don't know that level of detail. mr. ellison: how did you generate these lists for workers to have to make calls? how were the lists generated? mr. stumpf: i didn't know if there were lists. i don't know that level -- mr. ellison: you don't foe if there were prospecting lists to make cold calls on? mr. stumpf: i don't know that level of detail. mr. ellison: if sales weren't important, were workers given credit card and home equity loan goals to meet? mr. stumpf: don't know what their goals were. mr. ellison: why were workers encouraged to open numerous accounts for customers?

mr. stumpf: our team members are encouraged to talk about -- mr. ellison: if a worker got a person to open up an account, isn't it true that that account, let's say a debit account, there has to be a certain minimum balance in that account and there is a fee to hold that account if there is not the minimum balance met, am i right? mr. stumpf: i don't believe you are. mr. ellison: if there is an account, does there have to be a certain number of uses of that debit account per month? mr. stumpf: i believe that's one way -- mr. ellison: if it's not met is there a fee? what is the minimum balance fee? mr. stumpf: i don't know what those numbers are. chairman hensarling: time of the gentleman has expired. the chair now recognizes the gentleman from south carolina, mr. mulvaney. mr. mulvaney: i thank the chairman. i can't tell you how disappointed i am to even have

to be here today. as one of the many members of this committee who every single day in here defend a banking system. defend capitalism. defend free markets. to sit here and have to watch you essentially validate everything that the other side has said about you and your business and industry for the last three or four generations is extraordinarily disappointing to me. the damage that you have done to the market, to your industry, far exceed the damage you have done to your own business. but again there is nothing i can do about that. i want to ask you one question. i know a little bit about business, not nearly as much as you. what little i do know i learned from my dad who was actually raised very similar to you. he was from minnesota, went on to university. little older than you, but not much. i remember him telling me one time when i was first getting into business, you know what,

you can learn a lot about an enterprise, about an organization, by looking at the leader. and that the organization will take on the personality of the leader. or the owner, or the person in charge. if you walk in to somebody -- you walk into a lobby and you receive nicely by the young man sitting there answering phones, it's probably a good indication the lady that owns the place is a good person. conversely if you walk in and get treated like crap and disdain, it probably says a lot about the people at the top of the chain. i think the folks that work with me in my office reflect that. you come to my office you get treated well because that's important to me. the place that you ran, mr. stumpf, i don't know that much about wells. i know a little bit about wachovia and wells being first union because of where i grew up. you-all are rotten. we have heard stories today everybody's heard about. i'm looking at the story from 2009 about the lawsuit that got

filed that says wells fargo, saw the black community's fertile ground for subprime mortgages as working class breaks were part of the homegrown mania. in an after date she stated that employees referred to blacks as mud people. and to subprime lending as ghetto loans. i can't tell you how hard it is for me to even say that. targeted black churches. i'm not going to defend that. that doesn't even deserve defense. i'm going to ask you one question. is this organization -- does this organization reflect you? mr. stumpf: i am deeply sorry and i read that article you just said. and that has no place in our culture. no place in what we have done. and we're, today, the largest lender to low and moderate income people in housing. we make more loans to african-americans.

latinos, persons of color. we're proud of that. and that place -- that kind of language and that kind of behavior is not who i am. i have learned my life lessons also from my parents. my dad is 94. and he's still a wonderful guy and big influence on my life. so is my mother. i try to lead with courage and conviction. our company is based on those values of ethics, of doing what's right. and the company, of course we have made mistakes. not everybody lives up to our vision and values. but the vision and values are 268,000 people aspire to and do every day is consistent with what i want to live my life and what our cultures of our company. mr. mulvaney: i appreciate that. i want to say something to my democrat colleagues. i know we'll see this.

and believe me if the role was reversed i might see this as an opportunity to push a political initiative, agenda, to bang the drums for more heavy regulation. everything that we're talking about here today, including what i just read, which i won't read again, happened in cfpb and dodd-frank. it happened after we supposedly fixed all of this with regulation. and maybe i would suggest this. you can't fully regulate bad actors. i'm not here in a position to say if there stumpf is a bad person or not. try not to be in the position of judging other people. that's for his board. i know how i would vote if i were the board. he wouldn't be here if i were on the board of that company. but you're never going to be able to fully regulate bad actors and i hope we look at this with a certain levelheadedness as we move forward. thank you. chairman hensarling: the time of the gentleman has expired. the chair now recognizes the gentleman from colorado, mr. perlmutter.

mr. perlmutter: first, mr. chair, i'd like to introduce into the record the report, community banking reports may 24, 2016 from wells fargo. chairman hensarling: without objection. mr. perlmutter: and report from may 20, 2014. chairman hensarling: without objection. mr. perlmutter: mr. stumpf, about eight years ago you were before this committee and i was so proud of you and proud of wells fargo. and the fact that i thought, operated as a bank. and really looked after me, customer, somebody who's been with the bank. all these young guys. i have been with one of the predecessor banks for 40 years. and i represented some of the predecessors. first interstate, security pacific, united. the culture is what i want to talk about because that really is you and it is your board of directors. and i have heard terms today

that i don't really align with the banking business. if you will. i look at banks as something different. we came in with $800 billion to save the banking system when it was collapsing. because it's something different. but i hear you use words today, and this is where i think the root of this problem is, sales organization. retail sales. stores. i never, ever in my life referred to my branch, bank, in applewood, colorado, as a store. you don't sell veggie matics. you don't sell grapefruit. you take people's money, you save guard it. and you lend it out to people who may need it for interest. maybe me. and to get in -- this is where mr. green was going with the products. i don't know how many products

you got. i looked at my account. i do like the online banking by the way because i can look at all my accounts. i turn out, as mr. royce says, i have eight accounts, personal accounts with you. how i have eight, grade eight, don't know. but i do. so talk to me about why you're calling these things stores. why you use words like retail sales and cross selling. you're a bank. mr. stumpf: we're a bank. and the idea here is that we want to make sure our team members when you come into a bank or any one of our customers do that we treat them with respect and that we provide products and service that is help them. when they do more with us, we give them a better deal. they get more value. it helps them and it helps us. and whether we call them a store or a branch or a location, it's

what -- it's the hearts and mind of our people inside there. mr. perlmutter: i'll accept that. but i still think you are a bank. and we treat banks differently than grocery stores because you are the heart of the financial system. here's where i want to go. i go into my bank and there's been some turnover there. they always treat me well. they are always very nice young people. sometimes they are saying do you need this or that, i generally am saying no. when you talk about these goals that are established, why are you even setting goals? the goals should be if your customer needs something try to help them. mr. stumpf: correct. we're getting rid of product sales goals. mr. perlmutter: why did you have the goals in the first place? mr. stumpf: it was an idea for people to make sure that they use the right way of sitting down so they have a conversation with a customer. i don't want people in our branches or banks to be

apathetic and not care. i want them to sit down and have a conversation with about where that customer is in their financial journey so they can meet a need with a product. what works well and deepens relationships, everyone wins. whatever the goals are, no one should be forcing a product or saying why don't you do this. why don't you buy this. it doesn't -- that's not the way we train. that's not the way we innocent for. even today we have taken that off the table because we're learning that customers grow with us when they are happy. when they are satisfied. when -- and our satisfaction scores and loyalty scores have never been higher. that's a better way of doing business. mr. perlmutter: look, i'm just up here as a member of congress who has worked with banks before.

i'm just telling you you got to stop -- our stores, our stores generate more deposits than our competitors. you got denver up here on your chart. that creates the wrong culture. and i yield back. chairman hensarling: the gentleman's time has expired. the chair recognizes the gentleman from north carolina, mr. pittenger. mr. pittenger: thank you, mr. chairman. mr. stumpf, good afternoon. i'm from charlotte. mr. stumpf: we love charlotte. mr. pittenger: there are some 23,600 employees there. they are my constituents. i do have deep respect and appreciation for the corporate citizenship that you-all have been in charlotte, you have been exemplary in terms of what you have done in our community. you take active roles, your employees do, and many nonprofit organizations. that leadership is commended. of course we cherish the wells fargo golf tournament.

so you have a major presence in our community. and that's why today is such a sad day. i know it is for you. i am sure as you look back on these 35 years and where you are today you think, what if? what if i had done this? what differences could i have made? where ways blind-sided? what mistakes, where did i err? so i think i'm asking you to look as if you were sitting in our seat. we represent these people. as was said earlier, some 750 to 800,000-plus people. you heard a lot of outrage. a lot of a lot of righteous indignation because we haven't seen what we expected. in the south part wells fargo facility that you have, there is written behind the teller

station, counter, statement by mr. wells. came from 1864. do you recall that statement? it's very prominent. perhaps it is in other wells fargo. it seems to be the motto of your bank. mr. stumpf: are you asking me a question? mr. pittenger: made a lot of statements. mr. stumpf: treat every customer with respect. mr. pittenger: we have a powerful rule. concentrated one word, courtesy. as you look at all -- i think that's the challenge we have today. what could have been done different? certainly the regulators were there. yet this is reported by a news agency. what would you have done different today?

as you look back and the changes and mistakes that were made as the c.e.o., what happened in that corporate culture that did not allow that information to come to you in a more timely fashion? that would have caused you to take even greater direction and leadership. mr. stumpf: it's a good question. i probably ask myself that a thousand times, a million times. and while i want to defend our culture and people, i recognize that we could have done more earlier. i don't know if there is any one point, but surely we should have realized earlier that product sales goals could elicit behavior that's inconsistent with our culture. even if it happened like in this case with 1% of our team, it's way too much. it's simply not worth it. frankly it's not even consistent

with where we're going by giving the business today. i don't know if i can be clearer than that. there is a lot of people doing a lot of introspection within the company today to make sure that we never, ever put a customer or a team member. we want all these customers to be foremost at what we do. if courtesy with the right word, we think of relationship. we love long-term, mutually beneficial relationships with our owners, our team members, and most importantly our customers. mr. pittenger: yes, sir. i think those of us who understand free markets, i was on a bank board, small bank, but we understood the customer. we understood the importance of financial industry and what it does to facilitate economic growth. and that's why we're so challenged today because there's been a strangling of regulations

on the financial industry. yet with that we're having to deal with you and with this bank and with this problem that's going to have ripple effects. and the messaging is going to be there that there needs to be even more regulations. chairman hensarling: the time of the gentleman has expired. the chair now recognizes the gentleman from connecticut, mr. himes. mr. himes: thank you, mr. chairman. mr. stumpf, we focused a lot today on accountability. i want to go back to something that congressman lucas' concerns troubles me. the focus on culture and materiality of what happened here. we're hearing there is not a problem with the culture. are you hearing a lot of disagreement up here. we're hearing in the senate hearing that this wasn't material. and i guess if you sort of exquisitely finely define materiality. maybe the s.e.c. defines t. maybe $185 million in fines is not material. but this is about much more than

a legal definition of materiality. we need to hear you say that you understand the magnitude of what has occur here. it's more than $185 million. it's about trust and faith and belief in the system. it's not about the ups and downs in one k it's about people's faith in the banking system, faith in the market economy. it's about whether competition is perceived as a good thing by the american public or a bad thing. it's really about people's faith and organizations like yours and like the one that you're testifying with -- in front of today. let me start with the numbers quickly. what matters to an investor is the value of the company they own. your shareholders have paid out $185 million. including the state of connecticut's pension funds. mr. stumpf, do you know what the market cap, value of your company is today? mr. stumpf: i didn't look this morning but i think it's $220 -- mr. himes: $228 billion on september 7 when this started it was $253 billion. there has been no other material impact.

just this event has cut $25 billion off the value of wells fargo. do you know what the value of ford motor company is, mr. stumpf? mr. stumpf: i do not. mr. himes: $50 billion. just since the 7th, you have and your organization and the culture have obliterated a full half of a ford motor company. that has to be material, doesn't it? mr. stumpf: i don't want to diminish this. i'm deeply sorry we didn't do the right thing. i understand that re-earning the trust of our customer and american people is going to be our biggest challenge. mr. himes: i do want to get away with the numbers. i'm troubled by the culture thing. do you think that you can fully measure wells fargo's value with the hard assets, dollars and cents, numbers of the accounts. let me ask you it another way. wells fargo's reputation and

brand an important part of the company's value? mr. stumpf: no question. mr. himes: do you believe that wells fargo -- mr. stumpf: with an explanation. i think frankly what is in the hearts and minds of our people and the trust with our customer is by far the most important thing. if they make all the rest happen. mr. himes: do you think that wells fargo's reputation has been damaged in a material way by this? mr. stumpf: i think there's been damage, yes. mr. himes: what i worry about is bigger than wells fargo. it's the fact that the system comes apart if people don't have faith and trust. mr. stumpf, can you see what i'm holding up? it's a $1. all mighty dollar. piece of paper with green ink on it. does this thing have any intrinsic value? can i eat it if i'm hungry? mr. stumpf: no. it represents a promise. mr. himes: it's a promise.

it relies on the faith and the belief in the american people that this has some value, otherwise it's a piece of paper with green ink on it. mr. stumpf: i totally agree. mr. himes: can i expand that point to the banking system? if americans started getting anxious about the fact you don't have enough money in your banks on any given day to cover their deposits, we would have a problem. mr. stumpf: no question. mr. himes: the only thing standing between us and this being meaningless, and between them believing that the banking system doesn't work is trust and faith in the fact that it does. mr. stumpf: you are absolutely right. trust is the absolute critical element here and we have a lot of work to do to work on that. mr. himes: so your investors are equity investors. they accept risk, including the possibility that something like this could happen. if you don't want this risk, you buy bonds or treasuries or whatever it is. i would implore you as somebody who i think understands that the market economy is important and that the financial services industry is important, i would

implore you to please don't continue to focus on this idea that this is not material. i think we're now agreeing it is material. mr. stumpf: i never said -- mr. himes: please work with your colleagues to repair some of the damage that has been done to the faith and the trust that we both here today have acknowledged is the only underpinning of the system that has done so well by you, sir. mr. stumpf: thank you for your comments. i couldn't agree more. this is bigger than the 185. i don't even think in those terms. regaining trust. mr. himes: yield back. chairman hensarling: the time of the gentleman has expired. the chair now recognizes the gentlelady from missouri, mrs. wagner. mrs. wagner: thank you, mr. chairman. mr. stumpf, you have come before this committee today to answer for the appalling actions taken by your company, wells fargo. i have a number of questions but i want to start by expressing my outrage, outrage that your company was taking advantage of

your customers, our constituents, for years and years and years. i don't understand how your employees could create millions of unauthorized accounts without someone raising a red flag. and if that happened, how you failed to act. on that knowledge. you had a responsibility to your customers and you failed. bigtime. placing one's money into an organization like wells fargo someone of the biggest displays of -- what are we talking about? public trust. and you, sir, and your company, have betrayed that trust. and taken advantage of consumers in order to meet sales performance goals and fraudulently improve earnings and share prices. this is wrong.

this is immoral. and this may even be criminal. and as you stated, sir, the buck stops with you. not only did wells fargo and your employees fail these customers, but our regulators failed as well. they neither identified nor prevented this malpractice from occurring in the first place. it wasn't the o.c.c. or the cfpb that first uncovered these deceptive failed practice that is were taking place but the "l.a. times." the media. that first brought your company's shameful practices to light. and while it is the regulator's job to prosecute the banking institutions that break the law, it is our job as members of congress to prosecute the regulators who are asleep at the wheel. from what we know, and there is a lot we don't know, sir, this widespread abuse was occurring

as long ago as 2011, some have said maybe back as far as 2007. with 1,000 employees being terminated every year for creating fraudulent accounts. yet this behavior persisted for years without management intervening. and even when regulators began to investigate, wells fargo did nothing to notify customers and shareholders. your company abused its customers while you have apologized, that apology carries no weight with me, sir. you still have a lot to explain to this committee. and frankly to my constituents. how many of your customers have been impacted by your fraudulent activities? mr. stumpf: i don't know. i know what the p.w.c. numbers showed. mrs. wagner: what is that number? mr. stumpf: two million accounts. they could not rule out. now we're going back and contacting those customers. within our credit card business, as i mentioned, we have already talked to 20,000 of them.

mrs. wagner: how many in missouri? mr. stumpf: i can't get you that. mrs. wagner: quickly as you can, please. how many customers have been abused in my home state of missouri? mr. stumpf: there were, 1,191 accounts. mrs. wagner: what portion of these customers were defrauded after you became aware of the fraudulent activities? mr. stumpf: i don't know -- i don't have a time line on that. i just have it broken out by credit card -- mrs. wagner: you are going back, you can find out. and you don't have a time line it. you have a time line for the employees that you fired year after year after year, but you have no time line of the number of fraudulent accounts? mr. stumpf: i can work on that and get that to you. i don't happen to have it in my book right now. mrs. wagner: you keep saying, sir, you are going to make it right.

those are your words. are you going to make it right. i'd like to know when? when will these customers be made whole, mr. stumpf? when will we know and when will they know whether their credit scores have been affected? when? mr. stumpf: we already talked to 20,000 of our customers. and we're hearing that 75% -- less than 25% either didn't want the card or didn't know they had the card. and -- mrs. wagner: 20,000 out of two million-plus customers? this is five years, sir. just to identify and begin rectifying the problem and wells fargo only just announced their sales incentives will eliminate in october. customers, will they have to wait five years or longer to get relief? mr. stumpf: 20,000 we talked so far is out of the 565,000. other ones did not have, from my understanding, a bureau involved. we're going to talk to you-all our customers. chairman hensarling: the time of the gentlelady has expired. the chair now recognizes the

gentleman from delaware, mr. carney. mr. carney: stumpf, i represent the whole state of delaware, 500,000 people. one of the bigger districts here in the congress. we're a banking center as you may know. we don't have a huge wells fargo presence. could you look in your book and find out how many fraudulent accounts were attributed to people who live in the state of delaware so i know what we're talking about? mr. stumpf: i can tell you how many accounts that the p.w.c. analysis could not rule out. these aren't -- mr. carney: your commitment is to make right each of these accounts? mr. stumpf: right. delaware, let me see if i have this number right. 4,255 accounts. mr. carney: my responsibility is to make sure and your commit s-to make sure each of those

accounts will be -- you will make right by those people. mr. stumpf: we're going to contact every deposit account. every credit card customer that we can make contact with. we'll try to contact all 565 in your district, your state. looks like there's 1,793 cards. and i don't know how many of those won't be wanted versus wanted. we'll look for the secondary harm. mr. carney: part of our responsibility as members of congress in this hearing is to figure out what went wrong. whether people are being held accountable. most importantly what we should be doing going forward. the thing that i'm struggling with is how long this went on. before you were able to stop it. and you have heard that question on and on again. it does for me as mr. stutzman asked from the other side of the aisle, by the way i agree with mr. capuano, there are very issues in the six years i have been here where both sides of the aisle are on the same page. mr. meeks and mr. capuano and

mr. posey and mr. duffy are outraged on the same subject, you know that something is going on here. what about that question about whether this is an institution that's too big to manage? mr. stumpf: again, as i mentioned to another -- mr. carney: mr. stutzman asked the question. mr. stumpf: we can get our arms around this and we will. mr. carney: how can you manage such a large organization with 260 whatever thousand employees and not be able to answer the questions that mr. ellison posed to you about things happening on the frontlines? how do you control that activity which was really what was going on here. mr. stumpf: again, we have leaders in those businesses that could answer those questions. i don't have that level of detail. i can get that. mr. carney: one of the things i have worked here, i'm not going to be here after this next election. one of the things i worked here since coming is on mortgage

finance reform. entered into the record by mr. meeks was a list of wells fargo settlements for state and federal regulators. there is a whole list, $5 billion plus, related to mortgage fraud, if you will. could you explain to me how your chain of control got out of hand with respect to these violations? mr. stumpf: regarding the -- mr. carney: much more impactful on the economy than these fraudulent accounts. although they are really important. mr. stumpf: i don't want to minimize any of our mortgage settlements. but we're by far the largest mortgager. mr. carney: which is why i asked the question. if you have the level of fraud going on with fannie mae and freddie mac. mr. stumpf: we have made settlements with a number agencies. our settlements have been, we have had far fewer issues, even though they are the largest -- i'd like to make this point. mr. carney: the settlements were

representations made to fannie and freddie which indicated that the mortgages are -- were what you said they were, correct? mr. stumpf: i believe what you're referring to is an f.h.a. issue we settled in the last six months. mr. carney: $1.2 billion. fannie and freddie settlements were $869 million to freddie and $591 million to fannie mae. essentially as i understand these settlements, they are over information that was misrepresented to the g.s.e.'s. >> we made 11 million mortgages to help people get lower rates or buy homes. that is been very important. >> with an institution that large, how do you make your these kinds of things don't happen on the mortgage side as well? >> we have a terrific team. we have done a lot of work to improve there.

we have great leaders in those businesses. i would like to have some additional information if you could provide it. >> i will do whatever i can. from kentucky. five minutes. i share my colleagues outrage over the unethical and illegal sales practices at wells fargo which opened up over 1.5 million take bank credit card accounts in names of real customers cutting those consumers millions of dollars in fraudulent overdraft in inactivity fees and potentially hurting their credit scores. while wells fargo does not have a major retail presence in kentucky, it is very likely that many of my constituents were defrauded if you could, reference materials again and

identify the number of my constituents who may have been impacted. clearould like to make that the 1.5 million deposited accounts, very few had credit impact. >> potentially the accounts in kentucky. 629 account but could not be ruled out. today that will happen at your institution over the last several years was not consistent with their culture and ethics. have to think about the 600 kentuckians. it may have had an account opened without the knowledge or consent, middle income, hard-working kentuckians. that may have resulted in overdraft fees. could damage their credit score.

no fault of theirs. want to said that you make this right. i would say, my constituents have been damaged by your conduct would say that that culture allow that to happen. that is a russian culture. culture.en let's not lose focus on the victims. let's not lose focus on those defrauded wells fargo customers. you said you will make this right to the customers and the committee job is to hold you accountable to make this right. will you -- we all have caseworkers. it will not surprise me at all if we get a call from a customer who has been wronged. will you commit to me into government relations team commit on the record that will you will you work with us in our constituents to make this right for them? >> the answer is yes. we are committed to make it right for everyone of us.

in fact, we are working with -- we're going to have a consultant that the cfb has to approve. we will have mediation and go back. i'm interested in results. >> i appreciate that. clearly, there is a lot that went on wrong with your bank. i want to tell you correctly by to the constituents, i think about the community banks and credit unions in my district. i've talked to many people who work for small institutions who are your competitors. the scandal has painted a bad picture for the and, thenking sector institutions in my district, they don't have their culture.

now, they have a tarnished reputation because they haven't swept into this with you. we have been fighting for regulatory relief for the small community tanks and these credit union. they represent competition to big banks like you. small worry about are the committee banks and credit means that are not going to have to deal with the ramifications of the ad accept your institution can you comment on their colleagues that now are going to have to live with the regulatory onslaught that is likely going to sweep them into this when they are not at fault? they don't have a culture like it. >> i'm sorry for what we did. i'm sorry that we did not move fast enough. the vast majority of our people, even the regional bank did exactly what is right. they followed our culture. this is about people who did not do the right thing or behaving

not right. i except responsibly for that. i'm sorry about what happened. >> you testify that you should have known sooner that product sales gold would have elicited bad behavior. was it your policy at the time to notify customers when an account was opened? an account opened that was not funded, we within 60-90 days removed from the account trial. it was not until 2015 that we finally put together that there could be a fee during this. that is similar to the study back in 2011. >> i would think that best practices going forward and the past it have been to notify a customer when you open an account. >> we do that today. within one hour of the cap being opened.

we want to the new without the signature. >> gentleman from alabama. has doneks wells fargo millionive on the 1.5 accounts and have a million credit cards. can you tell me with any specificity what demographics were most affected? i represent alabama. comic books in the state of alabama affected? -- how many folks in the state of alabama affected? >> more of the west and southwest. let me get to my numbers. >> i also want to know whether or not you have identified any commonality between those folks that were affected, either geographical, demographics, race, ethnicity, income level.

you isolatedlated -- who was most affected? accounts 2 million that we could not identify, we cannot rule them out come there was -- did upon the side skewed to younger people. we don't use rates or ethnicity. only ages what we capture. >> what about income? when people open up credit cards, they have to say what range of income, many of those identifiable commonalities. side, we don'tit do that. other credit cards that i don't have that information. i can get back to you on that. you are looking up alabama. 22,795 accounts,

not necessarily customers. i don't know how many of those -- >> 22,795. i can assume from all of your that the that my -- customers in my state will be made right. >> that is our goal for every customer. >> my real question, being made right includes more than just been made whole for the damage that was done personally to the customer. the reality is, you violated the public trust and seems to be go to thele should bonuses that were received off of fraudulent information over the time identified. how much money have you made 2009-2015ive years of

in just bonuses? i don't recall exactly. >> 12 going to bonuses for the last three. >> 18-20,000,000 dollars. >> my frustration is that being made right is not just about the personal damage done to the customer, it is about the public trust that goes to every level of your company being unjustly enriched by a scheme such as this. i would like to know what your thoughts are on how wells fargo is to make right to the public of such a magnitude. >> i think it's important to note that fraudulent or unused accounts her customers and hurt

us. fees that weion of found for this for years cost us $10 million to produce. that is a losing operation. people invest in our company for and onelot of reasons is about the relationships of customers who use products. >> ited products -- understand that her too provocative tell you that the customer base are much more egregiously hurt than you. >> no question. >> to the comments of my colleague who was trying to capture the bad business practices of your sales force, do you still have that line of business? great retail banking business. we love it. we are getting rid of sales goals. in fact, our --

>> what else are you doing to make sure this doesn't happen. open door credit card deposit account open, there has to be a signature today. if there's not a signature, it cannot get open. we are also doing it for shopping. >> what is to stop their fraudulent signature? >> you have to put in your pin. only the customer knows that. >> the gentleman from pennsylvania. >> these charges against wells fargo i would any legal or ethical standards. we know that wells fargo open to an accounts for customers without authorization. driveles targets and additional fees from bank employees falsified accounts and engaged in egregious example practices. this with theft. what they did in the systematic way represent the gross violation of trust.

when i first heard about this, my first that was this falls into the, you have to be kidding category. the course of the last five years, wells fargo was acquiring -- firing 1011 employees each year. and lastly testimony, it was not andl 2014 that committees wells fargo board was in court. it is incredible that this did not rise to the attention of the board immediately. incredibly did not end sooner. these actions were wrong. by thousand people, perhaps more, live and she did stole from customers who they thought would trust them. how may people in pennsylvania? >> as unto death, a couple of comments. many of these people were bankers. or make managers.

levels?any >> depends on the operating business. 8-10 letter stucco >> players -- layers. >> pennsylvania? >> 79,000 accounts we could not exclude. also understanding the rate on credit card. plutarch percent could not remember or did not order. >> how many branches? >> 6200. >> how many identified in the scandal? >> i don't have that number. >> this is a coast-coast scandal? >> behavior we did not want. i don't know if it affected every state or every region.

i don't have that. >> how many branches have you visited personally? >> i don't give account of that. maybe 1000. >> do you make it a practice to go behind the counter and work as a teller? asto work as once i got -- one? >> like undercover boss. >> i'm not trained or allowed to do that. i will become a teller line and meet our people and talk out front with bankers. should >> i talked with them. the vast majority of people are excited. we cap engagement scores. every year we do a participation

regional bank and a gallup score that brings in to account if you are happy with your job or rewarded. people are engaged. some of the highest scores in the industry. >> how many whistleblowers are there? >> do not have the number. >> the appreciate the courage it takes to be a whistleblower? >> are people can call that . >> you have no idea coming whistleblowers? >> cnn is reporting dozens. do you think that is accurate? >> i don't know. >> have any idea how may people are no longer employed at wells fargo. >> i don't have the number. >> demoted? >> i do not know. i don't have the number.

-- given theest courage it takes for somebody to spot something like this, to speak and the historic protection that should be attributable to whistleblowers, this should be a top priority. >> how many people are now working on the issue? >> but don't know. i can have my team perk with your staff. >> you have any idea coming august wells fargo employees may have lost out there is some of the fraud stirs jocks are -- fraudsters? >> i don't know. >> the gentleman from illinois. >> thank you for holding this hearing so we can examine the abuse and fraudulent practices that were so progressive -- pervasive. i will start by reiterating what my colors have said that this is

why we need a strong and independently funded cft be -- c fbp. they learned about the fraud through its whistleblower line. it is my understanding that he offered to be here today but it appears that his testimony was not needed to understand the role that his agency played in bringing the front to light. i suppose that we don't need his cfbp hasy because the returned billions of dollars to americans. they did not learn about the broad because wells fargo self-reported. in fact, the record suggests that you are informed about their fraudulent accounts anywhere between 2-4 years before self reporting. in the wake of this agreed just institutionalized conduct, he about come to washington to say you are sorry. and your punishment for going some of your compensation

for that does not address the core problems and the culture of the institution and the governance rules that allowed it to develop. as some who started a manufacturing business and served on the board, i understand that corporate culture starts at the top and eventually permeate the entire organization. your response to the gross misconduct that drove results are predators up on has been underwhelming to say the least. it is clear that the simple motivations of keeping the trust of customers and shareholders in the jobs of 5300 front-line employees has not been enough incentive to drive a culture of compliance among innocent. question, given this situation, what specific governance rules should have been in place that would have prevented these abusive practices? >> thank you for the question. that we should

have done more early. we should've brought corporate resources and earlier. we should have got rid of sales were earlier because we misrepresented by some of our team members. >> i would like to focus on specific proposals. i think we have all been impressed by this list of settlements and penalties imposed on wells of the financial crisis. without objection, i would like to enter that into the record. >> without objection. >> one specific proposal that has been made is that regulators penalties should be paid first out of the bonus pool for top executives. so that you and everyone of your top executives would have your issues at risk for any rather than having a regulatory

fines be taken largely out of the shareholders. my question to you, if everyone is -- >> i can't speculate on that. in my case, the board is independent. the board took my recommendation and past that. good to do all i can to lead this company going forward. largely on what fraction of that -- [indiscernible]

>> we do and a lot of really good things. a great corporate citizen. we can't get it right every day for all of our customers. as we look for bipartisan solutions to prevent the sort of thing happening again, i find that an interesting suggestion. question, many of were taken here hurt the credit scores which made it difficult for them to buy mortgages. are you specifically looking to find out if and if your customers have been denied or to just because of action taken? caller: >> we will dig into that and make it right. >> the gentleman from new hampshire. >> thank you.

i share in the frustration and anger and displeasure of my colleagues on both sides of the aisle relative to this issue. i listened over the course of this testimony and there are a number of what i would consider inconsistencies based on what you said today, closing or oral testimony or what you had stated in the senate hearing last week. i want to clarify a few things written in your oral statement you said that you made a recommendation to the board to take actions regarding your salary and pay. >> that is accurate. >> when did you make that recommendation? >> today is thursday. it was sometime before the independent board met without me. been -- before

during the board meeting. that toomments about our lead director that i wanted to do that. >> last week? >> last week. >> the four after the 20th? it was sometime after on the weekend i believe the best of my recollection. >> after the senate. to there you had said senate that you did not would you prejudice the compensation committee with the process. did exactlyth, he that. what has changed? >> i felt that it would not prejudice them. i did not want to prejudice them. they can do more if they want to.

they have all the rights and responsibilities. is ont i don't understand the 20 you sent to the senate you did not want to prejudice them. later, you did a reverse course. what happened for you to change your mind? way decided this was a good to show a step -- a start to show my level of commitment. >> i was preparing for other things. it did not cross my mind at that time. i've developed that thinking sometime over the weekend. right? compensation hit, >> it was right for me to do to recommend to the board at that time. they can do more, they have all the independence and i did not believe, i thought that was the right thing. >> what about the stall stood --

>> she does not report to me. that was made by her boss. >> when were you aware that recommendation? >> sometime over the weekend. do you currently have sales goals at wells fargo? banke end and original tomorrow. -- in our original bank tomorrow. do vast majority of people the exact right thing. we don't want to hurt them from a compensation perspective. we thought we could do this and do it right and put other goals by customer loyalty and other things that customers appreciate by january 1. we know we can do by october 1. we don't want to hurt them.

we also want to make sure our customers get treated well. you been asked several times how many employees were embedded at wells fargo. i think what you said is something to be effect that you will do your best to work with us. you didn't say whether you would provide that number. would you provide us with that number when you get it? answer.'t know that i will work with our team. the best i can do is promise you that i will consult. >> when you work with your team to identify the number, please share with congress? >> i don't know that is a confidential supervisory -- >> they are public employees. >> i don't want to make a promise i can't keep you i will promise that i would take a look at the. >> speak with your leadership and try to get us something in writing. >> i will work with them as soon

as it gets done. >> time has expired. from maryland, mr. delaney. >> thank you for being him. a lot of focus has been on your cross sales across cell culture. something the institution has been very proud of. chairman was probably the architect of the cross sell bogus american by the industry's number one ranked customer service culture and i was a very substantial customer in my prior life that nothing but a terrific experience, with the industry's number one sales and cross-selling culture of wells fargo. analyst reports across the last decade talk about the cross cell culture. several analysts also pointed

out that there is risk inherent in this and this culture might be undermining the customer experience including a woman banking analyst who said that wells fargo suggests a successful bank is one that keeps seeking new customers and selling as aggressively as possible more products to them and not getting bogged down in .ustomer service the question i have, your board of directors, the government process is important. to the board of directors ever discussed at the board level whether to cross sell culture had gotten out of control? you were outperforming appears in your product that. your peer and you are proud of that.

the law number says it is difficult to outperform your peers. did your board ever talk about this issue? today they ever sit around and examine whether this culture had gotten out of control? i don't know all of the things that are poor talks about because i'm not an open meetings. i will say this, cross sell is our shorthand for depth of relationship. we love that. when customers do more, they get more value. it helps everyone. >> you also make more money. >> is really good for you or the customer, depending upon whether they needed the product or not. i'm getting at the board's responsibility. your board is responsible to make sure that you are setting the right tone at the top. you are also responsible for that. the board is responsible for examining the business practices of the bank.

for most of the meetings, you are there. you set the agenda. you probably sitting most of the committee meetings. ever talk about whether the culture and retail banking business and all the accolades you are receiving for your success and the fact that several analysts had focused on the fact that you were overly aggressive, did they ever ask for questions of whether we would should look into this? around this issue, ensuring that your customers were getting inappropriate service which they obviously were not? >> the answer is yes. evidence that is the board has examined this issue? >> i can do that.

>> did you ever give speeches where it is as important to give customers interest first as it is to achieve our cross all objectives? --cell objectives? -- cross sell objectives? >> i try to talk about what is good for customers is good for us. it is important to you are asking good questions. havinga that somehow customers have our products that they don't use helps us, it is -- >> if they pay for them, it helps you. >> all of them are free. virtually. >> can you find any evidence where you said it is as important to make sure we put our customers interests first as it is to achieve the sales goals we set? >> i can't recall my words. i do know this, every time i

talk about this, it's about customers and putting them first. >> your largest shareholder have the famous expression, it takes her whole life to but a reputation and you can lose it in five minutes. do you think you enter institution have permanently lost his reputation? -- its reputation? >> i'm committed to make it happen. >> the gentleman from texas. just like many hard-working americans and members of this committee, i am really angry. i also am a customer of your bank. i am amazed at what you do not know about your business. knows heard more i don't from visio and i think i have ever heard my life. a.c.l. -- and i think -- -- than a ceo in my life.

i came here to deregulate. but it is making it hard to when he going to resign? -- are you going to resign? >> i've been on managing to leading this country through this. -- company through this. angry because by a large number of wells fargo employees opening accounts for wrong,g customers, it is i'm angry because wells fargo agreed to pay what hundred $99 -- $199 million and don't have to admit wrongdoing. people don't care about your hurt. they care about their hurt. i'm tired of hearing about that today. doddngry because under the frank act, wells fargo would still be a little for taxpayer funded a lot. i'm angry because i am a strong supporter of" big and small. today, you really make it hard.

what you have done has hurt main street. i owny, i'm angry because a business. i'm am a borrower. i've been in debt more than i've been out of debt. it sickens me to think that you took advantage of customers in the manner that you have done. customers are important. they don't make that many customers. learned two things, the customer is always right. you try to teach us your business today we don't need to hear that. reputation, it is all you have when you go to bed at night. when you lose your reputation, you have nothing. fargo ando take wells longtime before the camera store customer confidence and reputation. this, inart off with

the past i have been part of a banking board like many have. big banks, small bank. i understand what that entails. i certainly understand the charge that is given to the board. to make the bank successful. ultimately you answer to the shareholders. theou discussed with banking committee, top executives knew about the front under your watch in 2013. as some have sat on a board, i find it troubling that no action would be taken at all. we have established that no action was taken by you or your board in 2013. what about your outside auditors? can you tell us committee again who they were and if you advise them of this 2-year-old systemic fraud? >> the auditors kpmg. they do a wonderful job. this is on us.

we should have done more earlier. there's no question about that. i don't want to minimize whatever portion of the 2 million accounts were unauthorized. we take that seriously. they are the ones we put first. as ceo and chairman of the board at wells fargo, how often did you meet new board of directors? boardht more beatings -- meetings a year. >> the entire to stop the incentive program -- did anybody try to stop the? program? >> that is not shared by me. i'm not a member of the committee. >> you don't know? >> i do know that we have incentive programs and controls and so forth. that is what i know about the committee and our business. concerns?body raise >> as we start to understand

this issue, the board to direct action to make sure that and along with management, we understood for the customer harm was in to make sure that sales process -- that we did not have unethical the hitter. -- time. how many people in texas are affected by mismanagement? there were 149,857 accounts. >> thank you. for, thent to clause d gentleman from washington will be recognized for an additional five minutes upon the conclusion of the time allotted to him under the five enrolled. the gentleman from washington. >> thank you.

after sitting here patiently for nearly four hours, my take away is that you are in denial. i say that because i can't reconcile what's up what you have set with the known fact pattern. you have said, i did not know in essence. the us at a small percentage of our dedicated workforce was actually engaged in this behavior. you said you're sorry. you are very sorry. you said we are going to fix it. the facts are that 5300 of your employees were fired for inappropriate behavior. theywere fired because misappropriated millions of dollars in fees without the agreement of the customers. an act of which you yourself a great with congressman duffy constituted stealing. all of this and the publicity

surrounding it led to a $25 billion reduction in the market capitalization of your company. i cannot reconcile what you said , it those facts and conclude can only conclude you are in denial. some here have said you should resign. i don't see how you survived. i don't know this. i have been on a board of virtuallyand it is inconceivable to me that your board of directors would see fit to call back $40 billion in bonus and incentive pay without also concluding you are no longer at the correct person to be disorganization. the truth is, it is not your survival that i'm concerned about. i'm concerned about your company. your bank, institution. the two under 68,000 people that you employ. more importantly, the 19 millions of depositors. i'm more concerned about the

trust level in wells fargo and in the financial sector. thanks and credit unions. and the heartbeat of a market-based and capitalist economy. i'm very concerned about what you and the company have done in the way of damage to that. unlike her to suggest that you resign. i don't think it would do good. i think you're in denial. i'm going to remind you of some things that you have said. i know right from wrong. lead with kurds. to make it right. you also said that you feel privileged to lead wells fargo. on that, i'm going to take you at your word. hope, i would suggest that it

is beyond help, it is a prayer. that in the quiet and solitude of your home into discussions with your family you ask yourself, what's in the best interest of wells fargo? not you? i do have a question. i think some other people have noted that it looks like you are repeating some mistakes in the , falsifiedis case applications, consumers being pushed into products they do not want. driven by aggressive sales goals. it is identical to your practices that led to a record fine against you in 2011. for012, he paid violations violating the service member civil relief act. foreclosure of homes in violation of federal law. privilege beyond member --

measure to represent funny thousand uniformed personnel at joint base lewis mccord. again forstigation, violating the service members some civil relief act for foreclosing on cars. we don't want men and women in uniform bring about that when they are putting a life in harms way. going to predict going to pay another fine for violation of a of's in the millions dollars. other than as a question, i will just say, this pattern just keep th the repetition. if years later, we are back at it, the same thing again. with that, i yield back the balance of my time. thank you very much. thank you for yielding this time to me. know, as a ranking

member, i have the responsibility for some kind of leadership here. pleased that i was able to work with the chair of this committee to get this hearing. recognizingnt you the size of wells fargo, 1.9 trillion and assess with over 6200 bank branches. me how huge this bank is. i'm also concerned about whether or not it's -- as chairman and ceo you can really know what is going on at the bank. i'm concerned about the length of time it took you to know what is going on. i'm concerned that maybe you don't have a handle on your

management and what the reporting processes that would make you aware of what is going on. management ofr her division even though she fired 1,000 employees for this fraud in 2011 and yet supposedly it took you two years to know about what had happened. she didn't tell you. she withheld information. and you indicated in her glowing retirement that she had done a great job. i'm really concerned about whether or not -- in fact, you understand we have been sitting here fighting to implement dodd-frank and trying to work out, you know, some of the problems that have been identified with dodd-frank, but