africa or ethiopia, but there are areas around the world where we have had a persistent number of that. and we suspect that this congress has a duty to make sure we are careful about those admissions, and being in touch with reality when we do vetting. that is what the issue is about. >> thank you. on the vetting process, so how long is it for someone coming from syria and i guess we've admitted only 12,000 refugees as displaced population of five million people. considering the humanitarian crisis there which i think is he worst since world war ii. and today's chairman talked about the light of liberty. and i believe i'm at -- on the

statue of liberty, there is a poem by m. lazarus who says bring me your tired, your poor, your huddled masses wanting to breathe free. 12,000 refugees at displaced population of almost five million. we've seen these heartbreaking pictures of children who are being killed. and think about -- i guess we're talking about 400,000 syrians being killed in this. -- what about what our and b is as human beings what our obligation is to other human beings. these are people who are fleeing isis. these are people are fleeing an

assad regime that uses poison gas against civilians. the u.n. g process is first, refugee, first vets people hands them to us. average a over on year and a half before we vet them, is that correct? >> yes, that's correct, senator. senator franken: and have we had any dulls that came over in syria engage in some sort of errorist plot? >> no, senator, not to my knowledge. senator franken: you know, my

grandfather came from russia. he arrived and saw that on the statue of liberty. he was one of those huddled mazzes yearning to breathe free. one s our -- you know, awful thing happening is one too many. but we've had 400,000 people killed. let's weigh those things. and let's talk about what kind of country we are. are we a country that's just terrified? are we -- are we political leaders? are we office holders whose job terrorists e in the and tell them that we're not going live up to our values that are there on the statue of liberty. or are we going to be a bigger people.

i think it's great that we have given more financial said in the syrian crisis than any other country. but the number of people that we ve brought in is, i think, a disgrace. 25 to minnesota. 25 people. i just think that this is really a matter of sort of values here. i think when you come right down to it. and i think our country is my hed by refugees like grandfather. i don't think we should have a test that you should ask someone from syria whether they're muslim or not. i have a feeling that isis terrorists might lie. they're very tricky, you know?

they might say they're christian. we have a member of this committee that suggested that that be the -- i think we have do a gut check here and see whoer as a people. we benefit from our immigrants. we benefit from our refugees and witness stand we don't benefit as a country when little and ren are drowning families goes through these hardships and see their families die. thank you. >> senator franken, an eloquent station. we should all consider what you've told us. senator. >> go back to your opening comments and the comment that you refered to that you refered

to as being transparent on the prosecutions. i want to have you come back and read that in a republican. this committee, i'm relatively new. i've been here for less than two years and i'm already tired of people talking past each other in this committee. here's one of the problems we have. and i want to thank people who have come as refugees and served our nation. you see national cemetery and see a lot of muslims who died for this nation. this issue should be about the integrity of the process. it should be about recognizing and not finessing the fact that 1/5 of the prosecution related to alleged facilitators are through the refugee program. why is that important? because it does a disservice for the legitimate refugee who is had no intention of wants to

harm this country. and they are willing to serve it. we do the refugees a disservice. we need to tom stop talking about a republican position and dem cralt position and come up with a responsible, compassionate position for these refugees. we also should come up with a responsible policy so that they're not forced to make the heartbreaking decision to lead their nation. i don't think people were born and say i want to come to the united states. they leave their nations because they're threatened with their lives. that's a profound decision. it's one that i hope i would never have to make in the united states. most people want to live in their nation of birth where their families exist. -- where r done chure

their culture resides. i want to start mr. rodriguez by you reading that package or that passage. >> it was extemporaneous. >> the problem was, i think -- >> i can tell you what i meant to say. >> my request to you, is actually if you were aware of the fordham report, then you should have said 1% is too many. clearly 18% is 18 times too many. what can we do within your agency and other agencies to make sure that we're sharing that information where we're integrating and providing information on patterns of life so that we can find people are abusing our good will and potentially try to do harm to this nation. because if one succeeds then it

harms our ability to go help the refugees that we should find a safe place shir in this pla or somewhere else. what precisely have you done to -- you know, the dialogue, the public dialogue out. what precisely have you done? that what saying constructive actions have you taken where most of us this happens where we don't pass the baton and we don't share information? what can you point during your tenure to try to eliminate that gaps? >> i'm going to el you two concrete things that have occurred. there are things that my predecessors have done. tell you about two concrete things. first, during my time as director we took the interagency check. which is the multiagency check

of intelligent agencies, law enforcement agencies. this is now a recurrent check which means that from the time it is first initiated prior to interview. they're after. if knew information go into that data base. e are able to notified -- >> thank you. if you could respond back in a written form. i guess my final question is rodriguez.u -- mr. have you heard about this fordham school? i would like to get a response on your agency on what if anything may have been able to do in the process to have identified in this threat. or the pattern of life that.

and there are things that we can learn from this. it would seem to me if this report is legitimate. and it appears to be. er operate to improve the integrity of the season so that we don't have to continue to have this circular discussion about refugees or not. >> we are on a nation founded on immigration. we're in the time now where people can be radicalized on twirt. we have to make sure that those who are coming here want to honor our nation for honoring them as female who are legitimately at risk. we expect them to dom this country and participate full any . by eliminating in the last. but give credibility to some of the arguments that have been expressed today. thank you.

>> thank you, mr. chairman. thank you to the witnesses for being here today. a number of the commenlts made -- comments made, this morning on this panel reflect the fact that story. or most of us do. that is very near to us both in time and personal meaning. and i'm proud to say that my dad came to this country in 1935. he was 17 years old. he spoke virtually no english. had not much more than the shirt on his back. and essentially no one. and this great country gave him a chance to suck seese seed. arguably he was the refugee. and certainly his parents when he enabled them to get here by borrowing money that he could scarcey pay back. of he other -- on the eve

holocaust. we have welcomed many refugees over the years. they were seeking to escape similar kinds of persecution and violence there our churches and synagogues, nonprofits across the state have volunteered to help settle those refugees. the integrated refugee and mgranted services in kentucky. it has doubled the number of families. a similar outpouring of community support. i visited the refugee carp in

tripsingring one of my there. some of whom are on this committee, i believe. we seldom our state. i'm not sure that he still. zbot. name is ismael de he fell to. and was resettled until connecticut with his bife and thrifeyoing. is that the university he was attending was shutdown. and the leaders of his place of worship were arrested with no one to lead his church, he stepped in and fulfilled that role for almost a decade.

he was prevented from becoming a breast -- priest because of the religious persecution in this country. other church leaders were murdered. he was eventually targeted. he escaped to this country and e now works as a hospice haplain in nagatuck. mr. dezbot is serving the people of connecticut, not just benefiting from the greatness of this country, but contributing to it. and giving back. there is a fear today. it's understandable. that our nation is at risk. we are at war with extremists violence that violence presents dangers to our country.

and the apprehensions created by hat ongoing war. extremism. you should not be permitted to overcome our basic ideals but we do need be careful and thoughtful about the way we do our refugee programs. the question that i am asked and how do we k you is improve vetting and screening now? how do quzrenkten it? because we must if there are weaknesses in it. i noted in your testimony that you talked about pilot programs under way that will strengthen and increase it's efficasy. the increased reliance on poe en lrble biometrics. -- potential

biometrics. and it presents challenges but they too have to be explored. so my question to you is what efforts have been ongoing and what can be done to improve those vetting programs. >> first of all, we are for the information against which we vet dependent on law enforcement and intelligence agencies. there's an ongoing process. among those agencies and with their international partners to seek new sources of information to fortified information sharing. that's something that increased since september 11th. we benefit tremendously from the wealth of information created by

the work that those agencies do. secondly, we have been in process of focusing now on specifically on syrian and most recently. and in social media utilized by those applicants in certain defined cases, it's possible place where is we may find derogatory or concerning information about those individuals which would then inform our. it's onthe pilot now. there is active work going on for defined categories of people right now in that area. what can with be done to improve the ability of biometric information so that checks can e more effectively done.

and he is here today. those are efforts that are being lead by the law enforcement and intelligence agencys that has been identified as a critical area of further development in the world that we do. and again, we benefit in the world that we do as those improvements come with us. . efforts are necessary. but they're also urgent. >> i agree sir. soir i would like to get written answer with the chir's permission. my time has expired, thank you mr. chairman. >> thank you. senator cruz. >> america has shown an safe haven. i'm the son of a refugee who came to america seeking freedom. but immigration laws are not a

suicide pact. the refugee should not become a vehicle. murder orists to come innocent americans. americans are oncerned by the willful act of terrorism. that was characterized a few minutes ago when senator al frankel said we should not even ask refugees are muslims. if one is trying to predict terrorists from coming in. the second from my democratic stance is that we shouldn't even ask. to me, it's nuts. as we look that -- what is happening in syria and what's happening in the middle east.

isis is evil. they are waging a wear of -- cide against cristians christians. they are murdering jews. ey are murdering fellow muss williams. yes, sir the refugee programs eams to have an enormous conference for syrian muslim efugees and seems to actively. eep out. syrian christian refugees. the obama admitted 249 refugees from syria. 224. he went 5.2%.

2000, 249 were muslim. that's 898%. and only 29, 1.3% were christian. in 2016 to date the o obamaed a administration has admitted 99.2%. and 49 were christian. that's 4.1%. 2004, and more than 14,000 of them were muslim. fewer than 100 were christian. now, those numbers are not even close to the proportion nal population in syria.

10% of the population of syria was christian. yet, 0.86 being admitted by the administration or christians. united aw, why is the states admitting a low-level of refugees? > mens of refugees is based on vulnerabilities. syrian refugees another although -- although christians were 10% of the prewar syrian population. that only about eight have flead. one of them is that many of the christians still reside in syria. they were low kealted in there beforehand. -- they were located in there

beforehand. we have a. one of the other difficults we face is that some of the christians have lead has flead to lebanon. but we're trying to build it up. persecuting christians and den discovering and would like to like to endiscover to wage genocide against them. >> yes. >> and any person that disagrees with them. so we tharted our program to include "syrian who is waited for visas" based on the number states. let me shift to another question. >> could i just add -- >> my time is expiring and i want to add one more. >> mr. rodriguez, the house of representatives recently

obtained a leaked internal memorandum that admitted that refugee fans those commit but notess to investigate. >> i think i won it. seed you be willing -- my i it >> right here. >> yeah, it is the document that i thought it was. this is a draft document. it is my understanding it was never issued. whoever wrote this didn't know what they were talking about. for this simple reason, they assume that we were not collecting finger prins. that we were not taking photographs and interview. even back then and well before

that . all three were over the age of 14 years ode. so you don't know who prepared this document? >> i don't know who prepared this document. >> i appreciate you answering the committee inrying after this hearing. >> we ought to be. whoever it was was deeply misinformed. nd the memorandum says, isis refugees is particular already to frau. where at times the testimony of an applicant alone is significant for approval. as a result, a rage of back bad actors as well as purdue. supporting documentation. having exploded this program.

and the the apply can't. including the asai lent and refugee -- receive the government issue. that the applicants sup plide. this document could be used such a water fountain. >> without supporting information tell us who they claim to be and we're letting them in. how rector of the f.b.i. can we possibly be confidence that the refugees innocent americans. what i am tell yog you is that i would give it there. whoever that person does.

were ke talk about real gas. areas of risk. . to and he didn't take to pass. >> you disagree in >> i disagrees. >> sit true or false that the testimony of the applicant alone can be significant for approval. >> it is considered. it depends on the case. usually we do extensive documentations. rians present with extensive documentation that we review it. . my time has expired but i would like to get an answer to this question. is it drew or false that the testimony of the applicant alone can be significant for approval? >> there are cases where the testimony is not necessarily

corroborated by documents. but it is always tested against forecast information. and the way that you're asking the question, senator. >> are you saying it's true. >> i'm just trying to understand how -- i am acknowledging that yes, testimony can be the basis for the grant of a refugees but it needs needs to be dested about other things that we now about the country conditions at a minimum. thank you. sir. >> well, mr. rodriguez, all of you work for the people of the united states. this is the calmness of the yuths. answer.a right to he took too long to get you to acknowledge the answer. and i don't appreciate it. and i just tell you, oh, in's doubt. yes, the director came before the house and now testified that

the challenge will be talking about the hopeful defeat of isil, at least taking away their. he said the challenge will be through the fingers of that come of isis are going to very, very dangerous people. they will not all die in syria and attacks. >> who do you see yourself in 5 or 10 years. the added count is like. especially in western europe. ecause when when he is supplied. killer and here through chill and innocent people. what he's saying is, we don't have a system that can stop that from happening. and i'm on easy dfment but

you're in charge of it. he admits there are dangerous. i just want you to know. >> > they say he's a willful. . and we're not going to be intel dated from it. i'm not going to be intimidated and others aren't. from discuss tgsdange your. by splb saying. you opposed cuban refugees. i'm not apomed. our that we are careful about it. engaged and concerned about the dangers we faced. ere we had an exit about that.

estity mated 27 victims of anna kill them. not in syria. . this is what the -- this is box food things in for flouting on the rotation. or. 23 to 27 on our killings first year in the united states. 1% of the victims are murdered .ut being too western western over the refugees to make the refugee to me. and remember it 18 years or young every. my father is almost always involved. of physical and

and the expert. that's something we need to know about. meet ioned the female lation. this is the f.b.i. report i'm reading from. and it was may of this year. first line. more than 500,000 women and girls across the country most of thun themlying in areas of undergoing female mute liization. it goes on to say a major cities like new york, minneapolis. and washington. there are -- wear a large -- he's half coalesce. and it doesn't occur. >> so this is a real problem. >> it's not a made up problem. swrp.

so let me say i believe that the like on in syria is catastrophe. there is no easy. we've got four million people. we're going to fix this problem. by bringing in. from syria. i can't possibly. the problem was statesmen snirp. ut and we eaped in that depurt erring of. . and our bet solution in my opinion is to help -- 1. by helping people in the region stay close to their home and women. t a see sire very

and what if. . is it out. as being in danger? it's just not possible. focus. we needed to do the right thing. we are the most dangerous one. . and doing all they can. i would like the 27th and off. they will try to work together. to try to. ways to create more safe. i think that's doable. we're just not getting any report. the administration. we've got to set our example. . and leave their country and be with the united states. >> there is's one expert. institute of main. it's not good policy to see how

many people you can take people if the united states wants to hem the world, and overall gold should help these countries. people from the country. >>. the american people think it's uneasy about i this. and we're not getting very, very good things. >> our government officials are who are in charged with these programs. i believer you have anothery. you'd like to ask. >> thank you, mr. chairman. >> mr.. and director comb's item. the federal government could not prove that they weren't terrorists. he said if someone wouldn't get their own. reflected on our own data base. >> we can sa queery them.

but there will be position in to show up. do you agree with the head of the f.b.i. that we cannot make thure to make sure they're not terrorists. >> i agree with the quote. i >> we cannot stret refugees. sbhrp there's evert that we can vet the refugees. and how successful do you think that betting has has been >. . a group as the example have been denied. oort because -- information about them has risen in various law enforcement or intel or in the interview. we have determined to not be credible. roughly double that number perhaps a little bit less placed on hold no action taken on their -- >> but mr. rodriguez, with all

espect, that's an odd to say it's successful because of turning people down. >> if vetting is successful it is preventing terrorists from coming to america. let me ask it a different way in the eight years of the obama administration, how many refugees admitted to this country have been implicated in terrorism? >> i mean, we've talked about this during the hearing. there have been a number of cases most of them -- >> how many? >> i don't know the -- >> i can't tell you the exact number. >> let me ask you, why can't you tell me the exact number? >> if you're concerned about the vetting. is working. would have every incentive to know every single instance. >> i think what really matters in the discussion about these cases is looking at those cases and determining if there are things that we should have done differently. that is one of the reasons why

the enter agency tracks. because of what occurs a while ago. every single time a new case arises that is a discussion that that sa discussion my staff has. because what could we do differently. you do ay dwow that that. >> i'm going to ask you will you provide this city many writing with an answer to my question specifically of how many refugees admitted in the last sathe years have been implicated n terrorism? >> as best we can we will respond to your questions. >> we're aware of 20 individuals because these are public donation you have access that we don't have. we can go through those.

>> and there are instances, two in my home state of texas, recently. n january of 2016, omar farad making false statements and attempting to purr cue citizen shim under lawfully. he was a palestinian born in. and admitted a refugee in 2009. and he obtained a green card in 2011. and according to media accounts. he told his wife, i will go to blow myself up. i am against america. in your view did the vetting process work well admitting al harden is a review gee? >> i wouldn't feek a specific case. of course, i will this there was derogatory information about that case. i won't speck about that ant and

i will sigh that every. is there something that we should have done differently. also in texas. on 5 february 5th, 2015. he said for conspiring to rovide materials support to al -shababo. i bra shim a native of somalia. ame at the age of 22 and was given a green card. >> we keep saying instances over and over again. f refugees coming to america with an intention to engage in terrorism. and isis has made clear that they intend to exploit our

refugee program, to send murder ts to america -- innocent americans. how can you make sure american people admit that we don't have more terrorist who is would wage jihad in our nation? >> we conduct the process in a manner that is decided to do everything within our power, beginning with the screening criteria that are given to unhcr, the fact that people are interviewed multiple times before one of my officers. >> but we're letting them in. >> >> there are those cases. there are a number of cases where we've stopped people from traveling to the united states. as time has gone on, the process that is become better and

better. there are thidges that we are doing today that we weren't doing two years ago. and so we are continuing to strengthen the process further and further so that we can have the highest -- it's not going to eliminate all risk. but we are doing it so that we can have the highest lem of confidence that we can that we are not admitting threats inside the united states. >> well, thank you. senator -- thank you, senator, cruz. they understand the challenge. you cannot react people from syria because there's no way, no plans to send people into syria to verify anything that they say. >> that's the problem. and -- so i'll ask you. are you not aware that i have written four letters, asking for information on how many refugees have been convicted of criminal terroristic activitys?

this is absolutely breath taking. it's a total disrespect to this body who is in charge of good eveninging you money, to run your business and we're going to -- we should quit giving you money if you don't respond and you don't know basic things. in august 12th, i sent a letter. december 15, i wrote on that effect. 2016, and in june and so frustrated was i that i wrote directly to the president. to ask why can't we get this information. but do you think we're it into told know this? s that.ourse, you deserve >> to me it promotes an agenda ithout throng american people. and the down play and

misrepresents, really the danger that this program really clists. >> we're some areas we are having terrorists threats. >> were those letter addressed to directly to our agency. >> we will follow up. >> and if somebody wasn't sending it to you or whom, -- absolutely refusal to respond of congress. the way, our operations are not funded by taxpayer. >> you're not funded by the taxpayer. and we have a responsibility for the american female do the right way to to do the job. >> you don't get any fees that congress hadn't others rised is that true? >> that's certainly. thank you for your

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c-span. >> wells fargo c.e.o. said the bank is reviewing the two million fake customer accounts. they have levied $185 million in fines against well fargo. beginning with committee chair jeb hence early. -- henserley. >> the committee will come to order without objection. the chair is authorized to declare a resource to the committee at any time. holding wall street accountability investigating wells fargo opening unrecognized accounts. we are here today because millions of americans were

ripped off by their bank and let down by their government. fraud is fraud, theft is theft and what happened at wells fargo over the course of many years cannot be described any other way. in fact, a whole host of federal laws were potentially violated including truth in savings act, the fair credit reporting act, the truth in lending act. the listen tronic funds transfer act. the securities act change of 1933 and 1934 and the sarbanes-oxley acts of 2002.

the cost is big. to the wells fargo employee with kids to support who lost her job because he refused to participate in the scheme, the cost is big. we will make sure those who are betrayed by wells fargo are not forgotten and it is on their behalf that our committee has launch and in-depth nevertheless gation of your bank's activities. let me make sure, today's hearing is just the beginning of our investigation. it is not the end sm our committee is gathering thousands of pages of records and documents from boldt wells wells fargo and the coming regulators. if necessary i will not hesitate to issue subpoenas because we

will do what is necessary to go get the bottom of the matter. we don't know yet knew what you knew and what you nude about it and what you chude to and we know we hold you accountable for the answers to why this happened. at last week's senator hearing,. in the intervening days we trust that you have had a chance to refresh your recollection. there are we hope and expect you will provide more complete answers today. we need to know exactly went and how you and other executives at wells fargo found out about this indem innocent fraud. we need to know today what you directed others to do about it when you found out. we need to know today who in management is being held accountability. >> we know as far back since 200 9. 9. they started filing wrong

fortunately termination lawsuits. and improper sales tactics were taking place. were fired over a five-year period for these practices and programs as many as two million unthorsed accounts were opened. based on these facts we will also be asking serious questions of our regulators during the course of this investigation. if o.c.c. had examiners on sight. . and the cfbb were conducting reck examations. and once exposed why dit id take lmost 18 months. today, do i know the answers to our questions. perhaps they deserve a pat in the back. or a swift kick on the back

side. >> but we launched this because it is our job to hold both wall street and to protect homers from the excesses of both. . nnovative, remarket better dar through. for fraud and dissension. i know that wells fargo represents an iconic band. i know that your bad has a very rich and proud. hundreds of thousands. who had nothing to do with this or sid affair. . ut this sordid affair did . i do not trust individual companies. and mr. tump i have a mortgage with your bank. i wish i done. if i was in the position i to may it off i would.

because you have broke tennessee trust of millions of others. and it will be a long, long time to earn that trust back. i know recognize the ranking member for five minutes. >> thank you very much, mr. chairman. and i thank you for agreeing to hold the meaning. so they wouldibility see the fraudulent activity that goes there. the word game stopped today. it's not a sales practice violation. stealing. using customer social security numbers to especial up. it's not wrong ffl sales behavior. it is identity theft. let's call it what it really. is . at least she thinks normal. sales goes. but that was so unrealistic.

some felt pressured to committee crimes just to keep their jobs. and in may it splay happened times. 0 mill we have. julie miller. and dfment -- . meanwhile your senior management. the board of directors encouraged even bragged about behavior. today, i hope you came prepared to explain and why. why you personally there. you were prull pair. we've seen your testimony in front of the nat backing committee. and there are stills ons their need to be given. the testimony that we have

trying to explain what happened s not sass fac o understand -- and who knew about it and went. despite her statements. . but. weight either weight or knew much earlier thanl 2013. that these practices were taken someplace. i think that executive conduct and wells fargo. someone is responseable for the broke nl culture that lead to this behavior. need to be meld sfansbility -- responsibility. . . this issue is similarly. well,.

in from california. . of the employees or customers were. they don't deserve. they will look at your no one di. . in my office and one caller describe how he went into the bay. . . the employees cused my. and yes he had violationing the publicless truth. . . vealed. t was re you're always from that. now, i know that you said you take responsibles for these practices and thaw you are conducting your own investigation and that you are and other managers are foregoing some of your compensation, that

is welcome. let me be clear it's not enough. unfortunate will, this is not the first time we've seen abusive practices at wells fargo. we thought that you were working on these practices six years ago. your mortgage executive sat right here in this very chair reassuring our subcommittee that you were committed to fixing wells fargo forgery documents and yet we haven't seen the problem fixed. we've seen it migrate to another part of you bank. i hope i hope today we can hear from you, mr. stumpf, because the american public deserves to know what happened at wells fargo and why customers are ripped off so blatantly and repeatedly. you can also rest assured that this is just the beginning and that they will be demanding more information until we get to the bottom of this. of course i urge your cooperation and i must tell you that i have known you for a while. i have communicated with you. at times you have been very helpful to my constituents.

so i'm very disappointed. we must get to the bottom of this. and i want to be able to receive the documents and information that we requested from you. i'm told they have been refused. i think it is your best interest to come forward with those documents. mr. chairman, i yield back the balance of my time. chairman hensarling: the gentlelady yields back. today we'll receive the testimony of mr. john stumpf, who is the chairman and c.e.o. of wells fargo and company. mr. stumpf has held a number of senior management positions at wells and its predecessors where he has worked for 34 years. mr. stumpf, would you please rise and raise your right hand. do you solemnly swear or affirm that the testimony you are about to give will be the truth, the whole truth, and nothing but the truth. thank you, please be seated. let the record reflect that the witness has answered in the affirmative. without objection, the witness' written statement will be made

part of the record. mr. stumpf, you are now recognized for five minutes to give an orel presentation of your testimony. mr. stumpf: chairman hensarling, ranking member waters, members of the committee, thank you for inviting me to be with you today. i'm the chairman and chief executive officer of wells fargo, where i have worked for nearly 35 years. it is my privilege to lead this company which was founded over 164 years ago and played a vital role in the financial history and development of our country. i am deeply sorry that we failed to fulfill our responsibility to our customers, to our team members, and to the american public. i am fully accountable for all unethical sales practices in our retail banking business, and i'm fully committed to fixing this issue, strengthening our culture, and taking the necessary steps and actions to

restore our customer's trust. we should have done more sooner. but we will not stop working until we get this right. this morning i will update you on a number of steps taken to address our retail bank sales practices problem and make things right for customers who may have been harmed. at wells fargo we have new leadership in our retail banking business, focused on ensuring that all team members in our retail bank provide the best service to our customers. secondly, we recently announced the elimination of product sales goals for everyone in retail banking effective january 1. today i am announcing that we're accelerating this process and ending all product sales goals effective at the end of this week. we want to make sure nothing gets in the way of doing what is right for our customers. also, we now send out to all

customers a confirmation email approximately one hour after opening a saving or checking account and an acknowledgement letter after a customer applies for a credit card. we're also making it right for customers. we have begun contacting the customers with open credit cards identified by pricewaterhousecoopers to determine rn whether they wanted these credit cards. it's early in the process, but so far we have reached more than 20,000 of these customers, and talked to them about their credit card accounts. fewer than 25% have told us they either did not apply for their card or they cannot recall whether they applied or not for the card. for those customers who want the card, the card will remain open. for any customer who does not want their card, we're closing the account and informing the

credit bureaus. any fees these customers may have paid already has been refunded and we're developing a process to deal with any other forms of harm. for deposit customers, we have refunded fees and are contacting every single one of them across the country to ensure that we have a full understanding of every customer affected by this problem. in addition, we're voluntarily expanding the scope of the reviews we have done to go back in time to 2010 and 2009. while these issues we will discuss today are deeply disappointing, and will take time to repair, they do not represent the true culture and nature of wells fargo. some have suggested the problem was cross selling. but that is not the case. at its core cross selling is all about deepening customer household relationships with products they want, they use,

and they value. it is not about improper sales practices used to create unwanted accounts. that's not good for our customers and not good for wells fargo. if we take care of our customers, they will deepen their relationships with us and trust us more with their business. that is good for customers who benefit from lower costs we pass on, and that is cross selling done the right way. in closing, i'd like to talk about my commitment to accountability. when i say i am accountable, i am referring to the actions our board took at my recommendation to forfeit the stock awards that are the largest part of my compensation for the past three years and any phone bohnous this year, as well as my agreement to work without salary until the board completes its investigation. i respect and accept the board's decision. when i when i say i'm accountable, i also mean accountable for leading wells fargo as the company restores

its trust of customers, team members, and investors. thank you for this opportunity to testify today. chairman hensarling: the chair now yields himself five minutes for questions. mr. stumpf, to the american people this kind of feels like deja vu all over again. some institution is found engaging in terrible activities. there is a headline, fine, and yet no one seems to be held accountable. i mean let's face it, the fine that's been assessed to you is probably a rounding error, again, in your quarterly earnings report. so my question is, you know, with almost perhaps as many as two million fraudulent accounts over the course of five years, 5,000 dismissed employees, it's just beyond credibility that somebody up the food chain didn't either order this, condone it, or turn a blind eye

to it. my question to you is who is the highest ranking official at wells, who is the highest person in the management team who has been dismissed because of these activities? mr. stumpf: thank you, mr. chairman, for that question. as you know within, or maybe you don't know, within the 5,300, there were managers and managers and managers. we're doing a full review -- chairman hensarling: were these branch managers? mr. stumpf: yes, about 10% or more. chairman hensarling: nobody above the branch manager level? mr. stumpf: there was managers of the branch manager, and manager of those within the line of business. but we're doing a full review of other control functions within the company. that process has already begun. the board is going to be involved. management will be involved.

as i mentioned, -- chairman hensarling: will your own internal investigation be complete to hold management accountable? mr. stumpf: i can't give you a specific time frame, mr. chairman, but i will tell you, we're moving in that correctly and we're going to get to the bottom of this. chairman hensarling: anybody at the bank holding company level being held accountable? mr. stumpf: people will be reviewed across the board at holding company, activities, corporate activities. anybody who is involved in this behavior -- chairman hensarling: isn't it true, mr. stumpf, in the settlement agreement wells entered into with the l.a. city's attorneys office, o.c.c., no individual admits guilt, is that correct? is that part of the settlement agreement? mr. stumpf: i believe we either did not admit or deny. so the facts there are the facts that we agreed to. chairman hensarling: mr. stumpf, let's go back to 2011 which i think is the first year we know

for a fact that these fraudulent activities were taking place. the records that i believe your bank has shared with us show that 939 employees were terminated from the retail banking sector for improper sales practice in that year. does that comport with your memory? mr. stumpf: yes it does, mr. chairman. chairman hensarling: in 2011, isn't it true that wells fargo entered into a consent order with the federal reserve that required wells to cease and desist from certain practices in the mortgage lending department? and that you paid an $85 million civil penalty. is that true? mr. stumpf: mr. chairman, that's true. that was in a different business area. but that is a true statement. chairman hensarling: in a different business area, but i will read from the consent order. wells fargo's internal controls were not adequate to protect and prevent instances in order to meet sales performance standards and receive competitive compensation altered or falsified income documents, and

inflated perspective borrowers' income to qualify them for loans they would not otherwise have been qualified to receive. this sounds eerily like the retail banking division. also as i understand it the fed required wells fargo to submit a plan to investigate and to change policies and procedures. so, i think you testified on the senate side that you were not personally aware of the problems in the retail banking division until 2013. surely you are aware of the problems in the mortgage lending division in 2011, correct? mr. stumpf: that is correct. chairman, mr. chairman, we shut that division down. that was even shut down -- chairman hensarling: if you saw the problem in one area of the business, why didn't you thoroughly investigate in the other? mr. stumpf: there is no question, mr. chairman, we should have done more sooner.

chairman hensarling: it just seems, mr. stumpf, five years later your bank is being fined for exactly the same transaction. again, it just feels like deja vu all over again. and i hope and trust. but please tell me that these fines are not simply a cost of doing business for wells. mr. stumpf: mr. chairman, it's not a cost of doing business. this has -- this is a serious trust issue with our customer. but i also want to say there's 268,000 people who came to work this morning at wells fargo. trying to do their very best to serve customers. and they do a wonderful every day. and i don't want our culture to be defined by these mistakes. we take accountability. chairman hensarling: i understand that, mr. stumpf. but it appears to be a little bit and particularly when you get caught doing it five years ago, you get caught doing it once again. somebody has to be held accountable. i now yield to the ranking

member. ms. waters: thank you very much. mr. stumpf, you said repeatedly you were not aware of this widespread fraud in your bank until late in 2013. and it appears that there were activities going on that indicates you may have known much earlier than that. for example, in 2007, just months after you became c.e.o., the sales quality manual for the community banking division was updated with your executive guidance. as the manual states. that sales guide reminded employees of what should have been obvious, that they needed to obtain a customer's consent before opening an account. and so am i to understand that you discovered that there was something going on and there was a need for you to do this? that manual also said that sales practices that showed,

"questionable activity" would be sent via high priority to bank executives. so it appears that you knew something in 2007. that unauthorized accounts were a big enough problem that you had to correct your employee manual. and as early as 2008, i have documents from court filings showing your employees were contacting your ethics hotline reporting bank fraud and complaining to managers over unauthorized accounts. so it looks as if you certainly knew in 2008. what's more, i have here a consent order with the fed from 2011 that puts your company on watch for sales quotas and compensation schemes that pushed employees to break the law. does this sound familiar? mr. stumpf: ranking member, i acknowledge that we had a 2011 order from the federal reserve.

and i think we have always known any sales organization you are going to have to be diligent because not every team member will do everything right every day. so we have controls built in. we have ethics lines. and i knew and i still know you put people to work every day and mistakes will happen. it was not until 2013 when i learned that this problem had been growing. it had been more prevalent. and a certain part of the country which happens to be in the wonderful part of california which you live. so these are things we have been working on. all of our strategies around training team members, which get two weeks of classroom training before they go out into a branch, is about doing things right, about ethics. i would also want to remind the committee that there are the vast majority of our people who

had the same opportunities, the same training, the same goals who did it right every day for our customers. in fact, our customer loyalty scores now are the highest they have ever been in our company's history. ms. waters: let me just point out some other activities that should sound familiar to you. while you were under the consent order for the mortgage arm of wells fargo, this fraud was surging in the retail arm of wells fargo. but you didn't connect the dots until these high-level trends across the bank. do you or didn't you know in 2011 that perhaps your sales incentives were driving this fraud? mr. stumpf: congresswoman, i knew that it at least i know today, that we should have done more sooner, but maybe -- not

only maybe, some of our people -- again it's 1%, but that's a big number for a big organization. any time we have 100,000 people in our branch network, and if 800 people for whatever reason either misunderstood or used this as a way to be break our code of ethics and do something wrong for our customer and something wrong for us, that's why we're removing sales goals. they'll be gone as of this weekend. we don't even think they are an important requirement for us to continue to grow. ms. waters: some people assume that you changed your customer agreement to add force arbitration clauses for checking accounts and these clauses proved to be incredibly helpful when you use them to dismiss multiple customer lawsuits. is that true? mr. stumpf: that's not true. i think arbitration does make sense. but in this case for any customer that might have been

harmed in this situation we're also paying for a mediation process so they have a mediator. ms. waters: thank you very much. my time is up. i'll get to this later on. if i can, thank you. yield back. chairman hensarling: time of the gentlelady has expired. the chair now recognizes the gentleman from texas, mr. neugebauer, chairman of our financial institution subcommittee. mr. neugebauer: thank you, mr. chairman. you serve as both the chairman and the c.e.o. of the wells fargo, is that correct? mr. stumpf: that is correct. mr. neugebauer: section 972 of dodd-frank requires securities -- why the issuer has chosen the same person to serve as the board chairman and c.e.o. this year wells states that urdual role is the result of your extensive experience and

knowledge regarding the company and provides the most efficient leadership of the board and the company. mr. stumpf, do you think it's a good idea for the chairman and to be the chairman of the board and c.e.o.? mr. stumpf: thank you for that question. in our company we have 14 outside directors. we have a lead director. all directors had new york stock exchange, independent by their standards. i'm not a member of any standing committee of that board. the independent directors and the lead director help set the agenda for the boards. they always have meetings that are executive session without me. and as you probably read about what happened this weekend because we filed an 8-k yesterday about actions that they took as an independent board and i was not part of that. so the board acts quite

independently. mr. neugebauer: in these current situation is is that you -- you're accused -- recused yourself from the board decisions on this situation? mr. stumpf: congressman, you're right. i have either recused or not been invited. i'm not part of that. and i serve at the pleasure of the board. mr. neugebauer: give me a good idea of how your board's structure but the original question was, do you think that's a good idea for the c.e.o. to be also the chairman? the board and stock shareholders, customers be better served if there was some separation in that area? mr. stumpf: thank you. for our company i believe we have the right structure. but again i serve at the will of the board and the board can make a decision on that. mr. neugebauer: mr. stumpf, you testified that you learned of these violations some time in 2013. when did you inform the board

that this was an issue? mr. stumpf: the board had high level ethics, line, comments or questions, or high level kinds of activities around people who left the company involuntarily. terminations. really through the 2011 through 2013 time frame. after we learned -- mr. neugebauer: the board was having discussions as literal as 2011 about this? mr. stumpf: i was saying the board from 2011 to 2013 would get reports at a committee level at a high level about ethics lines, requests, or information at maybe at the company level. mr. stumpf: you didn't find out

about it until 2013? until 2013, i became aware there was an issue in the southwestern part of the country and by 2014, then, this was late in the year, by 2014, we started to provide more information to more committees of the board. by 2015 the board had a -- the board had a complete report on that issue. mr. neugebauer: as chairman of the board, c.e.o., when did you tell the board we have a problem? mr. stumpf: it was in 2015 that we had a full report. again, as i said in my testimony the senate and here today, 2014 we were starting to get more granular information that this was a risk area for the company to focus on. mr. neugebauer: did you ever disclose this issue on a 10-k filing? mr. stumpf: our 10-k -- all of our k or q filings are facts and

circumstances what we knew at the time. as recently as our second quarter q this year, when we use our disclosure teams and compliance teams to look at this issue, the facts and circumstances, we believe, were not material. mr. neugebauer: i'm not for congress sit sething the corporate structure, but i do -- setting the corporate structure, but do i think in this particular situation whether the company would have been better served with those roles being separated. i yield back. chairman hensarling: choir. the chair now recognizes the gentlelady from new york, miss maloney, ranking member of our capital markets subcommittee. mrs. maloney: mr. stumpf, we know now that whistle blowers first contacted the consumer financial control board about the fraud at wells fargo in mid 2013.

and you said in your senate hearings last week that you first found out about the fake accounts in late 2013. and the "l.a. times" article about the scandal was published in december, 21, 2013. i have right here your form for filing which i'd like to submit to the record. chairman hensarling: without objection. mrs. maloney: that shows on october 30, 2013, you sold $13 million worth of wells fargo stock on the open market. that is by far the largest open market sale of wells fargo stock that you made in your nine years as c.e.o. so my question is, did you dump $13 million of wells fargo stock, which you did through

your family trust, right after you found out that your bank had been fraudulently opening hundreds of thousands of scam accounts ripping off your customers? mr. stumpf: thank you for the question. first of all, the vast majority of our people go to work every day -- mrs. maloney: that's not nigh miquestion. excuse me. my question was, did you dump the stock after you found out about the fraudulent accounts? because it seems that the timing is very, very suspicious and it raises serious questions. mr. stumpf: i did not sell shares at the time because anything related to -- mrs. maloney: the form 4 said you sold the shares. mr. stumpf: i hold four times as many shares as i'm required. mrs. maloney: did you sell the

shares or not? mr. stumpf: i sold the shares and sold them with proper approvals with no view about anything that was going on with sales practices or anything else. mrs. maloney: it seems very, very suspicious that your largest sale was right after your $1.8 trillion bank was turned into a school for scoundrels. you acknowledge that your bank fired over 5,300 people who got caught willfully defrauding your customers. and a recent lawsuit allegation you fired even more people because they refused to willfully defraud customers. and then you blame the low-level people. you fire them. you make profits. then you dump the stock. i just have to say that it seems that when you found out about the fake accounts, instead of helping your customers, you first helped yourself. so moving right along to the next question.

mr. stumpf, you said that wells fargo is conducting a review of all accounts going back to 2009 in order to identify any scam accounts. but last week in the senate hearings you were asked if you would extend the review period to before 2009. and you refused to commit to extending the review period back to even earlier. so if you were -- if you were presented with hard core evidence that wells was engaged in some of these practices, these illegal scams prior to 2009, would you change your mind about extending the review? mr. stumpf: thank you for that question. we have agreed with our regulators to go back to 2011. we voluntarily said last week that we'll go back to 2010 and 2009.

i told our team to leave no stone unturned. and if we find a situation where a customer is harmed that goes to that, we will make it right for that customer. mrs. maloney: thank you. because i have the evidence right here. and i'd like to submit for the record a court case in montana in which six wells fargo employees were fired. among other things, ordering debit cards for customers without their permission, which is clearly illegal. and according to the court documents, these illegal sales go back to 2007. chairman hensarling: without objection. mrs. maloney: now we have evidence of illegal sales practices going back to 2007. will you agree to extend the review period back to 2007 to cover this evidence that we're submitting today? mr. stumpf: again, congresswoman, we're going to go

back to 2009. if we can find -- we're going to contact every customer. mrs. maloney: this is evidence that it went back to 2007. my question is -- we thank you for going back to 2009. my question is, we have clear evidence that it goes back to 2007. will you live up to your commitment of helping your customers that were defrauded with clear evidence back to 2007? mr. stumpf: we will go back. if we find any evidence of any customer that was harmed to 2007 through our review through 2009, we will take care of each customer. chairman hensarling: the time of the gentlelady has expired. the chair now recognizes the gentleman from north carolina, mr. mchenry, vice chairman of our committee. mr. mchenry: thank you, mr. chairman. i have the honor of representing the suburbs of charlotte, north carolina. north carolina had an incredible banking culture over decades. yet in charlotte, first union, homegrown bank, great

reputation, went through challenging times in the economic crisis as you well know. before that time, they teamed up with a bank based in winston-salem, wachovia. and as you know in acquiring what was then called wachovia, which is first union and wachovia, the pitch was that your culture from california was very similar to this north carolina culture. banking culture. as you well know, john grimes midland, a great chairman of wachovia, imbued in wachovia this culture that a banker is a civil servant as well. there is this obligation to society they have in their community. you yule guise him. pay tribute to that culture. i want to think about that culture. because what is so sad to me is that pitch of culture doesn't

conform with my experience with my constituents in north carolina. it doesn't conform what i know about first union. what i know about with a sovea, and this cultural pitch that you had -- wachovia. and the cultural pitch that you had in acquiring them. what's sad to me is the impact of this on them and those employees you have in north carolina. i wanted to look at your code of conduct. let's look at your code of ethics and business conduct. you said in your message as c.e.o., we're all responsible for maintaining the highest possible ethical standards and how we conduct our business and serve our customers. the code of ethics says, our code applies to all team members, including officers, directors of wells fargo and company and its subsidiaries.

it also says we're all accountable for complying with the code as well as all company policies and applicable laws. finally, critical that all team members have a solid understanding of our code of ethics and business conduct and understanding that noncompliance with the policy may result in disciplinary action up to and including termination of employment. you clearly have failed. you clearly failed in your own ethical standards internally. you have broken and your company's broken long-standing law. you have broken long-standing ethical standards that you have within your company. this has nothing to do with the debate about dodd-frank or anything else. you have broken a long-standing law and you have defrauded your customers. how can you rebuild trust? how can you rebuild trust? and how can you get through this thing? what standards are you holding

yourself to that sends a message to the rest of these folks in your organization that look to you for leadership and guidance? what are you doing to restore that? mr. stumpf: thank you, congressman. the culture of the company is strong. i don't -- i know -- mr. mchenry: it's really hard to say that when you are before congress the second time and behind you was all the settlements you had for problematic relationships you had with your customers by taking their money. right. counter to the law, counter to your ethical standards. it's great to say you have a strong culture, but why are we here today? how are you addressing it? mr. stumpf: with respect to culture, we have 268,000 people who have made their life's work and careers out of helping customers. there's people today who are -- mr. mchenry: that's why i raise this the way i do. by severe disappointment. severe disappointment.

that's all. you broke the law. we make the law in congress. this is not new stuff that all of a sudden congress changed some rules. and you can't have your employees create fake accounts and take fees from customers unknowingly, unwittingly. that is -- there is never in human history when that has been an ethical ok. the culture's ok, this seems to me that you're just tone deaf to this. the final thing you need to think about and your board of directors need to think about is this. the impact you have is not simply on your institution but the wider conversation on how my consumers can access credit. and the implications on what you have done and your leadership has done has this broader societal impact that is very negative. chairman hensarling: time of the gentleman has expired. the chair now recognizes the gentlelady from new york, ms.

velazquez. ms. velazquez: thank you, mr. chairman. mr. stumpf, now that you were on the senate side and you testified and the senators asked you whether or not the 5,300 wells fargo employees that were fired for their misconduct, how many of them were fired because they failed to meet sales quotas? at that time you didn't know. now that a week has passed and you have had a chance to consult your records and speak to your staff, are you prepared to tell us how many employees were fired for failing to meet their sales roles? mr. stumpf: thank you, congresswoman. of the 5,300, which is about 1,000 people per year out of our team, and i don't want to

minimize it, it was 1%, about 100,000 people in our branch at any one time, all of those our investigation were terminated because of their unethical behaviors. we found them. we decided we can't have them here. they are not consistent with our culture and ethics. ms. velazquez: out of that 5,300 employees, were there any employee that was fired because they didn't meet their sales mr. stumpf: my understanding -- ms. velazquez: not the 5,300. outside of that. mr. stumpf: my understanding is that people should not be fired, terminated, for missing sales goals. i'm not saying it didn't happen. ms. velazquez: how should i trust that is the case?

mr. stumpf: we're doing a review of whatever, whoever might have that. ms. velazquez: if your review shows that there were employees that were fired because they didn't meet their sales quota, would you be rehiring those individuals? mr. stumpf: first of all, we don't have sales quotas, we have goals. and there's other goals that our people also have as part of their performance management. we're reviewing that. we're going to try to make it right for every team member. ms. velazquez: mr. stumpf, i am sure you are aware that wells fargo is the most active s.b.a. 7-a lender in the country. mr. stumpf: correct. ms. velazquez: as ranking member of the house small business committee, i am very concerned that illegal practices under

covered by the cfpb on the consumer side may have spread to the small business side. were your frontline employees under similar pressure to cross sale products through the bank's s.b.a. 7-a clients? mr. stumpf: first of all, thank you, congresswoman. we're the nation's largest small business lender. i am very proud that we do a lot of work helping men and women across this country start businesses and so forth. that's a very different business. and i don't know of any product sales goals which, again, we have eliminated in our retail bank, in that business. a very different business. ms. velazquez: the 7-a program is just a fraction of your overall small business lending portfolio. can you provide us today with assurances that these illegal practicenot affect any of your small business clients at wells frgo? mr. stumpf: i don't have that information in front of me. i'm happy to work with my staff, team, get back to your staff.

as best i can. ms. velazquez: given the fact that you lack the leadership to give us assurances that this was not the case, i'll be writing to the s.b.a. administrator so that they could review all the 7-a portfolio to make sure that we protected small businesses as well as taxpayers. my next question to you is, now that you have decided to end product sales goals and financial rewards, have you considered raising the salaries of your retail banking employees in order to make up for this loss in compensation? mr. stumpf: yes. we're working on a new incentive program. they'll be out by the first of the year. and we want to make sure that our team members are totally aligned with our customers. we want to make sure that compensation for our team,

again, through the vast majority do it right, are not hurt in this process. ms. velazquez: it's very difficult for any person in this country to live with a $25,000 salary. chairman hensarling: the time of the gentlelady has expired. the chair now recognizes the gentleman from new jersey, mr. garrett, chairman of our capital markets subcommittee. mr. garrett: thank you, mr. chairman. mr. stumpf, let me start by making a few observations then i'll end with a couple questions. first, foremost, i find it as we all do extraordinarily troubling that as i look through the history, timeline of the scandal, time line that stretches over years. you see as has already been testified to, 5,000 wells fargo employees were dismissed for their involvement in opening unauthorized accounts. was also interesting and troubling is the firings did not happen at one time.

my understanding as we have heard already today that roughly 1,000 employees per year. 11, 12, 13, 14, 15. extraordinary how wells fargo did not manage ow actively move to stop those activities after the first 100 or 500. 750, or 1,000 employees were fired is beyond me. the fact that it was allowed to go on and on and on for years is apparently a failure of corporate governance and a failure, quite candidly, of your management. your management to do what is foremost and that is to protect the customers who have trust in you. what concerns me moreover, it appears most of the 5,000 employ years that were fired were low level or mid level employees. the chairman just found out the highest level was a branch manager. and it doesn't even include those that resign due to culture at wells fargo. meanwhile, to the best of my knowledge, senior executives

have been held accountable in the same manner that the lower level employees were. i would not be surprised in a number of those people end up losing their homes or going into massive debt after they were dismissed. no, aim not defending their actions just making a point we have a problem in this country where it would seem, as we have seen previously, that the well connected, well connected on wall street, the well connected here in washington, the elite, if you will, in washington and wall street, seem to play by a different set of rules. while everyone else has to play by another. i know you just lost reportedly i hear $41 million of your salary. but if i understand that correctly that's only a quarter of your pay over the last decade or so. so you will forgive all of us if we don't really feel that sorry. second point i'd like to make is that under dodd-frank, wells fargo remains fully eligible for taxpayer bailout going forward under title 2 of the law should

be run into trouble going forward. taxpayers have already spent a lot of money bailing out poorly run wall street firms over the last decade. mr. stumpf, i hope you are aware that anger now directed at you, my constituents and others around the contry, isn't just over the actions of the employees, the fact that they seem forever on the hook to underwrite whatever kind of risky or fraudulent activities wells or other large banks engage in. fortunately earlier this month, we passed a bill out of committee, the choice act, which will ensure if wells fargo does run into trouble again, it's on its shareholders and management that pay the consequences and the taxpayers will no longer be on the hook. third and final point, i know they are not here, once again the financial regulators apparently, more than apparently, were completely asleep at the wheel as this massive fraud was occurring. if you look at one of those, the cfpb, one job, only one job in

the regulatory framework and they completely blew it. it took a reporter from the l.a. times to undercover what was going on at wells fargo. so i hope my friends on the other side of the aisle will keep that in mind as they may pat the cfpb on the back for a job well-done. in the time remaining, get to the securities question. securities exchange act require public company to keep disclosure in place. require the c.e.o. and c.f.o. to attest to financial statements. you refer to some of that. are you saying that all those reports you were filing that the information you had in 11, 12, 13, 14 none of that material was -- none of that information was material? mr. stumpf: at the time through the facts and circumstances we filed accurate reports and we did not believe it was material. mr. garrett: when you got the pricewaterhousecoopers analysis, when was that? mr. stumpf: that was late in 2015.

mr. garrett: as soon as you had that has that been filed as material statement? mr. stumpf: we krt facts and circumstances and we believe that not to be material. mr. garrett: it's not material. why not? mr. stumpf: remember, the p.w.c. material looked at 93 million accounts that we opened over four years. they could not rule out through a large data analytics about 1.5% of those accounts. that's still a lot because of the size of the organization. mr. garrett: that to me, mr. chairman, if that's not material, this occurring over a five-year period of time is a systemic problem in the organization, i don't know what is. i yield back. chairman hensarling: the gentleman's time has expired. the chair now recognizes the gentleman from california, mr. sherman. mr. sherman: mr. chairman, the american people need an assurance that this cross

sellingmania that has ahe flicted -- that has afflicted wells fargo is not to be found at the other behemoth banks. i would urge you to have hearings where we hear from the c.e.o.s of citi, the others, and until then i hope that you would join with me in a letter of inquiry to ask what new account opening quotas that had their for bank tellers. how many people they fired for not meeting their quotas. or how many people they fired for opening phony accounts. we have wells fargo before me, but i don't think, mr. stumpf, that you should be alone in this joyous experience. your colleagues should at least come forward with some assurance. we're now engaged in an important national ritual. where the c.e.o. comes before the representatives of the american people to apologize, to take full responsibility.

to do so humbly. mr. stumpf, welcome to washington. what plane did you fly in on? what airline? mr. stumpf: virgin american. mr. sherman: when you came to the senate? mr. stumpf: i think it was united. one of the two. mr. sherman: it shows wall street's learned something. thank you. now, you have these forced arbitration clauses in your agreement with your customers. you say, oh, they can have mediation too. some of them want their day in court. are they going to hold them to these forced arbitration clauses and screw them again out of their day in court, or are you willing to waive those clauses and say if you're caught up in this you have a choice to have a arbitration or not? mr. stumpf: thank you, mr. congressman. i believe in arbitration. i think it's a fairway to -- mr.

mr. sherman: but your customers may want something else. are you going to deprive them of that? mr. stumpf: no. we are not. we are going to pay for a immediate ator. mr. sherman: when they want their day in court, will you screw them out of that? mr. stumpf: we take this very seriously. mr. sherman: will you let them to go to court if they want to, yes or no? mr. stumpf: no but an explanation. mr. sherman: no, but. that's a no. this sham was not an attempt to steal a few million dollars in fees from customers, although that's important. because you could say that few million dollars wasn't material. what was material is the price of your stock. you opened two million phony accounts, and then went and told -- and had to be material because you 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 banking customers that had credit cards had grown from the mid 20% up to 4 %, so it had to

be material. you were talking about it. the peak firings, according to your own documents, was in 2013, so you knew you had a problem then. mr. stumpf: correct. mr. sherman: why didn't you tell your shareholders, our penetration are phoney our new accounts are phony accounts and when we tell you we're deepening our relationship with the customers we're putting them through the ringer? what internal audit system did you have that assured you that you didn't have a material problem? mr. stumpf: congressman, i have to push back here. this is the behavior of people that we found that we did not want and the vast majority of everything we do is right by our members and customers. mr. sherman: you were firing -- according to your own documents -- the highest number of people in 2013 but bragging about your penetration rates, the number of accounts opening in 2014. so you knew it was material to

shareholders and you knew it was a phony number that you fired people from -- for falsifying. mr. stumpf: congressman, may i a second? because we've gone back and looked. the two million accounts could not be ruled out. we don't know if those are good accounts or not good accounts because we already looked at 20,000 credit cards. mr. sherman: reclaiming my time, sir. you fired 5,300 people. you took 5,300 good americans and turned them into felons with a system you created, benefited from and drove your stock price up by bragging about your levels of new accounts. mr. stumpf: congressman, i have to disagree with that. mr. sherman: i'm not surprised. the two -- we have institutions that are too big to fail. in 2008 we found that they were too big not to bail. the eric holder has told us they are too big to jail saying he fears for putting them -- for bringing a criminal indictment. we now learn they're too big to manage, too big to regulate. it's time to break them up.

mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from missouri, mr. luetkemeyer, chairman of our housing and insurance subcommittee. mr. luetkemeyer: thank you, mr. chairman. today we're here to confront, in judgment, a total travesty in the financial market. consumers in this case were failed on all accounts. their financial institution, with whom they trusted their family's finances, failed them. the federal regulators who were charged with overseeing their protection failed them. the federal regulators in charge of wells fargo failed to stop the ripping off of consumers and the consumers lost. and slapping a bank with a fine isn't going to make that go away. only 5% of that fine is going to go back to the consumers who were harmed. mr. stumpf, giving back your bonus isn't going to make that go away. more rules and regulations are going to make this go away. the fact is regulators sat in that bank for years and did nothing. meanwhile, thousands of employees were being fired for these bad practices, yet nothing was changed to address the

issues. the regulators need to be doing their job from day one. instead they took a whatever takes approach to meet sales targets and regulators sat idly by even after reported in the news. to top it off, regulators failed tone force their obligations after the fact. they waive their right to pursue from other violations so they don't be viewed as late to the game. wall street needs to be held accountable but so does washington. that's what we're here today for. so my question to you, mr. stumpf, is, how many regulators do you have in your bank on a daily basis? mr. stumpf: i don't have precise count. mr. luetkemeyer: roughly. mr. stumpf: i'd pick 80, for example. mr. luetkemeyer: ok. cfpb are in there as well, do they not? mr. stumpf: i don't know the number on that. mr. luetkemeyer: ok.

just kind of curious. as a former bank regulator as well as a banker, this is a really, really disappointing situation for me. mr. stumpf: i couldn't agree more. mr. luetkemeyer: from the standpoint i tell people i'm shocked and dismayed. i'm shocked that the bank let this to happen and i'm shocked that regulators did nothing. while you're being find, which i think is appropriate, the regulators odd to be fined as well. for them to take the fine and keep it is a travesty. they need to be fined as well and let the money go back to the consumers because they were asleep at the switch. there is so much to blame it's unbelievable. a while ago you made a comment you have a good culture in your institution. that this shouldn't be happening. well, mr. stumpf, your own testimony says you're firing 1,000 people a year. 1,000 people a year. the only one way that can happen and there's a culture there that allows that to happen year after year after year.

there's a lousy approach in your bank. somebody ought to call a time-out and say enough is enough. this can't continue. and yet year after year you're firing people trying to hope this goes awaned regulators are watching this and sit sithing on their thumbs. actions must have consequences for not only you but they need to have consequences to the regulators as well. mr. stumpf: congressman, thank you for that question because i want to tell you that we did do things. in 2011 within the business, they moved the compliance or the concern for this issue into a compliance area. by 2012, they were reducing goals and doing more ethics training. by 2013, corporate resources were brought in and we worked with the o.c.c. in 2014, more reductions in goals. in 2015, and the o.c.c. -- we did our study. this does not represent a

culture. in fact, we -- mr. luetkemeyer: i respect to disagree with you, mr. stumpf. i've been in business like this all my life. you can't tell me when you have to fire people year after year after year that there isn't a problem. now, for a year or two that's one thing but four years, that's another thing. i have another question. in my examining days there was -- i examined a bank one time and found a teller skimming money out of her cash drawer. took it to the president and he said, well, you know, she's a good employee. as long as she keeps it to main mum i think we'll be ok. my jaw hit the floor. this reminds me of that situation. as long as they keep it to a minimum, i think we'll be ok. my comment to him back to that is have you reported it to your blanket bond company that has a clause on it? do you have a blanket bond or are you shelf insured? mr. stumpf: we have a fidelity bond. that's when we draw the line. when people do this -- mr.

mr. luetkemeyer: when did you report this to your blanket employees? mr. stumpf: we have a group that does that. i can ensure we have people to get back to you. mr. luetkemeyer: if you did not report that immediately when you found this going on and you allowed year after year to have a thousand people, your blanket bond company is going to be going bonkers over this. we will have a request for that and i hope you will answer that. mr. stumpf: we'll work with you. mr. hensarling: the time of the gentleman has expired. the chair recognizes the gentleman from new york, mr. meeks. mr. meeks: i can't believe some of what i'm hearing here. so let me understand. you've been the c.e.o. since 2007. you've been the chair of the boorned the c.e.o. since -- board and c.e.o. since 2010, is that correct? mr. stumpf: that's correct, mr. congressman. mr. meeks: i've been shown you have been penalized almost

systematically every year since you have been in charge. every year. $1.2 billion in april of 2016. $53 million in october of 2015. $4 million in june of 2014. another $2 million in january of 2015. $5 mp in september of 2014. i could go on and on. $869 million in september of 2013 while you were the c.e.o., right? and you're going to tell me there's not a culture of something wrong at wells fargo when you are the head -- you get credit? you go ahead credit as c.e.o. when you bring in all this money because that's how you get your bonuses, is that not correct? you get a bonus from your board because x amount of dollars come in. but are you telling me you don't have the responsibility of

losing your position when you have a culture of being fined and costing the bank year after year, month after month? there's no responsibility. you can stay being chairman and c.e.o., is that what you want us to believe? mr. stumpf: congressman, that is not the case. i serve at the pleasure of the board. i'm willing -- i told -- mr. meeks: then the whole board needs to go if they are going to allow someone to be in charge when time after time -- you just talked about you fired 5,300 employees. when you found out they were doing something wrong, they were fired. of course they were doing something wrong. well, something is going wrong at this bank. and you are the head of it. so shouldn't the board then -- from your own admission, if the buck stops with you, as you came out here and said, i apologize. the buck stops with me. and you have to also admit that criminal activity was going on in your bank, then you should be fired because it stops with you. mr. stumpf: again, congressman,

the board has that power. that's their -- and my energy rate is to lead this company forward. mr. meeks: you came out here saying i apologize, etc. if somebody walked into wells fargo tomorrow and robbed your bank or defrauded your bank and then after they are caught they say, well, i'm sorry, i'm going to take full responsibility for robbing this bank and i am sorry that i robbed this bank so please don't prosecute me because i am sorry now that i robbed this bank, would you allow the person just to walk out after robbing your bank because he is now sorry that he robbed this bank after he took the money already? mr. stumpf: congressman, i see something very different between being honest and breaking our code of ethics and taking advantage of -- mr. meeks: you didn't break code of ethics?

do you realize that you have not only given -- will you admit this? that not only your bank has a black eye, that your bank, wells fargo, has given the entire financial service industry a black eye, your responsibility? you heard mr. sherman. he wants -- and i agree with him. he wants everybody to come in here. why? there's only one reason why. your bank, you, c.e.o., chairman, basically for me was on top of what's basically been a criminal enterprise because when i look at consistency, time after time after time and time again, you have to get fines. now, it must mean you're making a lot of money because it's easier to pay the fine because you know something else will happen to you. you pay the fine. you get away. i'm from new york. a lot of times 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, taking