“Mr. Stumpf you are the chairman of the board!”

“You keep saying, ‘the board, the board,” US Senator Warren said.  “You describe them like strangers you met in a dark alley. Mr. Stumpf  you are the chairman of the board.”

 

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Senator Elizabeth Warren’s verbal evisceration of Wells Fargo C.E.O. John Stumpf is a reminder that very little has changed about banking culture since the financial crisis.
(Caption and photo courtesy of the New Yorker. Photograph by Pete Marovich for Bloomberg/Getty)

“You keep saying, ‘the board, the board,” US Senator Warren said. “You describe them like strangers you met in a dark alley. Mr. Stumpf you are the chairman of the board.”

US Senator Elizabeth Warren to Mr. John Stumpf, CEO and Chairman of the Board of Wells Fargo as quoted in the New York Times on 9.21.16.

While being questioned by a US Senate Banking Committee on 9.21.16 on the most recent shenanigans at Wells Fargo, which involved the opening of four million fraudulent checking accounts, Senator Warren asked what actions he planned to take against senior executives in the bank who knew about this issue but didn’t do anything about it. Lots of hemming and hawing.

During the questioning by Senator Warren and others, Mr. Stumpf kept suggesting that he did not want to answer certain questions because he did not want to prejudice the judgement of the board of directors on said issues since it was for them to actually decide.

Whether you like or dislike US Senator Warren (Democrat of Mass), you have to admit she did put her finger on an important point when she pointed out to Mr. Stumpf that he was the chairman of the board.  

Lest you think this was a session of partisan questioning by Democrats, Wells Fargo’s recent imbroglio, which resulted in a fine by the US Government of 85 million dollars, seemed to unite the parties in a spirit of bipartisanship very rarely seen these days. Of course, in this election season, all politicians want to verbally blast big banks.

From the New York Times:  “Many of those questions ( to Mr. Stumpf on executive compensation ) centered on Carrie Tolstedt, who ran Wells’s community banking operations, in which all of the problems occurred. She was allowed to retire at age 56 in July, with a compensation package totaling tens of millions of dollars. She is still eligible for additional compensation this year, the Senate panel revealed.

“Explain to the public: What does accountability look like when an executive departs with millions of dollars?” asked Senator Richard C. Shelby, Republican of Alabama and the committee’s chairman.”

The story from the New York Times is here: nytimes wells-fargo-ceo-john-stumpf-senate-testimony

Wells Fargo played into this anti-bank sentiment by Mr. Stumpf’s defensiveness when he answered questions put to him by the Senators. His less than eloquent prepared statement wasn’t a standout either. Neither he, nor the shareholders, nor the employees were well-served by the bank’s lobbyists, attorneys, pr people and/or speechwriters.

The bank is one of the largest in the world with more than 260,00 employees. (Source:  Wells Fargo Wikipedia )

A CEO can hardly know small details and four million checking accounts being fraudulently opened is a small detail. Having been in the financial business in one capacity or another for most of my life including being a consultant to senior executives, the biggest issue executives often face is learning what the hell is going on within the company. Everything is sanitized by the time it reaches the executive floor.

Given the size of Wells Fargo, this is a tempest in a teapot and calling on the CEO to resign is overkill. Still, one wonders why corporate executives have to keep re-learning the painful lesson that upon discovery of a violation of laws or regulations the only rational response is immediate and full disclosure of all legal and ethical violations to the public, the government, the financial regulatory authorities and shareholders.

Of additional interest is this piece on US Senator Warren and Wells Fargo from the New Yorker:

 

newyorker.com/business/currency/elizabeth-warren-and-the-wells-fargo-scam

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Charles McCain

Charles McCain is a Washington DC based freelance journalist and novelist. He is the author of "An Honorable German," a World War Two naval epic. You can read more of his work on his website: http://charlesmccain.com/

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