[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]







                    HOLDING WALL STREET ACCOUNTABLE:
                      INVESTIGATING WELLS FARGO'S
                        OPENING OF UNAUTHORIZED
                           CUSTOMER ACCOUNTS

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 29, 2016

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 114-109





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                  HOLDING WALL STREET ACCOUNTABLE:
                      INVESTIGATING WELLS FARGO'S
                        OPENING OF UNAUTHORIZED
                           CUSTOMER ACCOUNTS

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 29, 2016

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 114-109

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

PATRICK T. McHENRY, North Carolina,  MAXINE WATERS, California, Ranking 
    Vice Chairman                        Member
PETER T. KING, New York              CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             BRAD SHERMAN, California
SCOTT GARRETT, New Jersey            GREGORY W. MEEKS, New York
RANDY NEUGEBAUER, Texas              MICHAEL E. CAPUANO, Massachusetts
STEVAN PEARCE, New Mexico            RUBEN HINOJOSA, Texas
BILL POSEY, Florida                  WM. LACY CLAY, Missouri
MICHAEL G. FITZPATRICK,              STEPHEN F. LYNCH, Massachusetts
    Pennsylvania                     DAVID SCOTT, Georgia
LYNN A. WESTMORELAND, Georgia        AL GREEN, Texas
BLAINE LUETKEMEYER, Missouri         EMANUEL CLEAVER, Missouri
BILL HUIZENGA, Michigan              GWEN MOORE, Wisconsin
SEAN P. DUFFY, Wisconsin             KEITH ELLISON, Minnesota
ROBERT HURT, Virginia                ED PERLMUTTER, Colorado
STEVE STIVERS, Ohio                  JAMES A. HIMES, Connecticut
STEPHEN LEE FINCHER, Tennessee       JOHN C. CARNEY, Jr., Delaware
MARLIN A. STUTZMAN, Indiana          TERRI A. SEWELL, Alabama
MICK MULVANEY, South Carolina        BILL FOSTER, Illinois
RANDY HULTGREN, Illinois             DANIEL T. KILDEE, Michigan
DENNIS A. ROSS, Florida              PATRICK MURPHY, Florida
ROBERT PITTENGER, North Carolina     JOHN K. DELANEY, Maryland
ANN WAGNER, Missouri                 KYRSTEN SINEMA, Arizona
ANDY BARR, Kentucky                  JOYCE BEATTY, Ohio
KEITH J. ROTHFUS, Pennsylvania       DENNY HECK, Washington
LUKE MESSER, Indiana                 JUAN VARGAS, California
DAVID SCHWEIKERT, Arizona
FRANK GUINTA, New Hampshire
SCOTT TIPTON, Colorado
ROGER WILLIAMS, Texas
BRUCE POLIQUIN, Maine
MIA LOVE, Utah
FRENCH HILL, Arkansas
TOM EMMER, Minnesota

                     Shannon McGahn, Staff Director
                    James H. Clinger, Chief Counsel
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                            C O N T E N T S

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                                                                   Page
Hearing held on:
    September 29, 2016...........................................     1
Appendix:
    September 29, 2016...........................................    81

                               WITNESSES
                      Thursday, September 29, 2016

Stumpf, John G., Chairman and Chief Executive Officer, Wells 
  Fargo and Company..............................................     4

                                APPENDIX

Prepared statements:
    Stumpf, John G...............................................    82

              Additional Material Submitted for the Record

Foster, Hon. Bill:
    Slide entitled, ``Wells Fargo Settlements Since the Financial 
      Crisis''...................................................    87
Lynch, Hon. Stephen:
    Letter to John G. Stumpf from Oversight and Government Reform 
      Committe Ranking Member Elijah E. Cummings, dated September 
      13, 2016...................................................    88
Maloney, Hon. Carolyn:
    Filing for a court case in Montana which was filed on 
      September 17, 2010.........................................    92
    Filing for a court case in Montana which was filed on October 
      6, 2009....................................................   112
    SEC Statement of Changes in Beneficial Ownership for stocks..   126
Moore, Hon. Gwen:
    Constituent letter dated September 28, 2016, regarding Wells 
      Fargo employment...........................................   128
Perlmutter, Hon. Ed:
    Wells Fargo Community Banking reports........................   129
Stumpf, John G.:
    Written responses to questions for the record................   219

 
                    HOLDING WALL STREET ACCOUNTABLE: 
                  INVESTIGATING WELLS FARGO'S
                        OPENING OF UNAUTHORIZED
                           CUSTOMER ACCOUNTS

                              ----------                              


                      Thursday, September 29, 2016

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10 a.m., in room 
2128, Rayburn House Office Building, Hon. Jeb Hensarling 
[chairman of the committee] presiding.
    Members present: Representatives Hensarling, Royce, Lucas, 
Garrett, Neugebauer, McHenry, Pearce, Posey, Fitzpatrick, 
Luetkemeyer, Duffy, Stivers, Stutzman, Mulvaney, Hultgren, 
Pittenger, Wagner, Barr, Rothfus, Messer, Schweikert, Guinta, 
Tipton, Williams, Poliquin, Love, Hill; Waters, Maloney, 
Velazquez, Sherman, Meeks, Capuano, Lynch, Scott, Green, 
Cleaver, Moore, Ellison, Perlmutter, Himes, Carney, Sewell, 
Foster, Kildee, Murphy, Delaney, Beatty, and Heck.
    Chairman  Hensarling. The Financial Services Committee will 
come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    Today's hearing is entitled, ``Holding Wall Street 
Accountable: Investigating Wells Fargo's Opening of 
Unauthorized Customer Accounts.''
    I now recognize myself for 5 minutes to give an opening 
statement.
    We are here today because millions of Americans were ripped 
off by their bank and seemingly 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 the Truth in Savings Act, the Fair Credit 
Reporting Act, the Truth in Lending Act, the Electronic Fund 
Transfer Act, the Securities and Exchange Act of 1933, the 
Securities and Exchange Act of 1934, and the Sarbanes-Oxley Act 
of 2002. All charges must be thoroughly investigated, and all 
culpable individuals must be held accountable.
    And while the fine that Wells Fargo will pay, roughly 3 
percent of the bank's second quarterly profits, is tiny by Wall 
Street standards, the harm caused to consumers and employees is 
not. To the factory worker who just had her credit score dinged 
because of the fraud Wells Fargo perpetrated, the cost is big. 
To the waiter at the local diner living paycheck to paycheck 
who had to pay fees associated with a fraudulent account, the 
cost is big. To the Wells Fargo employee with kids to support 
who lost her job because she refused to participate in the 
scheme, the cost is big.
    We will make sure those who were betrayed by Wells Fargo 
are not forgotten. And it is on their behalf that our committee 
has launched an in-depth investigation, Mr. Stumpf, of your 
bank's activities.
    And let me be clear, today's hearing is just the beginning 
of our investigation; it is not the end. And, as I speak, our 
committee is gathering thousands of pages of records and 
documents from both Wells Fargo and the relevant Federal 
regulators. In the coming weeks, we will be questioning Wells 
Fargo executives. If necessary, I will not hesitate to issue 
subpoenas, because we will do what is necessary to get to the 
bottom of the matter.
    Mr. Stumpf, we don't yet know what you knew, when you knew 
it, and what you chose to do about it, but we know it happened 
on your watch, and we hold you accountable for the answers to 
why this happened.
    At last week's Senate hearing, you were uncertain of many 
matters. In the intervening days, we trust that you have had a 
chance to refresh your recollection and to review your records; 
therefore, we hope and expect you will provide more complete 
answers today.
    We need to know exactly when and how you and other 
executives at Wells Fargo found out about this indemnant 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 accountable.
    We already know that as far back as 2009, former Wells 
Fargo employees started filing wrongful termination lawsuits 
alleging fraudulent accounts and improper sales tactics were 
taking place. Approximately 5,300 Wells Fargo employees were 
fired over a 5-year period for these improper sales practices, 
and perhaps as many as 2 million unauthorized accounts were 
fraudulently opened.
    Based on these facts, we will also be asking serious 
questions of our regulators in the course of this 
investigation. If the OCC had examiners on-site at Wells Fargo 
during the time when these fraudulent accounts were opened, and 
the CFPB was conducting regular examinations, why did it 
seemingly take the L.A. Times to expose the fraud? And, once 
exposed, why did it take almost 18 months for the CFPB to 
initiate a supervisory review?
    Today, I don't know the answers to the questions. Perhaps 
our Federal regulators deserve a pat on the back, but perhaps 
they deserve a swift kick on the backside. We will find out 
which.
    But we launched this investigation, ultimately, because it 
is our job to hold both Wall Street and Washington accountable 
and to protect consumers from the excesses of both. True 
consumer protection is the preservation of competitive, 
innovative, free markets that are vigorously policed for force, 
fraud, and deception.
    Mr. Stumpf, I know that Wells Fargo represents an iconic 
brand. I know that your bank has a very rich and proud 
heritage. I also know that you have hundreds of thousands of 
good employees who had nothing to do with this sordid affair, 
and who do good work in building their communities. But this 
sordid affair does remind me why I trust markets and I do not 
trust individual companies.
    And, Mr. Stumpf, I regrettably have a mortgage with your 
bank. I wish I didn't. And if I was in the position to pay it 
off, I would, because you have broken my trust and you have 
broken the trust of millions of others, and it will take a 
long, long time to earn that trust back.
    I now recognize the ranking member for 5 minutes.
    Ms.  Waters. Thank you very much, Mr. Chairman. And I thank 
you for agreeing to hold this hearing so that we can examine 
the fraudulent activity that occurred at Wells Fargo.
    Mr. Stumpf, the word games stop today. Borrowing a 
customer's money without permission is not a sales practice 
violation; it's stealing. Using customers' Social Security 
numbers to open credit cards without their consent is not 
wrongful sales behavior; it is identity theft. So let's call it 
what it really is: some of the most egregious fraud we have 
seen since the foreclosure crisis.
    For at least 5 years, Wells Fargo pushed aggressive sales 
goals for low-wage employees that were so unrealistic and so 
unattainable that some felt pressured to commit crimes just to 
keep their jobs. It may have happened over 2 million times--2 
million times. In fact, we have two former Wells Fargo workers, 
Julie Miller and Ruth Landaverde, today in the audience who 
have borne the brunt of your choices. Meanwhile, your senior 
management, the board of directors encouraged, even bragged 
about behavior amounting to widespread fraud.
    Today, I hope you came prepared to explain both how and 
why. While you personally told me you were prepared to take 
full responsibility, we have seen your testimony in front of 
the Senate Banking Committee and there are still answers that 
need to be given. The testimony that we have witnessed in the 
Senate trying to explain what happened is not satisfactory. And 
we still do not have all the information we need to understand 
how this happened, when the sales culture turned toxic, and who 
knew about it and when.
    Despite your statements to the contrary, any legitimate 
investigation shows that executives at Wells Fargo either knew 
or should have known much earlier than 2013 that these 
practices were taking place.
    I think that executive conduct at Wells Fargo deserves a 
thorough investigation by the Department of Justice. Someone 
responsible for the broken culture that led to this behavior 
needs to be held responsible, not the lower-level employees who 
have been left to bear the weight of the mistakes that have 
been made.
    This issue is personal for me. The size of Wells Fargo's 
footprint in California means that many, if not most, of the 
employees and customers who were victimized by this are my 
constituents and neighbors. They don't deserve to have their 
trust violated by Wells Fargo. No one did.
    I'm still receiving calls in my office complaining about 
Wells Fargo now. And one caller described how he went into the 
bank and complained about excessive accounts that he knew 
nothing about. The employees called the police on him, and he 
was arrested. And yet violating the public's trust to drive up 
profits is exactly what Wells Fargo did.
    In the Senate hearing, it was revealed that even you 
benefited from that, Mr. Stumpf. Your own bank account 
benefited from that deception. Now, I know that you said you 
take responsibility for these practices and that you are 
conducting your own investigation and that you and other 
managers are forgoing some of your compensation. That is 
welcome, but let me be clear: It's not enough.
    Unfortunately, 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 my 
subcommittee that you were committed to fixing Wells Fargo's 
forgery of mortgage documents, and yet we haven't seen the 
problem fixed. We've just seen it migrate to another part of 
your bank.
    So 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 were ripped off so blatantly and 
repeatedly. You can also rest assured that this is just the 
beginning and that we will be demanding more information until 
we get to the bottom of this. And, of course, I urge your 
cooperation.
    And I must tell you that I have known you for a while; I've 
communicated with you. At times, you have been very helpful to 
my constituents. So I'm very disappointed, and 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 that they have 
been refused. I think it is in 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 will receive the testimony of Mr. John Stumpf, 
who is the chairman and CEO 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?
    [Witness sworn.]
    Chairman  Hensarling. 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 a part of the record.
    Mr. Stumpf, you are now recognized for 5 minutes to give an 
oral presentation of your testimony.

   TESTIMONY OF JOHN G. STUMPF, CHAIRMAN AND CHIEF EXECUTIVE 
                OFFICER, WELLS FARGO AND COMPANY

    Mr.  Stumpf. Chairman Hensarling, Ranking Member Waters, 
and members of the committee, thank you for inviting me to be 
here with you today.
    I am the chairman and chief executive officer of Wells 
Fargo, where I've 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've 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 
customers' 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 
1st. Today, I am announcing that we are 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 1 hour after opening a savings or checking 
account and an acknowledgment 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 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 percent have 
told us they either did not apply for the 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 are 
closing the account and informing the credit bureaus. Any fees 
these customers may have paid already have been refunded, and 
we are 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 are 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 the 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 3 years and any bonus 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.
    And when I say I'm accountable, I also mean accountable for 
leading Wells Fargo as the company restores the trust of 
customers, team members, and investors.
    Thank you for this opportunity to testify today.
    [The prepared statement of Mr. Stumpf can be found on page 
82 of the appendix.]
    Chairman  Hensarling. The Chair now yields himself 5 
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's a headline, a fine, and yet no one 
seems to be held accountable. Let's face it, the fine that has 
been assessed to you is probably a rounding error, again, in 
your quarterly earnings report.
    With perhaps as many as 2 million fraudulent accounts over 
the course of 5 years, and 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.
    So 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, but within 
the 5,300, there were managers and managers and managers of 
those managers. We are doing a full review--
    Chairman  Hensarling. Were these branch managers?
    Mr.  Stumpf. Yes. About 10 percent or more were different 
kinds of managers.
    Chairman  Hensarling. And nobody above the branch-manager 
level?
    Mr.  Stumpf. There were managers of the branch managers and 
a 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. And, as I 
mentioned, we have--
    Chairman  Hensarling. When will this be complete? When will 
your own internal investigation be complete to hold management 
accountable?
    Mr.  Stumpf. I can't give you a specific timeframe, Mr. 
Chairman, but I will tell you, we're moving on that directly, 
and we're going to get to the bottom of this.
    Chairman  Hensarling. Okay. Is 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 
was involved in promoting or supporting this behavior will be 
held accountable.
    Chairman  Hensarling. Okay, but holding people 
accountable--isn't it true, Mr. Stumpf, that in the settlement 
agreement Wells entered into with the OCC, the CFPB, and the 
L.A. City Attorney's office, no individual admits guilt? Is 
that correct? Is that part of that 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. Okay. So, 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. It was in a different business area, 
but I will read from the consent order: ``Wells Fargo's 
internal controls were not adequate to detect and prevent 
instances when certain of its sales personnel, in order to meet 
sales performance standards and receive incentive compensation, 
altered or falsified income documents and inflated prospective 
borrowers' incomes to qualify those borrowers for loans that 
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.
    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 were aware of the problems in the 
mortgage lending division in 2011, correct?
    Mr.  Stumpf. That is correct. And Mr. Chairman, we shut 
that division down. That was even shut down--
    Chairman  Hensarling. But if you saw the problem in one 
area of the business, why didn't you thoroughly investigate in 
the other areas?
    Mr.  Stumpf. There is no question, Mr. Chairman, we should 
have done more sooner.
    Chairman  Hensarling. It just seems, Mr. Stumpf, that 5 
years later your bank is being fined for exactly the same 
transaction, and, 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 been--this is a serious trust issue with our 
customers. But I also want to say that there are 268,000 people 
who came to work this morning at Wells Fargo trying to do their 
very best to serve customers, and they do it wonderfully every 
day. And I don't want our culture to be defined by these 
mistakes, and we take accountability for them.
    Chairman  Hensarling. I understand that, Mr. Stumpf, but it 
appears to be a little late. And, particularly, when you got 
caught doing it 5 years ago, and 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 have said repeatedly that 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 
indicate you may have known much earlier than that.
    For example, in 2007, just months after you became CEO, 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. And 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 Waters, I acknowledge that we 
had a 2011 order from the Federal Reserve. And I think we have 
always known, as in any sales organization, you're 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 that you put 
people to work every day and mistakes are going to happen.
    It was not until 2013 when I learned that this problem had 
been growing, it had been more prevalent and in a certain part 
of the company, which happens to be in the wonderful part of 
California in which you live.
    So these are things we've been working on. All of our 
strategies around training team members, who get 2 weeks of 
classroom training before they go out into a branch, is about 
doing things right, about ethics.
    And I'd also just want to remind the committee that the 
vast majority of our people who had the same opportunities, the 
same training, and the same goals, did it right every day for 
our customers. In fact, our customer loyalty scores now are the 
highest they've 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 on these high-
level trends across the bank. Did you know in 2011 that perhaps 
your sales incentives were driving this fraud?
    Mr.  Stumpf. Congresswoman, I knew that--at least, I know 
today that we should've done more sooner. But maybe--and not 
only maybe--some of our people--and, again, it's 1 percent, but 
that's a big number for a big organization. Anytime--any one 
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 dishonest and break our code of ethics and do 
something wrong for a customer and something wrong for us, 
that's why we're removing sales goals. They'll be gone as of 
this weekend. In fact, we don't even think they're an important 
requirement anymore for us to continue to grow.
    Ms.  Waters. Mr. Stumpf, some people assume that you 
changed your customer agreement to add forced arbitration 
clauses for checking accounts and that these clauses prove to 
be incredibly helpful when you use them to dismiss multiple 
customer lawsuits. Is that true?
    Mr.  Stumpf. That is not true. I actually think arbitration 
does make sense. But, in this case, for any customer who might 
have been harmed in this situation, we're also paying for a 
mediation process so they have a mediator.
    Ms.  Waters. All right. Thank you very much. My time is up, 
and I will get to this later on if I can. Thank you. I yield 
back.
    Chairman  Hensarling. The time of the gentlelady has 
expired.
    The Chair now recognizes the gentleman from Texas, Mr. 
Neugebauer, chairman of our Financial Institutions 
Subcommittee.
    Mr.  Neugebauer. Thank you, Mr. Chairman.
    Mr. Stumpf, here we go.
    You serve as both the chairman and the CEO of Wells Fargo. 
Is that correct?
    Mr.  Stumpf. Congressman, that is correct.
    Mr.  Neugebauer. And, as you're aware, Section 972 of Dodd-
Frank requires an issuer of securities to disclose the annual 
proxy statement, the reason why the issuer has chosen to allow 
the same person to serve as the board chairman and the CEO. 
This year, Wells states that your dual role is a 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 same 
person to serve as both chairman of the board and CEO?
    Mr.  Stumpf. Thank you, Congressman, for that question.
    In our company, we have 14 outside directors. We have a 
lead director. All directors are New York Stock Exchange-
independent, by their standards. I am 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 in 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. The current situation is that you've 
recused yourself from board decisions on this situation?
    Mr.  Stumpf. Congressman, you're right. I have either 
recused or I've not been invited. I'm not part of that. And I 
serve at the pleasure of the board.
    Mr.  Neugebauer. So you gave me a good idea of how your 
board is structured, but the original question was, do you 
think that's a good idea, for the CEO to be also the chairman? 
Would the board and the stock shareholders, the 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. Now, Mr. Stumpf, you testified that you 
learned of these violations sometime in 2013. When did you 
inform the board that this was an issue?
    Mr.  Stumpf. Yes, so the board had high-level ethics line 
comments or questions or high-level kinds of activities around 
people who left the company, involuntary terminations, really 
through the 2011-2013 timeframe. After we learned--
    Mr.  Neugebauer. Wait, wait, wait, let me have you repeat 
that. You said the board was having some discussions as early 
as 2011 about this?
    Mr.  Stumpf. I was saying that the board, from 2011 to 
2013, would get reports at a committee level, at a high level, 
about ethics lines requests or information at, not a granular 
level, but at maybe the company level--
    Mr.  Neugebauer. But you didn't find out about it until 
2013?
    Mr.  Stumpf. And, in 2013, it became--I became aware that 
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. And 
then by 2015, the board had a--the risk committee of the board 
had a complete report on that issue.
    Mr.  Neugebauer. So, as chairman of the board, the CEO, 
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 to the Senate and here today, 
in 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. We have--our 10-K--all of our K or Q filings 
are facts and circumstances, what we knew at the time. And as 
recently as our second-quarter Q this year, when we use our 
disclosure teams and our compliance teams to look at this 
issue, the facts and circumstances, we believed, were not 
material.
    Mr.  Neugebauer. I'm not for Congress setting the corporate 
structure, but I do think there is some question here whether, 
in this particular situation, the company would've been better 
served with those roles being separated.
    With that, I yield back.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentlelady from New York, Mrs. 
Maloney, ranking member of our Capital Markets Subcommittee.
    Mrs.  Maloney. Mr. Stumpf, we know now that whistleblowers 
first contacted the Consumer Financial Control Board about the 
fraud at Wells Faro 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 on December 21, 2013.
    I have right here your form for filing, which I'd like to 
submit for the record--
    Chairman  Hensarling. Without objection, it is so ordered.
    Mrs.  Maloney. --that shows that 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 9 years as CEO.
    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 and try and do the right thing--
    Mrs.  Maloney. Excuse me. That is not my question.
    Mr.  Stumpf. But I will get to your--
    Mrs.  Maloney. Excuse me. 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 of 
anything related to--
    Mrs.  Maloney. But your Form 4 says you did sell the 
shares.
    Mr.  Stumpf. I sold the shares. Today, I hold 4 times as 
many shares as I'm required. I want to stand with our--
    Mrs.  Maloney. Did you sell these shares or not?
    Mr.  Stumpf. I sold those shares, and I sold them with 
proper approvals, with no view about anything that was going on 
with sales practices or anything else.
    Mrs.  Maloney. Well, 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 alleges that 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.
    So 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've 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 presented with hardcore 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 will go back to 2010 and 
2009. I've told our team to leave no stone unturned. And if we 
find a situation where a customer is harmed that goes back 
prior 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 to the record a court case in 
Montana in which six Wells Fargo employees were fired for, 
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, it is so ordered.
    Mrs.  Maloney. So 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 are 
submitting today?
    Mr.  Stumpf. Again, Congresswoman, we're going to go back 
to 2009. If we can find--and we're going to contact every 
customer. If we find--
    Mrs.  Maloney. But this is evidence that it went back to 
2007. And 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 who were 
defrauded, with clear evidence, back to 2007?
    Mr.  Stumpf. We will go back, and if we find any evidence 
of any customer who was harmed in 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.
    So 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, a 
homegrown bank with a great reputation, went through 
challenging times in the economic crisis, as you well know. 
But, 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 really First Union and Wachovia, the pitch 
was that your culture from California was very similar to this 
North Carolina culture, this banking culture. And as you well 
know, John Grimes Medlin, who was a great chairman of Wachovia, 
sort of imbued in Wachovia this culture that a banker is a 
civil servant as well. There's this obligation to society they 
have and their community.
    You eulogized him.
    Mr.  Stumpf. Yes.
    Mr.  McHenry. Paid tribute to that culture.
    Mr.  Stumpf. Yes.
    Mr.  McHenry. So I want you 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 to what I know about First Union, 
what I know about Wachovia, and this cultural pitch that you 
had in acquiring them in the financial crisis. I know you have 
a huge head count in North Carolina; we're grateful for it. But 
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 that you tout. So 
let's look at your code of ethics and business conduct. You 
said in your message as CEO, ``We are all responsible for 
maintaining the highest possible ethical standards in how we 
conduct our business and serve our customers.''
    The code of ethics, in fact, says, ``Our code applies to 
all team members, including officers, as well as directors of 
Wells Fargo and Company and its subsidiaries.'' It also says, 
``We are all accountable for complying with the code as well as 
all company policies and applicable laws.'' And, finally, 
``It's critical that all team members have a solid 
understanding of our company's 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've clearly failed in your own 
ethical standards internally. You have broken, and your company 
has broken, longstanding law. You've broken longstanding 
ethical standards that you have within your company. This has 
nothing to do with this debate about Dodd-Frank or anything 
else. You've broken a longstanding law, and you've defrauded 
your customers.
    How can you rebuild trust? And how can you get through this 
thing? What standards are you holding yourself to that sends 
the message to the rest of these folks in your organization who 
look to you for leadership and guidance? What are you doing to 
restore that?
    Mr.  Stumpf. Well, thank you, Congressman.
    The culture of the company is strong. And I don't--I know--
    Mr.  McHenry. It's really hard to say that when you're 
before Congress for the second time, and behind you was all the 
settlements you've had for problematic relationships you've had 
with your customers by taking their money--right?--counter to 
the law, counter to your ethical standards.
    So it's great that you say you have a strong culture, but 
why are we here today? How are you addressing that?
    Mr.  Stumpf. Yes, we are addressing it.
    First of all, with respect to culture, we have 268,000 
people who have made their life's work and careers out of 
helping customers. There are people today who aren't--
    Mr.  McHenry. That's why I raised this in the way that 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. There has never 
been a time in human history when that has been ethical, right?
    Mr.  Stumpf. Congressman--
    Mr.  McHenry. So for you to say the culture's okay, it 
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've done and your leadership has done has this broader 
societal impact that is very negative.
    Chairman  Hensarling. The 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, of the 5,300 Wells Fargo 
employees who were fired for their misconduct, how many of them 
were fired because they failed to meet sales quotas? At that 
time, you stated that 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 goals?
    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 percent, 
because we have about 100,000 people in our bank branches at 
any one time--all of those people, through our investigation, 
were terminated because of their unethical behaviors. We found 
them, we decided that we don't--we can't have them here, they 
are not consistent with our culture and our ethics.
    Ms.  Velazquez. Out of that 5,300 employees--
    Mr.  Stumpf. Yes.
    Ms.  Velazquez. --were there any employees who were fired 
because they didn't meet their sales quota?
    Mr.  Stumpf. They were--from my understanding--
    Ms.  Velazquez. I'm not talking about the 5,300. Outside of 
that.
    Mr.  Stumpf. Oh, outside. Outside of that, my understanding 
is that people should not be fired, terminated, for missing 
sales goals. I'm not saying it didn't happen in some cases--
    Ms.  Velazquez. Why should I trust that was the case?
    Mr.  Stumpf. And we're doing a review of employees who come 
forward who might have been terminated for that.
    Ms.  Velazquez. Okay. So my next question is, if your 
review shows that there were employees who were fired because 
they didn't meet their sales quota, would you be rehiring those 
individuals?
    Mr.  Stumpf. Yes, well, first of all, we don't have sales 
quotas; we have goals. And there are other goals that our 
people also have as part of their performance management. We're 
reviewing that, and we're going to try to make it right for 
every team member.
    Ms.  Velazquez. Mr. Stumpf, I'm sure you are aware that 
Wells Fargo is the most active SBA 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 the illegal 
practices uncovered by the CFPB on the consumer side may have 
spread to the small-business side. Were your frontline 
employees under similar pressure to cross-sell products to the 
bank's SBA 7(a) clients?
    Mr.  Stumpf. First of all--thank you, Congresswoman--we are 
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've eliminated in our 
retail bank--in that business. It's a very different business.
    Ms.  Velazquez. So 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 practices did not 
affect any of your small-business clients at Wells Fargo?
    Mr.  Stumpf. Yes, I don't have that information in front of 
me. I'm happy to work with my staff or team and get back to 
your staff and cooperate on that 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 SBA Administrator so that they can review all of 
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 are working on a new incentive 
program. It'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. And we want to make sure that compensation for our 
team members--again, the vast majority do it right--are not 
hurt in this process.
    Ms.  Velazquez. I know that you're not aware, but it's very 
difficult for any person in this country to live on 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.
    So, Mr. Stumpf, let me start by making a few observations, 
and then I'll end with a couple of questions.
    First and foremost, I find it, as we all do, 
extraordinarily troubling that as I look through the history, 
the timeline of the scandal, a timeline that stretches over 
years, we see, as has already been testified to, 5,000 Wells 
Fargo employees were dismissed for their involvement in opening 
unauthorized accounts.
    What's also interesting and troubling is the firings did 
not happen all at one time. My understanding, as we've heard 
already today, is that roughly 1,000 employees per year, in 
2011, 2012, 2013, 2014, and 2015.
    It's extraordinary. How Wells Fargo management did not 
actively and decisively 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 to do what is 
foremost, and that is to protect the customers who have trust 
in you.
    What concerns me even more, however, is that it appears 
that most of the 5,000 employees who were fired were low-level 
or mid-level employees. I think the chairman just found out the 
highest level was a branch manager. And it doesn't even include 
those who resigned due to the culture at Wells Fargo. As I say, 
meanwhile, to the best of my knowledge, no senior executives 
have been held accountable in the same manner that the lower-
level employees were. I would not be surprised if a number of 
those people ended up losing their homes or going into massive 
debt after they were dismissed.
    No, I'm not defending their actions, just making a point 
that we have a problem in this country, where it would seem, as 
we've seen previously, that the well-connected here in 
Washington, the elite, if you will, and the well-connected on 
Wall Street, seem to play by one set of rules, while everyone 
else has to play by another.
    Yes, 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. And so you 
will forgive all of us if we don't really feel that sorry.
    The second point I'd like to make is that, under Dodd-
Frank, Wells Fargo remains fully eligible for taxpayer bailout 
going forward under Title II of the law should you 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're aware that the anger now 
directed at you by my constituents and others around the 
country isn't just over the actions of the employees; it's the 
fact that they seem to be forever on the hook to underwrite 
whatever kind of risky or, in this case, fraudulent activity 
Wells or other large banks engage in.
    Fortunately, earlier this month--I'll just make a 
sidenote--we passed out a bill out of this committee, the 
CHOICE Act, which will ensure that if Wells Fargo does run into 
trouble again, it's only its shareholders and its management 
that would pay the consequences and the taxpayers will no 
longer be on the hook.
    The third and final point I'll make--and I know they're not 
here, but, once again, the financial regulators apparently 
were--more than ``apparently''--completely asleep at the wheel 
as this massive fraud was occurring.
    If you look at one of those, the CFPB, the CFPB has only 
one job in a regulatory framework, and they completely blew it. 
It took a reporter from the L.A. Times to uncover what was 
going on at Wells Fargo. And 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, let's get to the securities 
questions. The Securities Exchange Act requires a public 
company to keep its disclosure in place--that's under SOX--
requires the CEO and the CFO to attest to financial statements. 
You referred to some of that.
    Are you saying that all of those quarterly reports you were 
filing, that the information you had in 2011 and 2012 and 2013 
and 2014, none of that information was material?
    Mr.  Stumpf. At the time, given the facts and the 
circumstances, we filed accurate reports, and we did not 
believe it was material.
    Mr.  Garrett. And when you got the PricewaterhouseCoopers 
analysis--when was that, by the way?
    Mr.  Stumpf. That was late in 2015, early 2016.
    Mr.  Garrett. And, as soon as you had, has that been filed 
as a material statement?
    Mr.  Stumpf. We considered the facts and circumstances, and 
we believed that not to be material.
    Mr.  Garrett. It's not material. Why not?
    Mr.  Stumpf. Remember--or at least--the PwC material looked 
at 93 million accounts that were opened over 4 years. They 
could not rule out, through large data analytics, about 1\1/2\ 
percent of those accounts. That's still a lot because of the 
size of the organization.
    Mr.  Garrett. Well, that, to me, Mr. Chairman, if that's 
not material, this occurring over a 5-year period of time, a 
systemic problem in the organization, I don't know what is.
    I yield back.
    Chairman  Hensarling. The time of the gentleman 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-selling mania that has afflicted 
Wells Fargo is not to be found at the other big banks. And I 
would urge you to have hearings where we hear from the CEOs of 
Bank of America, Citigroup, and others.
    And, until then, I hope that you would join with me in a 
letter of inquiry to ask what new account-opening quotas they 
had for their 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 are now engaged in an important national ritual where 
the CEO 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. And when you came to the Senate?
    Mr.  Stumpf. I think it was United, but it was one of the 
two.
    Mr.  Sherman. Okay. It shows Wall Street has learned 
something. Thank you.
    Mr.  Stumpf. Thank you.
    Mr.  Sherman. Now, you have these forced arbitration 
clauses in your agreement with your customers. You said, oh, 
they can have mediation too. Some of them want their day in 
court.
    Are you 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 were caught 
up in this, you get your choice, whether you have arbitration 
or not?
    Mr.  Stumpf. Thank you, Congressman. I believe in 
arbitration. I think it's a fair way to resolve disputes.
    Mr.  Sherman. Well, but your customers may want something 
else. Are you going to deprive them of that?
    Mr.  Stumpf. No, we're not. We're going to have them--we're 
going to pay for a mediator, and we--
    Mr.  Sherman. They want their day in court. Are you going 
to screw them out of that?
    Mr.  Stumpf. We're taking this very seriously. I told--
    Mr.  Sherman. Will you let them go to court if they want to 
go to court? Yes or no?
    Mr.  Stumpf. No, but with an explanation.
    Mr.  Sherman. ``No, but.'' Okay, thank you. That is a no.
    This sham was not an attempt to steal a few million dollars 
in fees from your customers, although that's important, because 
you could say that a few million dollars wasn't material. What 
was material is the price of your stock. You opened 2 million 
phony accounts and then went and told--and it 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 
percent up to 42 percent. 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 shareholders, our 
penetration rates are phony, our new accounts are phony 
accounts, and when we tell you we're deepening our relationship 
with our customers, we're doing so by putting them through the 
wringer? 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 team 
members and customers.
    Mr.  Sherman. Mr. Stumpf, 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'd fired people for 
falsifying.
    Mr.  Stumpf. Congressman, may I just have a second? Because 
we have gone back and looked. The 2 million accounts could not 
be ruled out. We don't know if those are good accounts or not 
good accounts, and we have 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 that 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. We have institutions that 
are too-big-to-fail. In 2008, we found that they were too-big-
not-to-bailout. Attorney General Eric Holder has told us that 
they are too-big-to-jail, saying that he fears bringing a 
criminal indictment. We now learn that they're too-big-to-
manage, and too-big-to-regulate. It's time to break them up.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Missouri, Mr. 
Luetkemeyer, chairman of our Housing and Insurance 
Subcommittee.
    Mr.  Luetkemeyer. Thank you, Mr. Chairman.
    Today we are here to confront, in my judgment, a total 
travesty in the financial market. The consumers in this case 
were failed on all accounts. Their financial institution with 
whom they entrusted their families' 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 percent 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 aren't 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 as well from 
day one. Instead, the institution pushed forward with a 
whatever-it-takes approach to meet sales targets, and 
regulators sat idly by, either oblivious or uncaring of these 
bad practices, even after reported in the news. And to top it 
off, regulators neglected to fulfill their enforcement 
obligations after the fact. Instead, they opted for a quick 
settlement and waived their right to pursue additional action 
for other violations so they wouldn'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, first is, how many 
regulators do you have in your bank on a daily basis?
    Mr.  Stumpf. I don't have a precise count of that.
    Mr.  Luetkemeyer. Just roughly.
    Mr.  Stumpf. I think there is--maybe the OCC, our 
prudential regulator, I'd pick 80, for example.
    Mr.  Luetkemeyer. Okay. The CFPB has some folks in there 
pretty regularly as well, do they not?
    Mr.  Stumpf. I don't know the number on that.
    Mr.  Luetkemeyer. Okay. I'm 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 that I tell people 
I'm shocked and dismayed. I'm dismayed that the bank allowed 
this to happen, because you did have a culture in place that 
allowed this to happen. And I'm shocked that regulators sat on 
their thumbs this long and did nothing. And while you're being 
fined, which I think is appropriate, the regulators ought 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 that money go 
back to consumers, because they were asleep at the switch as 
well. There is so much blame to go around on this, it's 
unbelievable.
    A while ago, you made the comment that you have a good 
culture in your institution, that this shouldn't be happening. 
Well, Mr. Stumpf, your own testimony says that you're firing a 
thousand people a year, a thousand people a year. There is only 
one way that can happen, in that there is a culture there that 
allows that to happen year after year after year. There is a 
laissez-faire approach to what you're doing in your bank. 
Somewhere along the line somebody just ought to call a timeout 
and say, enough is enough, this can't continue. And yet year 
after year, you're firing people, trying to hope this thing 
goes away, and the regulators are watching it and still sitting 
on their thumbs. These actions must have consequences, and for 
not only you, but they need to have consequences for 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 
OCC. In 2014, more reductions in goals. In 2015--and the OCC 
also was in 2013--we did our study. This does not represent the 
culture. In fact, we do an outside company--
    Mr.  Luetkemeyer. I respectfully disagree with you, Mr. 
Stumpf. I've been in business like this all my life. You can't 
tell me that when you have to fire people year after year after 
year after year that there isn't a problem. Now, for a year or 
two, that's one thing, but for 4 or 5 years? Your own testimony 
says this.
    I have another question. I need to go on. In my examining 
days, I examined a bank one time and found a teller skimming 
money out of her cash drawer. I took it to the president and he 
said, well, you know, she is a good employee, as long as she 
keeps it to a minimum, I think we're going to be okay. My jaw 
hit the floor. This reminds me of that situation. As long as 
they keep it to a minimum, I think we're going to be okay. My 
comment back to him at that point was, have you reported this 
to your blanket bond insurance company that has a dishonesty 
clause on it?
    Do you have a blanket bond or do you self-insure?
    Mr.  Stumpf. We have a fidelity bond, and that's why we 
draw a very bright line. When people do the wrong thing, they 
cannot be here.
    Mr.  Luetkemeyer. Okay. My question is, when did you report 
this action of your employees to your blanket bond company?
    Mr.  Stumpf. I don't--we have a group that does that, our 
corporate relations with our legal team. And I can assure you 
that--we can have our people get that to you. But there is a 
very bright line.
    Mr.  Luetkemeyer. This is a really, really big question, 
because if you didn't report that immediately when you found 
this going on, and you allowed for year after year to have a 
thousand people--
    Mr.  Stumpf. We do that.
    Mr.  Luetkemeyer. --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 your team.
    Mr.  Luetkemeyer. Thank you, Mr. Chairman.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now 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 CEO since 2007. You've 
been the chairman of the board and the CEO since 2010, is that 
correct?
    Mr.  Stumpf. That is correct, Congressman.
    Mr.  Meeks. And in the time that you have been the 
chairman, I have a chart here that shows you've 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 2015; another $24 
million in January of 2015; $5 million in September of 2014. 
And I could go on and on: $869 million in September 2013, while 
you were the CEO, right?
    And you're going to tell me that there is not a culture of 
something wrong at Wells Fargo, when you are the head--you get 
credit, you get credit as CEO 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 yet you are telling me that 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 is no responsibility? You can just stay to 
be the chairman and the CEO? 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 am willing, I've told you--
    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 firing 5,300 employees. When you found 
out that they were doing something wrong, they were fired--
    Mr.  Stumpf. Correct.
    Mr.  Meeks. --because 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 turn--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. 
And my energy right now is to lead this company forward. I also 
want to remind--
    Mr.  Meeks. But you came here and you started out by 
saying, I apologize, et cetera. 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 customers.
    Mr.  Meeks. You didn't break the code of ethics? Do you 
realize that you have not only given--will you admit that not 
only does your bank have a black eye, but that your bank, Wells 
Fargo, has given the entire financial services industry a black 
eye? Your responsibility.
    You heard Mr. Sherman say--and I agree with him--that he 
wants everybody to come in here. Why? There's only one reason 
why. Your bank, you, CEO, chairman, basically for me, was on 
top of what basically has 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 that you're 
making a lot of money, because it's easier to pay the fine 
because you know that nothing else is going to happen to you. 
So you pay the fine, you get away, you make a lot of money.
    Now, I'm upset. I'm from New York. I believe in financial 
institutions. That's why I'm so mad. I believe that they make 
our country better, until they rip us off. And they ripped us 
off tremendously, taking advantage of customers and consumers 
when we had the financial crisis. I've got individuals right 
now who are on the street, on the street. They are not back in 
their homes. They had these fraudulent mortgages. Nobody has 
said, oh, I'm sorry that we gave you these fraudulent 
mortgages, we're going to put you back in your home and we're 
going to make sure that everything is okay. No one has done 
that for them. You haven't volunteered to do that.
    Will Wells Fargo put people back in their homes?
    Mr.  Stumpf. Congressman, if I could just respond for a 
second, please. There is no question we didn't do everything 
right and we've made mistakes. We're upping our game.
    Mr.  Meeks. So who should pay for it? If you didn't do 
anything right, who is accountable for it?
    Mr.  Stumpf. We're going to make it right for every one of 
our customers.
    Mr.  Meeks. Your VP made a $125 million bonus package. Your 
institution is making over $22 billion a year. Who is paying 
for it? Who is taking responsibility for it? Don't come tell me 
you're sorry.
    Mr.  Stumpf. We're taking care of every one of our 
customers who was impacted.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Wisconsin, Mr. 
Duffy, chairman of our Oversight and Investigations 
Subcommittee.
    Mr.  Duffy. Good morning, Mr. Stumpf. I want to tell you 
that I'm a 20-year customer of Wells Fargo. I actually started 
at Norwest.
    Mr.  Stumpf. Oh, thank you.
    Mr.  Duffy. My wife was with Wells Fargo. We got married 
and it made it easy to join our accounts. I've had a pretty 
good experience with your bank, that's why I've been there for 
20 years. The people I've dealt with have treated me incredibly 
well and that's why I'm there.
    But what I'm hearing today is incredibly disturbing. And so 
I just want to make sure you and I are on the same page. How do 
you classify what Wells Fargo did with this potentially 2 
million account holders?
    Mr.  Stumpf. Well, the 2 million account holders were--
accounts were about--the PwC looked at 93 million accounts. The 
2 million are--
    Mr.  Duffy. No.
    Mr.  Stumpf. I'm sorry?
    Mr.  Duffy. Was this fraud? Was this just an HR problem? 
Was this theft? How do you see this?
    Mr.  Stumpf. The 2 million accounts could not be ruled out 
as--
    Mr.  Duffy. I'm asking about, well, how do you classify, 
when you took $22 to $25 from whatever the number is, maybe 
it's $1 million, maybe it's $2 million, how do you classify 
that?
    Mr.  Stumpf. Well, I think it was dishonest, it broke our 
code of ethics, and the people who are responsible--
    Mr.  Duffy. Was it theft?
    Mr.  Stumpf. Pardon me?
    Mr.  Duffy. Was it theft? Did you steal?
    Mr.  Stumpf. Our people did not do what was right.
    Mr.  Duffy. That's not my question. Did you steal? I want 
to know if you and I are on the same page. Did Wells Fargo 
employees steal from 1 million to 2 million of their customers? 
Yes or no?
    Mr.  Stumpf. In some cases, they did.
    Mr.  Duffy. They did?
    Mr.  Stumpf. Yes.
    Mr.  Duffy. And so as Wells Fargo, back to 2011, is 
stealing from their customers--and by the way, banking is based 
on trust.
    Mr.  Stumpf. Correct.
    Mr.  Duffy. Right? So I don't care if it's 10 percent or 1 
percent or 1/2 percent of the people that you do business with, 
if you're stealing from them in 2011, a thousand people are 
fired for stealing, and what do you do? You don't fix the 
problem. And a thousand people are fired in 2012, and you don't 
fix the problem. And in 2013, 1,200 people are fired, and we 
still have a problem, and you're stealing from people. So how 
do you--I guarantee you that any bank in my community, if they 
were stealing from someone at the lower level, fired and fix 
the problem on day one.
    Mr.  Stumpf. That's what we're trying to do. In fact--
    Mr.  Duffy. No, no, no, no. Don't tell me, ``trying to 
do.'' We're 5 years on.
    Mr.  Stumpf. Let me just say something about how we 
understood this problem. We didn't--when somebody would open an 
unauthorized account, a savings account or a checking account, 
it was not until--and when an account gets opened and not 
funded--it's really important, please. When it's opened and not 
funded, it gets auto-closed. We didn't believe, as we looked at 
that, until sometime in 2015, that there could be the 
possibility of a zero account that could affect a customer.
    Mr.  Duffy. You have got to be kidding me.
    Mr.  Stumpf. No, that was absolutely our analysis.
    Mr.  Duffy. You told us earlier the board members--you were 
not saying that you knew, but board members knew in 2011. They 
were looking at this. And if they're looking at 1,000 people 
fired, that they don't know why they're being fired, that they 
don't look in to say, what were these people doing that caused 
them to be canned? And they look, they just pull the curtain 
back a little bit and they go, man, whether you want to call it 
defrauding our customers or stealing from our customers, Wells 
Fargo has a big problem.
    So that you tell me that it took 1 year, 2 years, 3 years, 
to 2015? I don't buy it. What I think is Wells Fargo was making 
a lot of money off what you were doing, and I think that you 
were hoping that you wouldn't get caught. And so it's a risk of 
doing business. You know what? We're willing to fire a few 
people so I can come in here and say, weren't we great? We 
fired a couple of people, we were trying to make it right, but 
we kept the practice in play because we were making big 
profits.
    Did you end the practice? Is this over?
    Mr.  Stumpf. Yes. We're stopping all of our sales goals, 
but let me just--
    Mr.  Duffy. How did you stop it? How could you stop it now, 
but not in 2011 or 2012 or 2013 or 2014 or 2015?
    Mr.  Stumpf. Well, we should have done more earlier. We 
should have done more earlier, but it's really important I make 
this point, please. The $2.6 million of fees that were on 
accounts, these 2 million accounts that we could not rule out, 
it cost us $10 million to open those accounts and close them. 
Forget even the cost of the team member and the dismissal. This 
is a loser for us. It only helps when customers use products.
    Mr.  Duffy. Oh, it's a loser for you, I guarantee that.
    Mr.  Stumpf. It only helps when customers--I'd rather have 
a customer have two products they use than four they don't. 
We're totally aligned with customer--
    Mr.  Duffy. The concern that we have, Mr. Stumpf--and I 
told you, I like Wells Fargo, I've been there 20 years--is that 
you were turning a blind eye to your customers who were being 
stolen from, people who couldn't afford $22, people who 
couldn't afford $25, and that you didn't fix that problem. In 
an institution that is based on trust with your customer, that 
you didn't take this seriously, that you didn't remedy it, that 
it has taken this long. Shame on Wells Fargo.
    And I didn't get to my question, but I will hopefully at 
one point hear you testify to how many CFPB employees were 
embedded at Wells Fargo.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Massachusetts, 
Mr. Capuano.
    Mr.  Capuano. Thank you, Mr. Chairman.
    Thank you, Mr. Stumpf. I want to thank you particularly for 
doing something here today that no other person has been able 
to do in the last 4 years. You have brought true bipartisanship 
to Congress. We're all together on this. We are not happy.
    The last--oh, they already started. But the last few 
minutes, they've been running a graphic in the back, and my 
colleague had went through some of them. And I think it's 
important to know what some of the other things you have done, 
what they were. They weren't just fines. You screwed student 
loan holders, credit unions, Fannie Mae, Freddie Mac, mortgage 
holders, African-Americans, Hispanics, healthcare workers, on 
and on and on.
    And by the way, I understand this isn't material. Just 5 
months ago you paid $1.2 billion in a fine. This is only 15 
percent of that. Ah, who cares. We'll pretend to be sorry, 
we'll fire some workers, and we'll get through this. You know 
where I heard that before? The guys who ran Enron and the guys 
who ran Arthur Andersen thought the same thing.
    We're not your problem. We can't criminally prosecute you. 
You can keep--hell, you're your own boss. You are the CEO and 
the chairman. Hold yourself to accountability. Oh, my God, 
you've been bad. Oh, no, you haven't. That's ridiculous. Your 
problem is coming. It's not today. You think today is tough? 
It's coming. When the prosecutors get ahold of you, you're 
going to have a lot of fun. So I want to thank you for that.
    I want to ask you--you have the graphic up here--do you 
know this guy? See, I'm not a real good researcher. I'm not a 
prosecutor. This is simple Internet research. That's all I'm 
capable of doing. Google it. Wells Fargo. Boom, a whole bunch 
of stuff shows up. This is Mr. Robert Holmes, who apparently 
robbed your bank in Lancaster, Pennsylvania. He did not use a 
weapon. He got caught. They got all the money back. He is in 
jail as we speak on a $750,000 bail.
    You, on the other hand, have run an enterprise that has a 
culture of corruption. You encouraged subordinates to abuse 
existing customers by opening fake bank accounts. You charged 
those victims illegal fees, interest, and late charges, and 
then you sent some of them to collection agencies because they 
didn't pay them. Then you fired 5,300 workers, as if you care, 
to cover everybody's tracks. In my opinion, you and your entire 
leadership team are clearly and unequivocally guilty of at 
least conspiracy to commit fraud, conspiracy to commit identity 
theft, clearly racketeering, which is something a lot of my 
friends know something about, and probably a dozen other 
crimes.
    One simple question: What the heck is the difference 
between you and Mr. Holmes? Why shouldn't you be in jail? He 
didn't use a gun. You got the money back. I understand that at 
his arraignment, he said he was sorry. What's the difference? 
Why shouldn't you be in jail right along with Mr. Holmes?
    Mr.  Stumpf. Congressman, I think that when you do 
something unethical or dishonest, which I've tried to exercise 
my duties as a leader in our senior leadership team to stop--
    Mr.  Capuano. You haven't done a very good job. You've had 
16 violations in 5 years. That's a good job? This is a minor 
fine. You've had a lot of--this is only the seventh largest 
fine you've had. You've had six others that are a lot bigger. 
That's a good job? I guess I forgot. You're the one judging 
yourself, because you're also the chairman of the board. I 
actually think I'm the greatest Congressman in the history of 
the world. I should be Speaker, President, and maybe emperor of 
the world. That's my judgment of myself. Sound good to you?
    Mr.  Stumpf. There is no question that we've done things 
that we need to improve on and we've paid fines. And we're 
trying to get better in every one of our businesses.
    Mr.  Capuano. So if Mr. Holmes pays a little fine, a few 
bucks, based on the amount of money he stole and the victims he 
had, you think he should be let out and have no criminal 
record?
    Mr.  Stumpf. Again, being dishonest and breaking the law is 
something very different.
    Mr.  Capuano. Oh, so it's not breaking the law stealing my 
identity and opening an account that I didn't ask for.
    Mr.  Stumpf. And our culture is about not doing that. We 
train for that not to happen.
    Mr.  Capuano. I don't know what kind of a culture. You have 
16 violations and 5,300 employees that you say did it--
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from California, Mr. 
Royce, chairman of the House Foreign Affairs Committee.
    Mr.  Royce. Thank you, Mr. Chairman.
    Mr. Stumpf, the idea of a cross-selling target of at least 
eight products clearly 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 predecessor's ``current obsession.''
    Morphing the goal to a mandate here seems to be a big part 
of the problem. And I say mandate, because if people are fired 
for not hitting that goal, it's a mandate. And that seems to be 
at the center of a toxic sales culture that you've overseen.
    But I'd ask you, was the goal of eight cross-sold products 
something understood and embraced by management and by your 
sales force?
    Mr.  Stumpf. It was a rallying cry to help work together. 
The average consumer household has about 14 financial products.
    Mr.  Royce. Okay. I understand, but I'm going to ask you a 
question. In retrospect, do you think that target contributed 
in some way to the negative change in your sales culture?
    Mr.  Stumpf. We never had a target of eight. Again, it was 
aspirational. We had team members who would work with customers 
on need-based selling. And when they did that right, the 
customer won and it was good for us.
    Mr.  Royce. Did you read the L.A. Times article when it 
came out in 2013?
    Mr.  Stumpf. I'm sure I did. I can't recall it right now.
    Mr.  Royce. Was it something discussed at the board level?
    Mr.  Stumpf. We did discuss the L.A. Times article.
    Mr.  Royce. Well, here's my question: Did the information 
in that article give you pause about reporting cross-selling 
metrics or ratios in your annual reports, in your quarterly 
reports, in the analyst conference calls that were clearly 
inflated here by fake accounts generated by your sales force?
    Mr.  Stumpf. We love cross-selling because it helps 
define--
    Mr.  Royce. Look, I understand your argument about that. 
Here's the question: If you know fake accounts are going into 
that ratio, why would you keep reporting that ratio? Because 
I've got a copy here of your Investor Day. I've got a copy of 
what is in your quarterlies. And, you turned to Mr. Duffy here 
when he was asking the question, and you were saying, well, it 
isn't that material in terms of our bottom line, in terms of 
the fee income from these fake accounts.
    But what you're reporting on your products per household is 
a constant upswing quarter by quarter by quarter. It certainly 
is material, in terms of the stock price. What you were doing 
in constantly 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 was based 
upon fraudulent behavior. That becomes material, right?
    Mr.  Stumpf. Well, let me just talk about that 
specifically. The cross-sell ratio, even if you include all 2 
million accounts in that--and we know we can't because we're 
already finding out in credit card that 75 percent--or less 
than 25 percent either did not order it or do not remember. 
We've looked back for all the quarters going back. I can't 
remember, it was 2010 or 2011, and it has a, I think, 1/200 of 
one product impact. And it's absolutely immaterial.
    Mr.  Royce. Look, Mr. Stumpf, this is a California company. 
You've got a lot of California customers. You've got people all 
over the world dependent upon this company. You've got your 
employees, and from what I understand, a thousand of them being 
fired a year connected to this. I believe rebuilding the trust 
and righting the wrongs is going to take a course of action 
here that I've yet to see you set.
    And through opening unauthorized accounts or playing the 
shell game with a person's money, your employees and your 
company negatively impacted the credit of many people in this 
country. And I just want you to think for a minute about what 
that meant, in terms of their ability maybe to qualify to get 
that home or maybe to qualify to get that car or maybe, in 
terms of the student loan, to send that son or daughter to 
university. Not to mention, again, working Americans wrongfully 
terminated by your company. For what? Refusing to break 
financial laws. Refusing to break ethical laws. That's what we 
have to come to grips with here. And this is, at the very 
least, the result of actions over the last 5 years. That didn't 
happen by accident.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Massachusetts, 
Mr. Lynch.
    Mr.  Lynch. Thank you, Mr. Chairman.
    I have a unanimous consent request to enter into the record 
a letter sent by Ranking Member Cummings, the gentleman from 
Maryland, ranking member of the Oversight and Government Reform 
Committee, to Mr. Stumpf requesting related documents by 
October 13th.
    Chairman  Hensarling. Without objection, it is so ordered.
    Mr.  Lynch. Thank you, Mr. Chairman.
    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 
retaliatory attempts to provide information on the fraudulent 
conduct being conducted at Wells Fargo. I'm aware of at least 
three U.S. Attorneys who have also issued subpoenas in this 
case, so I'm hopeful that 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 OCC have done good work in this case, the 
fines thus far are pathetic, really, totally 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 that have gone on at your 
bank. It is really proof positive that whatever the OCC has 
done is not adequate to make you realize the level of your 
offenses here. Again, 5,300 employees were fired. Up to 2 
million fraudulent accounts. And this has gone on for at least 
5 years.
    I want to point out here--and Mr. Duffy has hit on this--
this is the banking industry. 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 with it 
and get the bonus so that the account was open. And these are 
your customers.
    Now, we've had credit card companies up here who have sent 
credit cards to noncreditworthy borrowers and seniors who 
didn't understand what they were getting, but in this case, 
these are your customers. These are the people who became 
victims because they did business with your bank. That is 
unbelievable.
    And I know that Mr. Meeks and Mr. Capuano before me have 
made comparisons to criminal activity, but I do want to note 
that under the Racketeer Influenced and Corrupt Organizations 
Act (RICO), 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 is no question about that. Mail 
fraud, securities fraud. You've done it all. You've covered 
basically every aspect of fraud in your bank over the last 5 
years.
    And secondly, in many cases, these employees, these 
whistleblowers were intimidated or fired. You have an HR 
employee here who says you had a system to retaliate in your 
bank against whistleblowers. And that's another predicate 
offense under RICO.
    So let me ask you, as the CEO and chairman of the board, 
you had a responsibility to file suspicious activity reports 
(SARs).
    Mr.  Stumpf. Correct.
    Mr.  Lynch. Right. You have up to 2 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 asked FinCEN, when we asked 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 just say a couple of things. We filed--
we did everything that was necessary to abide by every 
regulator and regulation issue--
    Mr.  Lynch. Are you saying you filed suspicious activity 
reports on--
    Mr.  Stumpf. I can't say on that, because that's--
    Mr.  Lynch. Well, it's your responsibility. Let me read you 
the law. I will close with this.
    Mr.  Stumpf. It's a responsibility, but that there is 
actually a prohibition--I have to do what's right according to 
the law.
    Mr.  Lynch. Let me just explain. All right. This is my 
time. I'm claiming it back.
    This is under the Bank Secrecy Act and Anti-Money 
Laundering statute: ``The board of directors, acting through 
senior management, is ultimately responsible for ensuring that 
the bank maintains an effective Bank Secrecy Act/AML internal 
control structure, including suspicious activity reporting and 
monitoring.''
    Mr.  Stumpf. And we do that.
    Mr.  Lynch. That's your responsibility.
    Mr.  Stumpf. And we do that.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Oklahoma, Mr. 
Lucas.
    Mr.  Lucas. Thank you, Mr. Chairman.
    Mr. Stumpf, while my day job is that of a Congressman, I am 
a farmer 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. 
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, figured 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 
effective 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 gone on. I think between the other committee and 
my colleagues here, that they've done an exceptional job of 
getting the facts. And I suspect, as a number of my colleagues 
have discussed quite straightforwardly, that this has legal 
implications far and beyond the activities of this committee or 
the other committee and the other body.
    But I'd say, Mr. Chairman, the most challenging thing 
you've done is, by the actions of your company, by your 
management of the company, you've made it really hard for those 
of us who are defenders of the market economy to continue to 
maintain the system that has helped drive this 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 econ classes, he used to lecture us about the 
concepts of enlightened self-interest. That's the nature of any 
consumer. That's the nature of any businessperson. But then 
there are the responsibilities that we used to talk about of 
good corporate citizenship, about self-restraint, about not 
pursuing greed.
    I guess I'd 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 
stockholders determine or your fellow board members, you've 
just made it 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 or the 
arbitragers of capital, to effectively make this country move 
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 it's 
unfortunate. But then, I'm just a farmer by trade, a 
multigeneration debtor, working hard to service my debts every 
year. But 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. And we take this very seriously. 
And I also come from a farm. I understand what it's like to be 
on a small farm--or at least ours was small with a 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've made mistakes. 
We're one of the Nation's largest taxpayers. We're one of the 
largest philanthropic organizations. We're involved in our 
communities. And we have a lot of work to do. There is no 
question about that.
    But I stand with our--the people who are doing the right 
thing, who honor our culture and our ethics. They are terrific 
people and they are out there with our customers every day. And 
we have work to do, I understand that.
    Mr.  Lucas. A disservice has been done to them.
    With that, Mr. Chairman, I yield back.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Georgia, Mr. 
Scott.
    Mr.  Scott. Yes, 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 find these--
    Mr.  Scott. Wait a minute, Mr. Stumpf.
    Mr.  Stumpf. We found these accounts and we found these 
people and we said, that behavior is not acceptable.
    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 are 
setting. And not only that, for the damage that you yourself 
with your action is being 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.
    Mr.  Stumpf. Congressman--
    Mr.  Scott. And you should apologize.
    Mr.  Stumpf. 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 in Wells Fargo in the bank in 
Atlanta, Georgia. I was on the phone with my district director 
about this. And she has told me that in our constituent 
services, when it comes to the mortgage assistance, 
particularly with the bill that we passed here, the Hardest Hit 
bill, and 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. And what's it doing?
    Mr.  Stumpf. Thank you.
    Mr.  Scott. But the example that you set is just absolutely 
terrible.
    Now, what I want to ask you is--because my number one 
concern is my constituents in Georgia. Let me ask you, could 
you tell us exactly how many customers of yours in my home 
State of Georgia had fraudulent accounts set up in their name 
without their consent? How many in Georgia?
    Mr.  Stumpf. I can get that for you if I have the right--
sorry. I know I'm using up your time here.
    Mr.  Scott. Well, maybe the chairman will give me a little 
extra here. But it's important for us to know how many in--
    Mr.  Stumpf. In Georgia--
    Mr.  Scott. Yes, sir.
    Mr.  Stumpf. --we had 55,579 accounts that we could not 
rule out as possible. Again, now, I just--
    Mr.  Scott. 55,000?
    Mr.  Stumpf. I need to--if you may let me, we're finding 
out that on the credit card side, less than 25 percent did not 
want those or did not remember.
    But here's my commitment to you, Congressman: We're going 
to work with every one of these accounts and make it right for 
every customer. That is our commitment. I'm interested in 
results, not in process here. Each account, we're going to take 
care of it.
    And I don't care whether there was--the biggest thing here 
is secondary harm. I want to make sure that--I think it was 
asked by another Congressman or Congresswoman about that issue. 
We take this very seriously.
    Mr.  Scott. My time is scratching down. Here's the 
fundamental question I want to ask you: Do you think what you 
did was criminal?
    Mr.  Stumpf. I'm not a criminal attorney.
    Mr.  Scott. No, but do you think that?
    Mr.  Stumpf. I led the company with courage and with--
    Mr.  Scott. If another bank president had done this, or 
chief executive officer, would not you say it's criminal?
    Mr.  Stumpf. I didn't break our code of ethics and I didn't 
do anything dishonest.
    Mr.  Scott. Thank you, Mr. Chairman.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from New Mexico, Mr. 
Pearce.
    Mr.  Pearce. Thank you, Mr. Chairman.
    Thank you, sir. I appreciate you being here. I suspect it's 
not all fun.
    So you've talked about the 5,300 who were terminated. How 
big a percent of the people in the company who were 
terminated--surely out of 268,000 people, you'd get more than 
5,300 terminated. So what percent of the terminations did that 
actually represent?
    Mr.  Stumpf. I don't have that. I can work with our team 
and see--
    Mr.  Pearce. Don't worry about it. That's okay.
    Mr.  Stumpf. I don't have that.
    Mr.  Pearce. So just looking at this from a 30,000-foot 
viewpoint, and keep in mind I'm like Mr. Lucas, I grew up on a 
small 5-acre farm. Dad was a sharecropper before he went to 
work as a roustabout. We had a blue-collar company, just 
working there in the oil fields of southeast New Mexico. So all 
the numbers that get thrown around here are a little bit big.
    But I can't fathom somewhere in the process that you had 
5,300 people terminated and that doesn't come to your attention 
as a CEO. You get calls on the ethics line saying, hey, we're 
doing unethical stuff, in 2008, according to one of the other 
people. According to your comments, people inside your company 
are breaking the law, they're creating criminal acts, and that 
doesn't come to your attention. You get $10.8 billion in 
settlements, and that doesn't come to your attention.
    So, 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 have a 
problem. But it doesn't appear that anybody ever said, Houston, 
we have a problem. The L.A. city attorney brings charges and 
nobody on the board says, Houston, we got a problem. 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 a regulator.
    Mr.  Pearce. I understand. You've already--you've been 
through that.
    Mr.  Stumpf. Okay.
    Mr.  Pearce. What kept you from seeing? What kept this from 
rising to the--I'm sure that today, that you probably consider 
the problem somewhat different than you did in 2011, 2012, 
2013, 2014, 2015. Why did not you see the importance that you 
would attribute to it today at any stage of the process?
    Mr.  Stumpf. Congressman, it's a good question. I've said 
in my testimony. I've said--
    Mr.  Pearce. I read your testimony. I did not see the 
answer. So since you appear not to want to see it, I'm sitting 
here--and a balance scale, as a business manager, is always 
there. Do we want to take that job cleaning out that well and 
we can't clean it out and we get a bad reputation? Well, it's 
worth a lot, 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? Stock 
price is doing okay. My compensation is okay. You get the 
balances there. Your compensation in that period of time is 
approximately $200 million. That would cause one to say, I 
think things are running okay. Yes, 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, that it just doesn't come to my attention, 5,300 
terminations doesn't come to my attention, because we have 
260,000 employees. Obviously, we're doing things 99 percent 
right. Forget the 2 million people that we've defrauded. Mostly 
we're doing okay.
    And so I see size and complexity being a great problem. 
When you can't see 5,300 people being terminated, when you 
can't see $10.8 billion in settlements, then you've got a 
problem in size and complexity. And I would say that 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 any time. I, sir, 
think you ought to submit a resignation, and your board cannot 
hold off action on that.
    Thank you. I yield back.
    Mr.  Stumpf. Mr. Chairman, may I just make a comment about 
that?
    Chairman  Hensarling. The witness may comment.
    Mr.  Stumpf. We did take accountability. We did invest in 
things to help reduce this, and we saw the numbers coming down.
    Mr.  Pearce. The problems continued, sir. The problems 
continued right on through your actions. In 2011, you did this; 
in 2013, you did that; and the problems continued.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Texas, Mr. 
Green, ranking member of our 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 in a growth mode by virtue of the new 
products you were having with your customers. You had customers 
who 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 got 
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 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.
    And what do I mean by a 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 Oversight and Investigations Subcommittee other 
CEOs, top-level executives, and let them tell us. And I think 
that 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--
    Mr.  Green. If you would, I'm going to have to intercede. I 
have to intercede, because I'm asking you about the industry 
now.
    Mr.  Stumpf. I have no idea.
    Mr.  Green. You have no idea as to how pervasive the 
product is?
    Mr.  Stumpf. I don't know what other companies use.
    Mr.  Green. Well, are they using cross-selling? Are you 
saying you have no belief or no idea that other companies are 
cross-selling?
    Mr.  Stumpf. I do not have that.
    Mr.  Green. I must tell you, I cannot believe your answer. 
You're telling me that you have no idea as to whether or not 
they even engage in cross-selling?
    Mr.  Stumpf. I don't know their performance management.
    Mr.  Green. Well, do you know that 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. I don't know their 
situations. I'm honestly--
    Mr.  Green. You don't talk to your colleagues? You don't 
talk to other bankers? You have no idea as to whether they 
engage in cross-selling?
    Mr.  Stumpf. I don't know what they use.
    Mr.  Green. Well, listen, I thank you for your answer--let 
me finish.
    Because, Mr. Chairman, this is the evidence that 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.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Florida, Mr. 
Posey.
    Mr.  Posey. Thank you, Mr. Chairman.
    Mr. Stumpf, members of this committee have already 
expressed the 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 comfort the customers or 
adequately compensate them.
    At best, at the very best, you and our Federal regulators 
were asleep at the switch. At worst, it's almost, if not, 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 understanding 
what caused and what perpetrated the unprecedented level of 
fraud. And I have just a couple of questions that I think will 
help drive us in that direction to understand it.
    First, Mr. Stumpf, I understand that 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 were part of their performance management, along with 
customer service, customer loyalty, doing things right. But, 
again, as of this Friday, we're getting rid of those goals.
    Mr.  Posey. Okay. I've read a range of reports that put the 
sales goals somewhere between eight to five new sales each day, 
compared to the reported industry standard of three to five per 
day.
    Briefly, I was going to ask you if you could give us an 
idea of how the goals were determined?
    Mr.  Stumpf. Within our business. I wasn't part of that 
process. And I don't know if that's an--you made reference to 
an industry standard and what ours is. I wouldn't have 
specific--
    Mr.  Posey. Okay.
    Mr.  Stumpf. I can try to get back to you on that.
    Mr.  Posey. Are you aware if the expected targets vary 
between bank branches of different size, location, or 
constituencies?
    Mr.  Stumpf. I believe that is the case, yes.
    Mr.  Posey. You think they did.
    Mr.  Stumpf. I believe that was--I don't know when that was 
introduced, but I believe in the past, at locations that would 
have more activity, we'd either have more bankers or more--
    Mr.  Posey. Thank you--thank you for the straight answer.
    Mr.  Stumpf. Okay.
    Mr.  Posey. As a followup, did the bonuses associated with 
those goals vary between those branches or did 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. Okay.
    Now, so far in the investigation of 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. Yes, first of all, I am--and I don't know--I'm 
not trying to be careful on words here. I don't know what 
``fraud'' exactly--I know what's right and I know what's wrong, 
and I don't know what the intent of all these people were.
    But, to answer your question specifically, there was no, 
that I understand, racial or ethnicity difference other than 
what the communities are, because we try to have--
    Mr.  Posey. All right. Okay.
    Mr.  Stumpf. --people in our banks who represent the 
communities.
    Mr.  Posey. All right. So 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 purposefully targeted as a result of employees 
stretching to meet their sales goals?
    Mr.  Stumpf. In fact, we've looked at--because we actually 
capture date of birth, so we could tell that. And for deposit 
accounts, no, there was no disproportionate--it did not--in 
fact, it was younger people, not seniors, if there was any 
emphasis at all or any--
    Mr.  Posey. Okay.
    Mr.  Stumpf. Yes.
    Mr.  Posey. To be clear, I don't think sales goals are 
inherently evil. Anyone who has owned 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 that this misguided idea of 
success that puts actual customers in the category of least 
concern is perpetrated by more than just Wells Fargo, by the 
way. To the best of your knowledge, was this practice of 
creating fake accounts exclusive to Wells Fargo?
    Mr.  Stumpf. Again, I don't know. And I only know what I 
know about our company.
    But I'd also like to make--if I just, in your few seconds 
left. The investment--the reason people buy Wells Fargo and 
invest in us is our--is a whole lot more. It's about our broad 
product model. It's about our--
    Mr.  Posey. Let me ask just one quick--
    Mr.  Stumpf. --distribution in the United States, about 
our--
    Mr.  Posey. --question with my time. 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've worked with the CFPB. We have made an 
agreement with them, and we're going to continue to work with 
them on this issue.
    Mr.  Posey. But any action that they've taken 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 Housing and Insurance 
Subcommittee.
    Mr.  Cleaver. Thank you, Mr. Chairman.
    Mr. Stumpf, thank you for being here. I know you're not--
this is not one of your better days, but hopefully you 
understand--I have a plane to catch. I may not finish my time. 
And 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 ``Kumbaya'' and fix the problem.
    One of the reasons that everybody in this place is upset is 
that 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--Gordon Gekko: Greed is good, greed is 
right, greed works--from the movie, ``Wall Street.'' And I 
think that's one of the problems we have here.
    Now, you've already been ``Warren'd'' before I had my 
opportunity, so I'm not going to ``Warren'' 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. There 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 are 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 and took advantage 
of our customers, they will be held accountable. And we've 
returned that money with interest with an apology.
    Mr.  Cleaver. Yes, I know, but I'm trying to find out how 
far up the chain have you determined, thus far, that the scheme 
went.
    Mr.  Stumpf. Well, first of all, it was--most of our people 
do it right, and this was just the opposite of what we train 
for, just the opposite of what we talked about. So when--
    Mr.  Cleaver. I think--
    Mr.  Stumpf. --they say it's a scheme,--again, it's 1 
percent of our people. And I know that's a lot of people, given 
the size of our company, but--and we'll do a full review, and 
we're going to do a review of that.
    Mr.  Cleaver. God bless you, but 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 of the company and make sure 
everybody is held accountable.
    Mr.  Cleaver. Okay, so--okay. Thank you. I appreciate that.
    Mr.  Stumpf. Thank you.
    Mr.  Cleaver. Now, how far up the chain?
    Mr.  Stumpf. So far, of the people that we have found, it 
is branch managers, their manager in some cases, and a manager 
of a manager. So that's the work we've done so far.
    Mr.  Cleaver. So the manager of a manager would be what, a 
vice president?
    Mr.  Stumpf. Yes, I don't know exactly the title, but I 
think it was called an area president.
    Mr.  Cleaver. Area?
    Mr.  Stumpf. Yes, I think it was area president.
    Mr.  Cleaver. Okay. So have any of those folks been fired?
    Mr.  Stumpf. Pardon me?
    Mr.  Cleaver. Have any of them been fired?
    Mr.  Stumpf. Yes
    Mr.  Cleaver. All the vice presidents?
    Mr.  Stumpf. Well, I don't know--again, I don't know if 
this person was a vice president. I don't know what the title 
was. But I know it was banker, then branch manager, manager of 
the branch managers--I think they're called district--and then 
an area manager.
    Mr.  Cleaver. So, no matter how high it goes, they're going 
to be fired.
    Mr.  Stumpf. They're going to be held accountable. I can't 
say what--
    Mr.  Cleaver. Okay.
    Mr.  Stumpf. I don't want to prejudge the--
    Mr.  Cleaver. No, I understand. I understand. So, no matter 
how far it goes up, though, they're going to be fired.
    Mr.  Stumpf. As far as they go up, they're going to be held 
accountable, whatever that means.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    Mr.  Cleaver. That's why everybody's beating you up.
    Mr.  Stumpf. Pardon me?
    Chairman  Hensarling. 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. And I, like probably most of my 
colleagues here, have received letters from your customers, 
from our constituents, from former employees of the bank. And 
they have a lot of questions of their own, 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've been asked many times already today, 
and last week in the Senate, about when you first heard of this 
situation, this so-called situation with your customer 
accounts. And you've given us approximate dates, which we 
appreciate.
    But, 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? The first moment.
    Mr.  Stumpf. Okay. So I'll answer your question, and thank 
you for that.
    I've always known, as I think most Americans know, that not 
everybody will do everything right every day. And we have 
100,000 different people in this retail banking business. So we 
knew and I knew that this had to be managed, and it was being 
managed in the business.
    Sometime later in 2013, before the L.A. Times story came 
out--because that did not surprise me, because I had heard that 
we were seeing an acceleration of this activity in a certain 
marketplace. And I can't recall if my chief legal counsel told 
me. I can't remember if it was in a meeting with the business 
leader at the time or compliance. And 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--or 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've learned earlier. We 
should have--we did--
    Mr.  Fitzpatrick. Mr. Stumpf, you're not answering the 
question.
    Mr.  Stumpf. I'm trying--
    Mr.  Fitzpatrick. When you first heard, where were you, who 
told you, and what did you do about it? When you first heard.
    Mr.  Stumpf. Again, I don't remember where I was sitting, 
what I was doing, where I--but I recall hearing it sometime in 
the summer/fall timeframe of 2013. I can't--I don't remember 
the exact minute or the person.
    Mr.  Fitzpatrick. Mr. Stumpf, there have been so many 
people who've been hurt by what we know right now, not just 
your customers you're going to lose--
    Mr.  Stumpf. Correct.
    Mr.  Fitzpatrick. --many customers. You'll never get them 
back. There have been lower-level and mid-level employees 
who've been injured. You mentioned earlier in your testimony, 
268,000 people went to work today--
    Mr.  Stumpf. Correct.
    Mr.  Fitzpatrick. --in Wells Fargo to do the right thing, 
and, for the most part, we all believe that. You also 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 perhaps right out of high 
school or right out of college--
    Mr.  Stumpf. Correct.
    Mr.  Fitzpatrick. --we have special responsibility to that 
employee to train them, to make sure that they're being trained 
in the ways of ethics in banking. How many of those lower-level 
employees who were part of the 5,500 who lost their jobs?
    Mr.  Stumpf. Yes, the vast majority--and I don't have exact 
numbers, but I believe about 7 percent or so would've been at 
the teller population, and the remainder, the other 93 percent 
were someplace--and that's my understanding--were banker, 
senior banker, branch manager, and so forth.
    And, incidentally, we do give 2 weeks of training for all 
of our team members before they go out into the--because you're 
right, we have a special responsibility to help them understand 
our culture. They sign a code of ethics, and we--
    Mr.  Fitzpatrick. Are they being told in those employee 
trainings about the so-called goals, quotas?
    Mr.  Stumpf. They're told about all the responsibility of 
their job, including--I've done townhalls, which I do every 
quarter. I did one in Philadelphia just a couple of months ago. 
And I've been talking in every one of those--generally, I talk 
about doing the right thing, putting customers first, ethics.
    Mr.  Fitzpatrick. Mr. Stumpf, there have been reports from 
multiple whistleblowers from the bank that they provided 
information up the chain of command and were ignored. As a 
matter of fact, some of them 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.  Fitzpatrick. Being fired in the Federal Government for 
being a whistleblower is a very serious matter. Hopefully, 
you're taking it as seriously as anybody else would?
    Mr.  Stumpf. We're taking that very seriously. We have a 
nonretaliation policy.
    Chairman  Hensarling. The 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. Thank you so much, Mr. Chairman.
    And I want to welcome our witness here today. I've learned 
so much here. And I know when you go to the Wells Fargo 
website, there your picture is, John G. Stumpf, the vision and 
values of Wells Fargo. And it features you.
    You said that you started in Wells Fargo in 1981?
    Mr.  Stumpf. 1982.
    Ms.  Moore. In 1982. Okay. My math is not that good. And 
you succeeded Mr. Kovacevich. And they had already started a--
so you were trained, and you knew what the culture of this 
Norwest company--I guess there was a merger of Wells Fargo and 
Norwest.
    And so did you receive training or do you know if the 
employees received training on this Going for Great program 
that we've 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. Yes, thank you for the question.
    As I mentioned before, that was an aspirational goal. Most 
of our customers have--most households have 14--
    Ms.  Moore. All right. Okay. Because I don't have much 
time.
    Mr.  Stumpf. Okay.
    Ms.  Moore. And so, as your predecessor noted, there is 
just abundant growth potential in the Wells Fargo customer base 
and that one of the sayings around that place was, ``Hey, we 
inspect what we expect.'' Were there constant monitorings to 
see if people were meeting these goals? That was--it said, ``We 
inspect what we expect.'' What does that statement mean?
    Mr.  Stumpf. Yes, that statement means that we expect our 
people to live according to our vision and our values, our 
ethics, and our culture. And if they don't--
    Ms.  Moore. Well, good. 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 in the old wagon train days. So I'm happy that you got 
rid of those employees. And I am sorry for your loss of your 
$41 million, and 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. I have her letter, and I ask unanimous consent to 
enter it into the record. She worked at Wells Fargo--
    Mr.  Fitzpatrick [presiding]. Without objection, it is so 
ordered.
    Ms.  Moore. Okay. Thank you.
    She started making $13 an hour, and she ended making $15 an 
hour. And she was one of those whistleblowers who complained to 
the manager, and then they changed her performance numbers and 
pushed her out. And so she's a person who kind of lost her job 
and other stuff that happens to you when you make $13 an hour--
$15 an hour, I'm 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 was it, $12-an-hour, $13-
an-hour employees? What is the remedy for my constituent at 
Wells Fargo? I know--
    Mr.  Stumpf. We want to know about everyone, and we're 
going to review their files for anyone who had anything to do--
if they were--
    Ms.  Moore. It says she has a case with the Wisconsin Equal 
Rights Division. How come she couldn't just come to you and 
tell you--
    Mr.  Stumpf. And we have people that she can talk to.
    Ms.  Moore. No. The people she talked to fired her.
    Mr.  Stumpf. We have corporate resources here. If you could 
give me that name, Congresswoman, I'll let our people know--
    Ms.  Moore. Okay. I want to ask a question. I have 49 
seconds.
    I was very disturbed to hear about--you said that the 
numbers were just not large enough to rise to the level of 
being material for security law purposes. I guess I don't 
really understand that.
    Would you, as an investor, invest in, sort of, the Bernie 
Madoff-type enterprise, it just seems like it was, these huge 
dividends? Would you make this kind of investment yourself?
    Mr.  Stumpf. This is not any--this is a quality company 
that made some mistakes, but our investment thesis is all about 
our capital, our growth, our--
    Ms.  Moore. I have 9 seconds left, and I just want to ask 
this one question.
    You have stated previously that you think the Dodd-Frank 
Act overregulates. Do you still believe that?
    Mr.  Stumpf. I have never said that.
    Ms.  Moore. Oh, really?
    Mr.  Stumpf. I don't recall saying that
    Chairman  Hensarling. The time of the gentlelady has 
expired.
    Ms.  Moore. Thank you so much, Mr. Chairman.
    Chairman  Hensarling. The Chair now recognizes the 
gentleman from Indiana, Mr. Stutzman.
    Mr.  Stutzman. Thank you, Mr. Chairman.
    And, Mr. Stumpf, I got my first loan from Norwest bank for 
a motorcycle when I was 20 years old, and I've been a happy 
customer of Wells Fargo for over 20 years.
    Mr.  Stumpf. Thank you.
    Mr.  Stutzman. And I have been frustrated with Wells Fargo 
as of late because of the new website. And I've voiced that. 
And I think part of this--I think you need to do something 
about it, because the transparency in the website right now, I 
can't find some of my accounts.
    And 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--you know, and I--your story 
is remarkable. You came from a dairy farm, I believe, in 
Minnesota.
    Mr.  Stumpf. Correct.
    Mr.  Stutzman. And if you'd have 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'd 
have taken a different path, a dairy farmer in Minnesota, and 
you have been trying to buy land and you were trying to buy 
some more cows. And you realize that your credit score, 
something is wrong with it, and you have not been able to get 
your credit score. But all of a sudden you find out that maybe 
your credit score was dinged because your bank was opening 
accounts.
    When accounts are opened, it dings your credit score, 
correct?
    Mr.  Stumpf. That is correct.
    Mr.  Stutzman. That's right. So 2 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 were about 565,000 
consumer credit cards, which we already now have contacted 
20,000 of those, and less than 25 percent saying--and I don't 
want to minimize the numbers. These are still big numbers. Even 
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 just watch a 
little bit ago. When Mr. Cleaver was asking you what was the 
highest-level officer at Wells Fargo to be fired and you didn't 
really know. You kind of said area manager--
    Mr.  Stumpf. I know that--excuse me. 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 it's a branch manager's manager's manager. 
And we're also not done with our investigation.
    Mr.  Stutzman. I understand. But this broke for the public 
within the past month. You apparently knew about it, what, in 
2012? In 2013?
    Mr.  Stumpf. We knew that not everyone does it right. It 
was sometime in 2015 we did our PwC study, and those results 
came in early in 2016.
    Mr.  Stutzman. But you're the CEO. When 939 employees are 
fired for improper sales in 2011, in 2012 another 1,000, all 
you have to do is stand up in front of your company--and I know 
it's a large company--and say, ``This is going to stop,'' and 
it should have--it should be stopping.
    I'm curious to hear from employees who were fired what 
their experience was, and 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. And 
we do a lot of areas really, really well, like model risk and 
market risk and capital liquidity. We know we have work to do 
in operational and compliance risk. We should have invested 
more.
    Today I've told our folks, no stone unturned, no dollar 
unspent, get this right. And we're getting rid of sales goals.
    Mr.  Stutzman. I know you said that today, but where was 
the outrage from you a couple of years ago when you first heard 
about it?
    Mr.  Stumpf. We were--
    Mr.  Stutzman. 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, her name is Ms. Tolstedt, I believe, 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. And 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 who were embedded at Wells 
Fargo bank?
    Mr.  Stumpf. I can talk to our team, and we'll be as 
cooperative as we can. I don't know whether that's covered 
under confidential supervisory information, but I'll be as 
helpful as I can be on that issue.
    Mr.  Stutzman. Please do that. I think that, not only have 
you and Wells Fargo let customers down, but so has the CFPB, 
and people across this country are mad at both.
    Mr.  Stumpf. Thank you.
    Mr.  Stutzman. Thank you, Mr. Chairman. I yield back.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Minnesota, Mr. 
Ellison.
    Mr.  Ellison. Mr. Chairman, I ask for unanimous consent to 
enter into the record a report entitled, ``Banking on the Hard 
Sell: Low Wages and Aggressive Sales Metrics Put Bank Workers 
and Customers at Risk.''
    Chairman  Hensarling. Without objection, it is so ordered.
    Mr.  Ellison. I would also like to enter into the record an 
op-ed I wrote in The Daily Beast just the other day entitled, 
``John Stumpf's Wells Fargo Racket Shows Why Bank Workers Need 
a Union.''
    Chairman  Hensarling. Without objection, it is so ordered.
    Mr.  Ellison. And I would also just like to note for my 
colleagues, the Progressive Caucus held a June 10th briefing, 
listening to the workers that we've been talking about today. 
We'd be happy to do another one. But on June 10th, we had 
workers come in and testify to the very thing that we've been 
talking about today, which is these high-pressure sales 
techniques.
    Mr. Stumpf, if you're a worker at Wells Fargo, you are 
expected to seek out and reach sales goals. You mentioned that, 
right?
    Mr.  Stumpf. We had sales goals and--
    Mr.  Ellison. That's a yes or no, sir.
    Mr.  Stumpf. Yes--
    Mr.  Ellison. Yes or no, sir, because I don't have a lot of 
time. I'm not trying to be unkind to you, but I'm not going to 
let you waste my time. Okay, so yes or no?
    Mr.  Stumpf. Yes, we had sales goals.
    Mr.  Ellison. Okay. Thank you.
    So 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 of detail.
    Mr.  Ellison. Okay, so you don't know whether there were 
prospecting calls?
    Mr.  Stumpf. I don't know.
    Mr.  Ellison. Would you be surprised--do you deny that 
there were prospecting calls?
    Mr.  Stumpf. I do not know that level of detail in our 
retail bank.
    Mr.  Ellison. Were you aware that each banker was expected 
to make at least 100 prospecting calls a day? Are you aware of 
that?
    Mr.  Stumpf. That--I'd had--that's the first time I've ever 
heard that.
    Mr.  Ellison. Mr. CEO/Chairman, are you aware that there 
were weekly meetings held by--no, morning huddles to talk about 
these sales goals? Are you aware of that?
    Mr.  Stumpf. I realize--I know that some--
    Mr.  Ellison. You've got to answer yes or no, sir.
    Mr.  Stumpf. But it's yes with an explanation.
    Mr.  Ellison. Well, okay. So morning huddles or not, yes or 
no, did they occur?
    Mr.  Stumpf. Yes, with an explanation.
    Mr.  Ellison. All right. 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, sir.
    Mr.  Ellison. Home equity loans, were they given goals in--
    Mr.  Stumpf. I don't know that. I don't know that every 
branch held a morning huddle. I know our team works together.
    Mr.  Ellison. Was there publishing of charts on who sold 
how many products in your bank?
    Mr.  Stumpf. That's a level I do not know that detail.
    Mr.  Ellison. Was there publishing of charts on who did not 
make their sales goals?
    Mr.  Stumpf. Again, I don't have that level of detail.
    Mr.  Ellison. Workers say that there were.
    Mr.  Stumpf. Okay.
    Mr.  Ellison. Now, 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 they did not--
    Mr.  Stumpf. And we got rid of sales goals now.
    Mr.  Ellison. Excuse me. If they did not--if workers did 
not meet second sales goals again, were they given second 
warnings?
    Mr.  Stumpf. I don't know that level of detail.
    Mr.  Ellison. Okay. If they were not given second warnings, 
were they written up, given written admonishments for not 
making sales goals?
    Mr.  Stumpf. Congressman, you're asking a question I can't 
answer.
    Mr.  Ellison. Okay. So, yes, you're the CEO and you don't 
know this.
    And were they given performance improvement plans if they 
did not make sales goals?
    Mr.  Stumpf. Congressman, I don't know that level of 
detail.
    Mr.  Ellison. All right.
    And how do you generate these lists for workers to have to 
make calls? How were the lists generated?
    Mr.  Stumpf. Congressman, I don't know if there were lists. 
I just don't know that level of detail.
    Mr.  Ellison. Okay. So you're the CEO, and you don't know 
if there were sales--if there were prospecting lists that each 
worker was made to make cold calls on.
    Mr.  Stumpf. I don't know that level of detail, 
Congressman.
    Mr.  Ellison. Okay.
    And if sales weren't important, why were workers given 
credit card and home equity loan goals to meet?
    Mr.  Stumpf. Yes, I don't know what their goals were. We 
want to deepen--
    Mr.  Ellison. Why did you--
    Mr.  Stumpf. --relationships.
    Mr.  Ellison. Why were workers encouraged to open numerous 
accounts for customers?
    Mr.  Stumpf. Our team members are encouraged to sit down 
with a customer, talk about their financial dreams, and help 
provide the right products and services.
    Mr.  Ellison. So if a worker got a person to open up an 
account, isn't it true that account--let's say a debit 
account--that there has to be a certain minimum balance in that 
account and there is a fee to hold that account if there's not 
the minimum balance met? Am I right about that?
    Mr.  Stumpf. I don't believe you are right about that, 
Congressman.
    Mr.  Ellison. If there's an account--
    Mr.  Stumpf. I don't believe that's correct.
    Mr.  Ellison. If there's 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 to avoid--to not have 
a fee.
    Mr.  Ellison. And if it's not met, is there a fee 
associated with that?
    Mr.  Stumpf. I believe there's a minimum balance--
    Mr.  Ellison. What is that fee? What is the minimum balance 
fee?
    Mr.  Stumpf. I don't know what those numbers are.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from South Carolina, 
Mr. Mulvaney.
    Mr.  Mulvaney. Thank you, Mr. 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 
spends every single day in here defending the banking system, 
defending capitalism, and defending free markets, to have to 
sit here and watch you essentially validate everything that the 
other side has said about you and your business and your 
industry, I don't know, 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 that you've done to your own business. But, again, 
there's nothing I can do about that.
    I want to ask you, I think, just one question. I know a 
little bit about business, not nearly as much as you do. What 
little I do know I didn't learn from college or business 
school, I learned from my dad, who was actually raised very 
similar to you. He was from Minnesota, born to a lower-middle-
class family, went to Winona University.
    He was a little bit older than you, but not much. And I 
remember him telling me one time when I was first getting into 
business, he said, 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.
    And if you walk into somebody's--you walk into a lobby and 
you're received nicely by the young man who's sitting there 
answering phones, it's probably a really good indication that 
the lady who owns the place is a really good person. 
Conversely, if you walk in and you get treated like crap and 
with disdain, it probably says a lot about the people at the 
top of the chain.
    I happen to think that the folks who work with me in my 
office reflect that. You come into my office, you get treated 
well, because that's important to me. The place that you ran, 
Mr. Stumpf--and I don't know that much about Wells. I knew a 
little bit about Wachovia and Wells--First Union because of 
where I grew up. You all were rotten.
    We've heard some stories today that everybody's heard 
about. I'm sitting here looking at the story from 2009 about 
the lawsuit that got filed. It says: Wells Fargo, Ms. Jacobson 
said in an interview--this is The New York Times--saw the Black 
community as fertile ground for subprime mortgages, as working-
class Blacks were hungry to be part of the Nation's home-owning 
mania. Loan officers, she said in an affidavit, 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--that you all targeted Black churches. 
I'm not going to defend that. That doesn't even deserve a 
defense.
    I'm going to ask you one question. Does this organization 
reflect you?
    Mr.  Stumpf. Well, I--
    Mr.  Mulvaney. You're in charge.
    Mr.  Stumpf. I am deeply sorry, and I've read that article 
you just said, and that has no place in our culture, no place 
in what we've done. And we are today the largest lender to low- 
and moderate-income people on housing. We make more loans to 
African-Americans, Latinos, persons of color, and we're proud 
of that.
    And that place--and that kind of language and that kind of 
behavior is not who I am. I've learned my life lessons, also, 
from my parents. My dad is 94, and he's still a wonderful guy 
and is still a big influence on our life, and so is my mother. 
And 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've made mistakes. 
Not everybody lives up to our vision and values. But the vision 
and values our 268,000 people aspire to and do every day is 
consistent with what I want to live my life and what our 
culture is of our company.
    Mr.  Mulvaney. Thank you, Mr. Stumpf. I appreciate that.
    For the minute I have left, I want to say something to my 
Democrat colleague, who I know will see this and, believe me, 
if the roles were reversed, I might see this as an opportunity 
to try to push a political initiative, a political 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 since the 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 Mr. Stumpf is 
a bad person or not. That's not up to me. I'm trying not to be 
in the position of judging other people. That's for his board. 
I know how I would vote if I were on the board. In fact, he 
wouldn't even 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 level-headedness 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. Chairman, I ask unanimous 
consent to introduce into the record the community banking 
reports from May 24, 2016, from Wells Fargo--
    Chairman  Hensarling. Without objection, it is so ordered.
    Mr.  Perlmutter. --and the report from May 20, 2014.
    Chairman  Hensarling. Without objection, it is so ordered.
    Mr.  Perlmutter. Mr. Stumpf, about 8 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 you guys operated as a 
bank and really looked after me, a customer, somebody who has 
been with the bank. Look at these young guys--I've been with 
one of the predecessor banks for 40 years.
    Mr.  Stumpf. Thank you.
    Mr.  Perlmutter. 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.
    Mr.  Stumpf. Right.
    Mr.  Perlmutter. And I've 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've never, ever in my life referred to my 
branch bank in Applewood, Colorado, as a store. You don't sell 
Veg-O-Matics. You don't sell grapefruit. You take people's 
money, you safeguard it, and you lend it out to people who may 
need it for interest, maybe me.
    And to get into--this is where Mr. Green was going with the 
products. I don't know how many products you have. 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, the great eight--
    Mr.  Stumpf. Thank you.
    Mr.  Perlmutter. --I 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 are 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 services that 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 is the hearts and minds of our people who are 
inside there. And--
    Mr.  Perlmutter. And I'll accept that. But I still think 
you're a bank. And we treat--
    Mr.  Stumpf. We are a bank.
    Mr.  Perlmutter. --banks differently than we treat grocery 
stores, because you're the heart of the financial system.
    Mr.  Stumpf. And--
    Mr.  Perlmutter. But here's where I want to go. So I go 
into my bank, and there has been some turnover there. They 
always treat me well. They're always very nice young people. 
Sometimes they're saying, do you need this, do you need that. I 
generally am saying no.
    When you talk about these goals that are established, why 
are you even setting goals? The goal should be, if your 
customer needs something, try to help them.
    Mr.  Stumpf. Correct. We're getting rid of product sales 
goals and the goal--
    Mr.  Perlmutter. But why did you have the goals in the 
first place?
    Mr.  Stumpf. Well, it was an idea that--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 to have people in 
our branches or our banks to be apathetic and just not care 
when people came in. I want them to sit down and have a 
conversation about where that customer is on their financial 
journey so they can meet a need with a product. And when it 
works well and it deepens relationships, everyone wins.
    No one should ever, whatever the goals are, be forcing a 
product or saying why don't you do this or why didn't you buy 
this. That's not the way we train. That's not the way we incent 
for. But even today, we have taken that off the table, because 
we're learning that customers grow with us when they're happy, 
when they're satisfied. And our satisfaction scores and our 
loyalty scores have never been higher. That's a better way of 
doing business.
    Mr.  Perlmutter. All right. And I--look, I'm just up here 
as a Member of Congress who has worked with banks before, but 
I'm just telling you, you have to stop saying, ``Our stores 
generate more deposits than our competitors.'' You have Denver 
up here on your chart. That creates the wrong culture.
    Mr.  Stumpf. Okay.
    Mr.  Perlmutter. And I yield back.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from North Carolina, 
Mr. Pittenger.
    Mr.  Pittenger. Thank you, Mr. Chairman.
    Mr. Stumpf, good afternoon.
    Mr.  Stumpf. Good afternoon.
    Mr.  Pittenger. Mr. Stumpf, I'm from Charlotte.
    Mr.  Stumpf. Okay, great. We love Charlotte.
    Mr.  Pittenger. Well, you have a very major presence in our 
community. I think there are some 23,600 employees who work 
there.
    Mr.  Stumpf. Correct.
    Mr.  Pittenger. 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've done in our community. You take active roles, your 
employees do, in many nonprofit organizations. And that 
leadership is commended. And, 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'd have done this, what 
differences could I have made? Where was I blindsided, what 
mistakes? Where did I err?
    And so I think--I'm asking you to look at it as if you were 
sitting in our seat. We represent these people, as was said 
earlier, some 750,000 to 800,000-plus people. And you heard a 
lot of outrage, a lot of righteous indignation because we 
haven't seen what we've all expected.
    In the South Park Wells Fargo facility that you have, there 
is written behind the teller station, the counter, a statement 
by Mr. Wells. It came from, I believe, 1864. Do you recall that 
statement? I think it's very prominent and perhaps it is in 
other Wells Fargos. It seems to be the motto of your bank.
    Mr.  Stumpf. Are you asking me a question?
    Mr.  Pittenger. Yes, sir.
    Mr.  Stumpf. Yes, I don't--he's made a lot of statements, 
but ``treat every customer with respect,'' and I can't recall--
    Mr.  Pittenger. Well, what we have there at the South Park, 
it says, ``We have one very powerful business rule. It is 
concentrated in one word: courtesy.''
    So I think, as you look at all of--there's a lot embedded 
in that word, ``courtesy,'' but I think that's the challenge we 
have today. What could have been done differently? Certainly, 
the regulators were there, yet this was reported by a news 
agency.
    What would you have done differently today? As you look 
back on the changes and the mistakes that were made, as the 
CEO, 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. Yes, I think it's a good question. I've 
probably asked myself that a thousand times, a million times. 
And while I want to defend our culture and our people, I 
recognize that we could've done more earlier. And I don't know 
that there's 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 this 
case, with 1 percent of our team, it's way too much. It's 
simply not worth it. And, frankly, it's not even consistent 
with where we're going, given the business today.
    So, I don't know if I can be clearer than that. And there's 
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 at--we want, always, customers to be the foremost of 
what we do.
    And if ``courtesy'' is 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 of a small bank, but we understood the customer, we 
understood the importance of the financial industry and what it 
does to facilitate economic growth. And that's why we're so 
challenged today, because we see there has been a strangling of 
regulations on the financial industry.
    And 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 oppressive 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, like Congressman Lucas' 
concerns, troubles me, which is kind of the focus on culture 
and the materiality of what happened here.
    We're hearing that there's not a problem with the culture, 
and you're hearing an awful lot of disagreement up here. And 
we're hearing, certainly in the Senate hearing, that this 
wasn't material.
    And I guess if you, sort of, exquisitely, finely define 
materiality by the way maybe the FCC defines it, maybe $185 
million in fines is not material, but this is about much more 
than a legal definition of materiality. And we need to hear you 
say that you understand the magnitude of what has occurred 
here.
    It's more than $185 million; it's about the trust and the 
faith and the belief in the system. It's not about the ups and 
downs of one company. It's about people's faith in the banking 
system. It's about their faith in the market economy. It's 
about whether competition is perceived as a good thing by the 
American public or a bad thing. This is really about people's 
faith in organizations like yours and like the one that you're 
testifying in front of today.
    But let me start with the numbers quickly here. What 
matters to an investor, of course, is the value of the company 
they own. And your shareholders have already paid out $185 
million, including, by the way, the State of Connecticut's 
pension fund.
    Mr. Stumpf, do you know what the market cap, the value of 
your company is today?
    Mr.  Stumpf. I didn't look this morning, but I think it's 
$220 billion or $230 billion--
    Mr.  Himes. $228 billion.
    Mr.  Stumpf. I was--
    Mr.  Himes. On September 7th, when this all started, it was 
$253 billion. And there has been no other material impact, so 
just this event has cut $25 billion off of the value of Wells 
Fargo. That's a big number.
    Do you know what the value of Ford Motor Company is, Mr. 
Stumpf?
    Mr.  Stumpf. I do not follow Ford.
    Mr.  Himes. $50 billion. So 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. Congressman, I take this as much more than 
$185 million in fines. I don't want to diminish this. I am 
deeply sorry that we didn't do the right thing. And I 
understand that re-earning the trust of our customers and the 
American people is going to be our biggest challenge.
    Mr.  Himes. I appreciate that. And I do want to get away 
from the numbers, because, again, I'm troubled by this whole 
culture thing.
    Do you think that you can fully measure Wells Fargo's value 
with the hard assets, the dollars and cents, the number of 
accounts?
    Let me ask it another way. Are intangible things, like 
Wells Fargo's reputation and brand, an important part of the 
company's value?
    Mr.  Stumpf. There's no question. I think the most 
important--
    Mr.  Himes. So, yes. The answer is yes. Do you believe that 
Wells Fargo--
    Mr.  Stumpf. With an explanation, though, if I may.
    Mr.  Himes. Yes, okay. Go ahead.
    Mr.  Stumpf. 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, because 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 has been damage, yes.
    Mr.  Himes. Okay. 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 right here?
    Mr.  Stumpf. I'm sorry, but I think it's--
    Mr.  Himes. It's a $1 bill. It's the almighty dollar.
    Mr.  Stumpf. Yes.
    Mr.  Himes. It's a piece of paper with some green ink on 
it.
    Mr.  Stumpf. Yes.
    Mr.  Himes. Does this thing have any intrinsic value? Can I 
eat it if I'm hungry? Can I use it to cut wood if I--
    Mr.  Stumpf. No.
    Mr.  Himes. Does it have any intrinsic value at all?
    Mr.  Stumpf. It represents a promise.
    Mr.  Himes. It's a promise.
    Mr.  Stumpf. Yes.
    Mr.  Himes. So 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. Is that not correct?
    Mr.  Stumpf. I totally agree with you, Congressman.
    Mr.  Himes. And can I not expand that point to the banking 
system? If Americans really started getting anxious about the 
fact that you don't have enough money in your banks on any 
given day to cover their deposits, we'd have a problem, 
wouldn't we?
    Mr.  Stumpf. There's no question about that.
    Mr.  Himes. And the only thing standing between us and this 
meaning 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. Congressman, 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 kind of 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've never said--oh, go ahead.
    Mr.  Himes. And 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. And I couldn't 
agree more. This is bigger than the $185 miilion in fines--in 
fact, I don't even think in those terms--regaining trust.
    Mr.  Himes. Thank you.
    I yield back, Mr. Chairman
    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've 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 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 
big-time. Placing one's money and wealth in the custody of an 
organization like Wells Fargo is one 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 OCC or the CFPB that first uncovered 
these deceptive sales practices that were taking place, but it 
was, in fact, the L.A. Times, the media, that first brought 
your company's shameful practices to light.
    And while it is the regulators' job to prosecute the 
banking institutions that break the law, it is our job, as 
Members of Congress, to prosecute the regulators who were, in 
fact, asleep at the wheel.
    From what we know--and there is a lot that 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.
    Mr. Stumpf, how many of your customers have been impacted 
by your fraudulent activities?
    Mr.  Stumpf. Well, I don't know--I know what the PwC 
numbers showed. It was--
    Mrs.  Wagner. What is that number?
    Mr.  Stumpf. It's--there were 2 million accounts that they 
could not rule out, and now we're going back and contacting 
those customers. Within our credit card business, as I 
mentioned, we've already talked to 20,000 of them and--
    Mrs.  Wagner. How many in Missouri, Mr. Stumpf?
    Mr.  Stumpf. I can get you that.
    Mrs.  Wagner. As 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 what--I don't have a timeline on 
that. I just know it was broken out by credit card versus--
    Mrs.  Wagner. So 2 million customers, you're going back, 
you're going to find out if there were more, and you don't have 
a timeline? You have a timeline for the employees that you 
fired year after year after year, but you have no timeline of 
the number of fraudulent accounts by year?
    Mr.  Stumpf. I don't--I can work on that and get that to 
you. I don't happen to have it in my book right now here for 
you.
    Mrs.  Wagner. You keep saying, sir, that you're going to 
make it right.
    Mr.  Stumpf. Correct
    Mrs.  Wagner. Those are your words. You're 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. Yes. Well, we're starting to work on that 
right now, and we've already talked to 20,000 of our customers, 
and we're hearing that 75 percent--or, less than 25 percent 
either didn't want the card or didn't know they had the card. 
And then we're going to--
    Mrs.  Wagner. 20,000 out of 2-million-plus customers? 
You're just getting started now?
    Mr.  Stumpf. No. The--
    Mrs.  Wagner. It took 5 years, sir, just to identify and 
begin rectifying the problem, and Wells Fargo only just 
announced their sales incentives will eliminate in October.
    Mr.  Stumpf. Ma'am, it just--
    Mrs.  Wagner. When will customers--will they have to wait 5 
years, sir, or longer in order to get relief?
    Mr.  Stumpf. The 20,000 we've talked so far is out of the 
565,000 consumer credit cards. Other ones did not have, from my 
understanding, a bureau involved. But we're going to talk to 
all of our customers. We're going to contact them all.
    Chairman  Hensarling. The time of the gentlelady has 
expired.
    Mrs.  Wagner. Thank you, Mr. Chairman.
    Chairman  Hensarling. The Chair now recognizes the 
gentleman from Delaware, Mr. Carney.
    Mr.  Carney. Mr. Stumpf, I represent the whole State of 
Delaware. It's over 900,000 people, one of the bigger districts 
here in the Congress. We are a banking center, as you may know. 
We don't have a huge Wells Fargo presence, but could you look 
in your book, please, and find out how many fraudulent accounts 
were attributed to people who live in the State of Delaware--
    Mr.  Stumpf. Okay.
    Mr.  Carney. --so I know what we're talking about?
    Mr.  Stumpf. I can tell you how many accounts that the PwC 
analysis could not rule out. These aren't, again--
    Mr.  Carney. And your commitment is to make it right for 
each of these accounts in some way?
    Mr.  Stumpf. That's exactly right. And in Delaware--let me 
see if I have this number right.
    Mr.  Carney. So while you're looking at it--
    Mr.  Stumpf. Yes, one hundred and--excuse me--4,255 
accounts.
    Mr.  Carney. So my responsibility is to make sure and your 
commitment is to make sure that each of those accounts will 
be--you will make right by those people.
    Mr.  Stumpf. We're going to contact every deposit account. 
We're going to talk to every credit card customer that we can 
make contact with. We'll try to contact all--in your district, 
or in your State, there looks like there's 1,793 cards. And, 
again, I don't know how many of those won't be wanted versus 
wanted. And we're going to look for the secondary harm.
    Mr.  Carney. Thank you very much.
    So part of our responsibility as Members of Congress in 
this hearing is to figure out what went wrong, whether people 
are being held accountable, and, most importantly, what we 
should be doing going forward.
    And the thing that I'm struggling with is how long this 
went on before you were able to stop it. You've heard that 
question on and on again.
    Mr.  Stumpf. Correct.
    Mr.  Carney. And it does for me, as Mr. Stutzman asked from 
the other side of the aisle--and, by the way, I agree with Mr. 
Capuano. There are very few issues in the 6 years that I've 
been there where both sides of the aisle are on the same page. 
When Mr. Meeks and Mr. Capuano and Mr. Posey and Mr. Duffy are 
outraged on the same subject, you know that something really is 
going on here.
    So 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. Yes. And I think this is a focused problem. We 
can get our arms around this, and we will. We have--
    Mr.  Carney. So 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 that were 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 surely get that.
    Mr.  Carney. I would appreciate it if you would. One of the 
things that I've worked on here--and I'm not going to be here 
after this next election--since coming is on mortgage finance 
reform. And entered into the record by Mr. Meeks was a list of 
Wells Fargo settlements by State and Federal regulators, and 
there's a whole list of these $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. Let me--regarding the mortgage--
    Mr.  Carney. Much more impactful on the economy, frankly, 
than these fraudulent accounts, although the fraudulent 
accounts are really important.
    Mr.  Stumpf. I don't want to minimize any of our mortgage 
settlements, but we are, by far, the largest mortgage 
originator. In fact--
    Mr.  Carney. Which is why I asked the question, right? If 
you have the level of fraud that was going on with Fannie Mae 
and Freddie Mac.
    Mr.  Stumpf. We've made settlements with a number of 
agencies, as other companies in our industry have. Our 
settlements have been--we've had far fewer issues, even though 
we're the largest mortgage originator--and I'd like to make 
this point--
    Mr.  Carney. The settlements were over warranties and 
representations made to Fannie and Freddie, which basically 
indicated the mortgages were what you said they were, correct?
    Mr.  Stumpf. I believe what you are referring to is an FHA 
issue that we settled in the last 6 months about--
    Mr.  Carney. That was $1.2 billion. The Fannie and Freddie 
settlements were $869 million to Freddie and $591 million to 
Fannie Mae. And essentially, as I understand these settlements, 
they're over information that was misrepresented to the GSEs.
    Mr.  Stumpf. I don't have that level of detail right now, 
but I know this: Since 2009, we've made 11 million mortgages in 
America to help people get lower rates or buy homes, and that 
has been very important to our customers.
    Mr.  Carney. With an institution that large and that 
difficult to manage, how do you make sure that these kinds of 
things don't happen on the mortgage side as well?
    Mr.  Stumpf. We have a terrific team on the mortgage side. 
We've done a lot of work to improve there, and we have great 
leaders in those businesses, and we're trying every day to get 
better.
    Mr.  Carney. Well, I'd like to have some additional 
information if you could provide it--my time has run out--on 
the basis of these settlements.
    Mr.  Stumpf. I will do whatever I can with our team to get 
back to you. Thank you.
    Mr.  Carney. Thank you.
    Mr.  Neugebauer. [presiding]. The time of the gentleman has 
expired.
    The gentlemen from Kentucky, Mr. Barr, is recognized for 5 
minutes.
    Mr.  Barr. Thank you.
    I share in my colleagues' outrage over the unethical and 
illegal sales practices at Wells Fargo, which opened up over 
1.5 million fake bank credit card and Web services accounts in 
the names of real customers, costing those consumers millions 
of dollars in fraudulent overdraft and inactivity fees, and 
potentially hurting their credit scores, through no fault of 
their own.
    And while Wells Fargo does not have a major retail presence 
in Kentucky, it's likely, it's very likely that many of my 
constituents in the 6th Congressional District in Central 
Kentucky were defrauded through Wells Fargo's credit card 
programs. And if you could reference your materials again, and 
identify the number of my constituents who may have been 
impacted.
    Mr.  Stumpf. Okay. Let me get that. And while I'm getting 
that, I'd like to make it clear that of the 1.5 million deposit 
accounts, very few, if any, had any credit impact. We didn't 
report that to the credit bureau. So we're really talking about 
credit cards here.
    Mr.  Barr. Potentially the accounts in Kentucky.
    Mr.  Stumpf. There were 629 accounts that could not be 
ruled out. We didn't know--
    Mr.  Barr. For those 600 of my potential constituents, 
you've testified today that what happened at your institution 
over the last several years was not consistent with your 
culture and ethics.
    Mr.  Stumpf. Correct.
    Mr.  Barr. But I have to think about those 600 Kentuckians.
    Mr.  Stumpf. No question.
    Mr.  Barr. And my constituents, who may have had an account 
opened without their knowledge, without their consent, middle-
income, hardworking Kentuckians. And that may have resulted in 
overdraft fees, inactivity fees, and it could very well have 
damaged their credit score, and, again, through no fault of 
theirs. So you've said that you want to make this right, but I 
would say that my constituents, who have been damaged by your 
conduct, would say that culture that allowed that to happen, 
that's a rotten culture.
    So, let's not lose focus on these victims. Let's not lose 
focus on those defrauded Wells Fargo customers. And you said 
your bank will make this right for your customers, and this 
committee's job is to hold you accountable to make this right. 
So will you commit to me--and we all have caseworkers and it 
won't surprise me at all if we get a call from a customer who 
has been wronged.
    Will you commit to me, and your government relations team 
commit to me, on the record, that you will work with us and our 
constituents to make this fully right for them?
    Mr.  Stumpf. Yes. So let me just--the answer is yes with an 
explanation. We are committed to making it right for every 
single one of our customers. In fact, we are working with--
we're going to have a consultant that the CFPB has to approve. 
We're going to have mediation. We're going to go back--and I'm 
interested in results. I'm not interested in--I'll have our 
team work with your team.
    Mr.  Barr. I appreciate that, because clearly, there was a 
lot that went on wrong with your bank. No one did enough. No 
one did enough fast enough to fix it.
    Secondly, I want to tell you who I also think about in 
addition to those constituents who have been harmed. I think 
about the community banks and credit unions in my district. And 
I've talked to many people who worked for small institutions in 
rural Kentucky who are your competitors. And the fact that this 
scandal has painted a bad picture for the entire banking 
sector. And frankly, the institutions in my district that are 
those community banks and credit unions, they don't have your 
culture, but now they have a tarnished reputation because 
they've been swept into this with you.
    And we've been fighting for regulatory relief for these 
small community banks, and these credit unions, that, frankly, 
represent competition to big banks like you. And so what I 
worry about are these small community banks and credit unions 
that are now going to have to deal with the ramifications of 
the bad acts of your institution.
    Can you comment on your colleagues in the banking sector 
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? And, frankly, they don't have a culture 
like yours?
    Mr.  Stumpf. Again, I am sorry for what we did. I'm sorry 
that we didn't move fast enough. Again, the vast majority of 
our people, even in our regional bank, especially in our 
regional bank, did exactly what was right. They followed our 
culture. This is about people who did not do the right thing, 
or at least about behavior that was not right, and I accept 
responsibility for that, and I'm sorry about what happened.
    Mr.  Barr. And one final question is, you testified today 
that you should have known sooner that product sales goals 
would have elicited bad behavior. Was it your policy at the 
time that all of this was going on to notify customers when an 
account was opened?
    Mr.  Stumpf. When an account was opened that was not 
funded, we had it automatically, within 60 or 90 days, removed 
from the account file. It was not until 2015 that we finally 
put it together, that there could be a fee doing this. So 
that's when we did the full-blown study back to 2011.
    Mr.  Barr. I would think that best practices going forward, 
at least, and in the past, should have been to notify a 
customer when you open an account.
    I yield back.
    Mr.  Stumpf. In fact, we do that today. Within one hour of 
an account being opened today, they get a notice that an 
account has been opened. And we won't even pull a credit bureau 
unless we have a signature.
    Mr.  Neugebauer. I now recognize the gentlewoman from 
Alabama, Ms. Sewell, for 5 minutes.
    Ms.  Sewell. Thank you, Mr. Chairman.
    So it looks as if Wells Fargo has done somewhat of a deep 
dive on the, I guess it's 1.5 million checking accounts and 
half a million credit cards?
    Mr.  Stumpf. Correct.
    Ms.  Sewell. So can you tell me, with any specificity, what 
demographics was most affected? Was it California? I represent 
Alabama.
    Mr.  Stumpf. Yes.
    Ms.  Sewell. So could you tell me how many folks in the 
State of Alabama were affected by this?
    Mr.  Stumpf. I can tell you, it does not--it was more in 
the West and the Southwest, but let me get to my numbers here.
    Ms.  Sewell. And while you're looking, I also want to know 
whether or not you have identified any commonality between 
those folks who were affected, either geographical, 
demographics, race, ethnicity, etc.
    Mr.  Stumpf. It's a good question.
    Ms.  Sewell. --income level. Have you sort of isolated as 
to who was most affected by the fraudulent actions?
    Mr.  Stumpf. That's a good question. Of the 2 million 
accounts that we could not identify, we couldn't rule them out, 
there was no--in fact, the deposit side skewed to younger 
people, not older people. And we don't take--we don't use race 
or ethnicity, we don't capture any of that information. Only 
age is what we capture. But I do have a number for--
    Ms.  Sewell. What about income? Obviously, when people are 
opening up credit cards, they have to say what range of income. 
Any of those identifiable commonalities between those?
    Mr.  Stumpf. I should have mentioned that. On the deposit 
side, I don't think we do that. On the credit card side, I 
don't have that information, but I can surely get back to you 
on that.
    Ms.  Sewell. I'd like to--
    Mr.  Stumpf. Or at least have our team talk to you about 
that.
    Ms.  Sewell. And you were looking up Alabama to see in the 
State of Alabama how many customers were affected?
    Mr.  Stumpf. And Alabama had 22,795 accounts--accounts, not 
necessarily customer accounts--that they could not rule out. I 
don't know how many of those are going to be--
    Ms.  Sewell. So 22,700?
    Mr.  Stumpf. And 95.
    Ms.  Sewell. And 95. And I can assume from all your 
testimony repeatedly here today that the customers in my State 
will be made whole or made right, as you like to say.
    Mr.  Stumpf. That is our goal for every customer, and I 
can--
    Ms.  Sewell. Now, my real question is this: Being made 
right includes more than just being made whole for the damage 
that was done personally to the customer. The reality is that 
you've violated the public trust. It seems to me being made 
whole also should go to all of the bonuses that were received 
off of fraudulent information over the time period that has 
been identified.
    Now, how much money have you made over the 5 years of 2009 
to 2015 in just bonuses? I'm not talking about your 
compensation, just bonuses?
    Mr.  Stumpf. I don't recall exactly, but let's say--
    Ms.  Sewell. Would it surprise you to know that you were 
paid $12 million in bonuses for at least the last 3 years?
    Mr.  Stumpf. Let's say it's $18 million or $20 million. I 
don't recall the exact number.
    Ms.  Sewell. So I guess my frustration is that being made 
right is not just about the personal damage that was done to 
the customer base. It really is about the public trust, and--
    Mr.  Stumpf. It is.
    Ms.  Sewell. --that to me goes to every level of your 
company being unjustly enriched by a fraudulent scheme such as 
this. And I'd like to know what your thoughts are about how 
Wells Fargo plans to make right to the public on such a 
magnitude?
    Mr.  Stumpf. Yes. Thank you for that. First of all, I think 
it's important to note that fraudulent or unused accounts hurt 
customers and they hurt us. In fact, the $2.6 million of fees 
that we found for this 4 years cost us $10 million to produce. 
That's a losing operation. There was--people invest in our 
company for a whole lot of reasons, and one is about deep 
relationships of customers who use products. So an unwanted 
product, an unused product is just--
    Ms.  Sewell. With all due respect, sir, I understand that 
it hurts you, but I'm here to tell you that the customer base 
and the 22,000 folks in Alabama are much more egregiously hurt 
than you.
    Mr.  Stumpf. There is no question, and I agree with you.
    Ms.  Sewell. And I just want to go back to the comments of 
my colleague, Mr. Ellison, who was really trying to capture the 
bad business practices of your sales force. Now, do you still 
have that line of business? Is that line of business still a 
part of the portfolio of Wells Fargo?
    Mr.  Stumpf. We have a great retail banking business. We 
love it. And we're getting rid of sales goals. In fact, our 
customer--
    Ms.  Sewell. What else are you doing to make sure that this 
does not happen again?
    Mr.  Stumpf. If I can just quickly answer that. For any 
credit card opened or, any deposit account opened, there has to 
be a signature today. If there's not a signature of a customer, 
it can't get opened. We're also doing mystery shopping, to make 
sure our people are doing the right thing.
    Ms.  Sewell. What's to stop a fraudulent signature?
    Mr.  Stumpf. Because you have to put in your PIN. Only the 
customer knows that.
    Chairman  Hensarling. The time of the gentlelady has 
expired.
    The Chair now recognizes the gentleman from Pennsylvania, 
Mr. Rothfus.
    Mr.  Rothfus. Thank you, Mr. Chairman.
    Mr. Stumpf, these charges against Wells Fargo violate any 
legal or ethical standard. We know that Wells Fargo employees, 
over years, opened 2 million accounts for customers without 
authorization. To hit sales targets and draw additional fees, 
bank employees falsified accounts and engaged in egregious 
deceptive practices. This was theft, plain and simple. That the 
offending Wells Fargo employees did what they did, in a 
systematic way, represents a gross violation of trust.
    When I first heard about these activities, my first thought 
was this falls into the, ``You've got to be kidding me'' 
category. One is left asking, how does this happen?
    Over the course of the last 5 years, Wells Fargo was firing 
1,000 lower-level employees each year. We learned in last 
week's testimony that it was not until 2014 that various 
committees on Wells Fargo's board were informed. It's 
incredible that this did not rise to the attention of the board 
immediately, and it's incredible that it did not end sooner.
    By any standard, these actions were wrong: 5,000 people, 
perhaps more, lied, cheated and stole from customers whom they 
thought would trust them. How many people in Pennsylvania were 
affected by this?
    Mr.  Stumpf. I'll take a look at that. As I am doing that, 
I just want to make a couple of comments. Many of these people, 
over 10 or 15 percent, were bankers or bank managers. These 
weren't all lower-level people. They were in the mid-30's to 
60's.
    Mr.  Rothfus. How many levels in the organization chart at 
Wells Fargo are there?
    Mr.  Stumpf. It depends on the operating business, so there 
could be--
    Mr.  Rothfus. Are there 10 layers?
    Mr.  Stumpf. It could be 8 or 9 or 10 layers.
    Mr.  Rothfus. Eight or nine or 10. So a third-level 
employee wouldn't be considered a lower-level employee?
    Mr.  Stumpf. The fact that these were--
    Mr.  Rothfus. How many people in Pennsylvania?
    Mr.  Stumpf. In Pennsylvania, 79,918 accounts we could not 
exclude. Again, that's about the 2 million. There's--you know, 
we're looking at--also understanding, right, on credit card, 
only 20--only 25 percent could not remember or did not order--
    Mr.  Rothfus. How many branches does Wells Fargo have?
    Mr.  Stumpf. In our total company?
    Mr.  Rothfus. Across the country.
    Mr.  Stumpf. 6,200.
    Mr.  Rothfus. How many branches are identified as being 
involved in this scandal?
    Mr.  Stumpf. I don't have that number. I don't know if 
there was a team member--
    Mr.  Rothfus. Is this a coast-to-coast scandal?
    Mr.  Stumpf. Well, first of all, it's exception--it's 
behavior that we did not want, and I don't know if it affected 
every State or every region. I just don't happen to have that 
information.
    Mr.  Rothfus. In the last 5 years, how many branches have 
you visited personally?
    Mr.  Stumpf. I don't keep a count of that, but I'm--pick a 
number, maybe 1,000.
    Mr.  Rothfus. Do you make it a practice to go behind the 
counter--
    Mr.  Stumpf. Absolutely.
    Mr.  Rothfus. --and work as a teller or as a 
representative?
    Mr.  Stumpf. To work as one?
    Mr.  Rothfus. Yes. Have you ever seen the show like 
Undercover Boss, where the CEO comes in and does the frontline 
work?
    Mr.  Stumpf. Yes. I'm not trained or allowed to do that, 
but I walk behind the teller line and I meet our people. I talk 
out in front with our bankers. There's--
    Mr.  Rothfus. You wouldn't have waited on a customer and 
maybe stood in the shoes of one of those frontline employees, 
maybe tried the cross-selling practice?
    Mr.  Stumpf. I've talked with them. And the vast majority 
of our people are excited. Our culture and our--in fact, we 
have engagement scores. Every year, we do--about 93 or 94 
percent of our people participate in the regional bank in a 
Gallup survey that brings into account are you happy in your 
job? Do you get rewarded? Whatever. And our people are 14-to-1, 
15-to-1 engaged, some of the highest scores in the industry.
    Mr.  Rothfus. Some of those employees had an issue. How 
many whistleblowers are there, do you know?
    Mr.  Stumpf. I do not have that number.
    Mr.  Rothfus. Do you appreciate the kind of courage that it 
takes to be a whistleblower?
    Mr.  Stumpf. Well, absolutely. Our people can call an 
ethics line, and they can do it--
    Mr.  Rothfus. You have no idea how many whistleblowers 
there are?
    Mr.  Stumpf. I don't have--
    Mr.  Rothfus. CNN is reporting dozens. Do you think that's 
accurate?
    Mr.  Stumpf. I don't know. And we're going to work on--
every name that we get, we're going to work on.
    Mr.  Rothfus. Do you have any idea of how many of these 
people are no longer employed at Wells Fargo?
    Mr.  Stumpf. I don't have that number for you.
    Mr.  Rothfus. Any idea how many would have been demoted?
    Mr.  Stumpf. I didn't get--
    Mr.  Rothfus. Any idea how many may have been demoted, if 
any?
    Mr.  Stumpf. I don't have that number for you, sir.
    Mr.  Rothfus. I would suggest that, again, given the 
courage it takes for somebody who spots something like this to 
speak, and the historic protections that should be attributable 
to whistleblowers, that this would be a top priority.
    Mr.  Stumpf. And we have an anti-retaliation program.
    Mr.  Rothfus. How many people at Wells Fargo are now 
working on the whistleblower issue?
    Mr.  Stumpf. I don't know that issue. I could have my team 
work with your staff and tell you.
    Mr.  Rothfus. Do you have any idea how many honest Wells 
Fargo employees may have lost out in a race with some of the 
fraudsters?
    Mr.  Stumpf. I don't have that answer for you. But we've 
got 268,000 terrific team members.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Illinois, Mr. 
Foster.
    Mr.  Foster. Thank you, Mr. Chairman, for holding this 
hearing so we can examine the abusive and fraudulent practices 
that were so pervasive at Wells Fargo. I'd like to start by 
reiterating what many of my colleagues have said, that this 
corporate malfeasance is exactly why we need a strong and 
independently funded CFPB. As Director Cordray testified in the 
Senate last week, the CFPB learned about the fraud at Wells 
Fargo through its whistleblower line. It's 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 fraud to light. And I suppose that we 
don't need his testimony because the CFPB has returned more 
than $12 billion to 27 million Americans, and this case adds to 
that record.
    The CFPB did not learn about the fraud because Wells Fargo 
self-reported. In fact, the record suggests that you, Mr. 
Stumpf, were informed about the fraudulent accounts anywhere 
between 2 and 4 years before self-reporting by Wells. In the 
wake of this incredibly egregious institutionalized conduct, 
you have now come to Washington to say you're sorry. Well, of 
course, your apology is appropriate, as is foregoing a portion 
of your compensation, but that does not address the core 
problems in the culture of the institution and the governance 
rules that allowed it to develop.
    As someone who started a manufacturing business and served 
on its board, I understand that corporate culture starts at the 
top and eventually permeates the entire organization; but your 
response to the gross misconduct that drove results that you 
prided yourself and the bank on has been underwhelming, to say 
the least, because it's clear that the simple motivations of 
keeping the trust of customers, of shareholders, and the jobs 
of 5,300 frontline employees has not been enough incentive to 
drive a culture of compliance among management.
    So my first question to you, Mr. Stumpf, given this 
situation, which actually should be a case study for corporate 
mismanagement in every business school and law school in the 
country, is what specific governance rules should have been in 
place that would have prevented these abusive practices?
    Mr.  Stumpf. Thank you for your question. I acknowledged 
before that we should have done more earlier. We should have 
brought our corporate resources in earlier, and we should have 
obviously gotten rid of sales goals earlier, because they were 
misunderstood or misrepresented by some of our team members. I 
think that would have been good governance.
    Mr.  Foster. Okay. I think I'd like to actually focus on 
specific proposals. I think we've all been impressed by this 
list of settlements and penalties that have been imposed on 
Wells since the financial crisis that has been scrolling on the 
monitors here. And, without objection, I'd like to enter that 
into the record.
    Chairman  Hensarling. Without objection, it is so ordered.
    Mr.  Foster. And one specific proposal that has been made 
is that regulators' penalties for illegal practices should be 
paid first out of the bonus pool for top executives, so that 
you and every one of your top executives would have your 
bonuses at risk for any malfeasance in any corner of the 
organization, rather than having the regulatory fines being 
taken largely out of the hides of shareholders.
    So my question to you is, if everyone knew that the 
regulatory fines were to be paid out of the bonus pool, would 
that have helped change the corporate culture that led to these 
abuses?
    Mr.  Stumpf. I can't speculate on that. I know that in my 
case, the board is independent, and the board actually took my 
recommendation and passed that. We filed an 8-K on that 
yesterday. And I'm going to do all I can to lead this company 
going forward.
    Mr.  Foster. And we all can speculate on what fraction of 
that compensation clawback would have happened without the 
attention in the press and by Congress on this. For example, if 
you knew that the bonus pool would take a hit for any 
regulatory fines, wouldn't that actually create an incentive 
not to develop a bank which was effectively too big to manage?
    Mr.  Stumpf. First of all, I disagree that we're too big to 
manage. We need to focus more on this issue, on operational 
issues and on compliance issues. But, again, we do many, many 
areas really well. And I'm sorry that we didn't get everything 
right along the way. And we've made settlements, we've tried to 
make it right for customers.
    But recognize also, we do a lot of really good things. 
We're a great corporate citizen, and 268,000 team members 
really try to get it right every day for all of our customers.
    Mr.  Foster. As we look for bipartisan solutions to try to 
prevent this sort of thing from happening again, I find that a 
very interesting suggestion.
    And just a last quick question. Many of the actions that 
were taken here hurt the credit scores of customers, which made 
it difficult for them to buy mortgages. And are you 
specifically looking to find out if any of your customers have 
been denied mortgages because of action you've taken?
    Mr.  Stumpf. We're going to dig into that and make it 
right. We will.
    Mr.  Foster. Thank you.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from New Hampshire, 
Mr. Guinta.
    Mr.  Guinta. Thank you, Mr. Chairman.
    Thank you, Mr. Stumpf, for being here. I share in the 
frustration and the anger and the displeasure of my colleagues 
on both sides of the aisle relative to this particular issue. 
And I have listened over the course of your testimony, and 
there are a number of what I would consider inconsistencies, 
either based on what you've said today, what was in your oral 
testimony, or what you had stated in the Senate hearing last 
week.
    So I want to clarify a few things. In your oral statement, 
you said that you made a recommendation to the board that it 
take certain actions regarding your salary and other pay.
    Mr.  Stumpf. That is my testimony and that's accurate.
    Mr.  Guinta. When did you make that recommendation?
    Mr.  Stumpf. It was--today is Thursday. It was sometime 
before the independent board met without me. I don't recall. It 
might have been--it was before or during the board meeting. But 
I referred--I made comments about that to our lead director 
that I wanted to do that.
    Mr.  Guinta. Are we talking about last week or this month?
    Mr.  Stumpf. Last week.
    Mr.  Guinta. Last week. Before or after the 20th?
    Mr.  Stumpf. What day is today?
    Mr.  Guinta. The 20th was Tuesday. Today is the 29th.
    Mr.  Stumpf. It was sometime after--it was sometime on the 
weekend, I believe, to the best of my recollection.
    Mr.  Guinta. So it was after the Senate hearing?
    Mr.  Stumpf. It was after the Senate hearing.
    Mr.  Guinta. So before, you had said to the Senate Banking 
Committee that you didn't want to prejudice the compensation 
committee or the board process.
    Mr.  Stumpf. Correct.
    Mr.  Guinta. And since the 20th, you did exactly that. So 
what has changed from the 20th to today, the 29th?
    Mr.  Stumpf. I felt that it would not prejudice them. I 
didn't want to prejudice them, but I thought it was--and they 
can do more if they want to. They have all the rights and 
responsibilities.
    Mr.  Guinta. No, I understand that. What I don't understand 
is on the 20th, you said to the Senate you did not want to 
prejudice them, and then 4 days later, the 24th, which is the 
Saturday over the weekend, you did a reverse course. So what 
happened between the 20th and the 24th for you to change your 
mind on that issue?
    Mr.  Stumpf. I decided that this was a good way to show, at 
least a step, a start to show my level of commitment.
    Mr.  Guinta. Why wasn't that important then before the 
20th?
    Mr.  Stumpf. I was preparing for other things and it didn't 
cross my mind at that time. I developed that thinking sometime 
over the weekend.
    Mr.  Guinta. That's a pretty big compensation hit, right?
    Mr.  Stumpf. Again, it's what I thought was right for me to 
recommend to the board at that time. And they can do more. They 
have all the independence. And I didn't believe that--I thought 
that was the right thing for me to do.
    Mr.  Guinta. What about the clawback of Ms. Tolstedt's pay? 
When did you make that recommendation?
    Mr.  Stumpf. That recommendation--she does not report to 
me. That recommendation was made by her boss.
    Mr.  Guinta. When were you aware of that recommendation?
    Mr.  Stumpf. I was aware of that sometime--
    Mr.  Guinta. Before the 20th?
    Mr.  Stumpf. It was sometime over the weekend also, I 
believe. I don't recall the exact days. Maybe--
    Mr.  Guinta. Both were after the 20th?
    Mr.  Stumpf. Yes.
    Mr.  Guinta. I want to go to a different issue. Do you 
currently have sales goals at Wells Fargo today?
    Mr.  Stumpf. They end in our regional bank tomorrow, 
because--and the reason we didn't take them out before, we 
have--the vast majority of our people do the exact right thing. 
We don't want to hurt them from a compensation perspective. And 
we thought we could do this, and do it right, and put other 
goals like customer loyalty and other things that our customers 
really appreciate by January 1st. We now know that we can do it 
by October 1. So we don't want to hurt them, and we also want 
to make sure our customers get treated well.
    Mr.  Guinta. Let me move on to the CFPB. You've been asked 
several times how many employees of the CFPB were embedded at 
Wells Fargo. And I think what you said is something to the 
effect that you will do your best to work with us, but you 
didn't say clearly whether you would actually provide us that 
number. So I'm curious, would you provide us with that number 
when you get it?
    Mr.  Stumpf. Again, I don't know that answer. I'll work 
with our team. The best I can do is promise you that I'll 
work--I'll consult my team--
    Mr.  Guinta. I understand you don't know the number today. 
I'm saying, when you work with your team to identify the 
number, will you then share it with Congress?
    Mr.  Stumpf. Again, I don't know if that's a--if that's a 
confidential supervisory matter or information.
    Mr.  Guinta. CFPB employees are public employees, aren't 
they?
    Mr.  Stumpf. I don't want to make a promise to you that I 
can't keep. So I will promise that I'll take a look at it.
    Mr.  Guinta. Would you speak with your leadership and try 
to get us something in writing as to whether you can provide us 
that answer?
    Mr.  Stumpf. I will work with them as soon as one of these 
things get done.
    Mr.  Guinta. Thank you, sir.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Maryland, Mr. 
Delaney.
    Mr.  Delaney. Thank you, Mr. Chairman.
    Thank you, sir, for being here. A lot of focus has been on 
your cross-sales or your cross-sell culture at the institution. 
It's something that the institution has been very proud of. 
When you acquired Wachovia back in 2008, your former chairman, 
Dick Kovacevich, who I think was probably the architect of your 
cross-sell program, said, we are combining the industry's 
number one ranked customer service culture of Wachovia--and I 
was a very substantial Wachovia customer in my prior life in 
business and I had nothing but a terrific experience--
    Mr.  Stumpf. Thank you.
    Mr.  Delaney. --with the industry's number one sales and 
cross-selling culture of Wells Fargo. This is 2008. Analyst 
reports across the last decade would talk about the cross-sell 
culture of Wells Fargo. But several analysts also pointed out 
that there was risk inherent in this and, in fact, that this 
culture might be undermining the customer experience, including 
a well-known banking analyst who said, ``Wells Fargo suggests 
that 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 customer service.''
    So the question I have is, your board of directors--because 
when you have a very large enterprise like you do, the 
governance process is incredibly important. Did the board of 
directors ever discuss, at the board level, whether the cross-
sell culture had gotten out of control at the bank? Because you 
were clearly outperforming your peers, and you were proud of 
that, and you bragged about it and you had a swagger about it. 
And the law of large numbers just leads us all to believe that 
it is very hard to significantly outperform your peers, 
particularly when they are very big and they are also 
sophisticated operators like your competitors are.
    Did your board ever talk about this issue? Did they ever 
actually sit around and examine whether this culture had gotten 
out of control, particularly after 4 or 5 years of having to 
let go so many people?
    Mr.  Stumpf. Congressman, I don't know all of the things 
that our board talks about, because I'm not in all the 
meetings, but 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.
    Mr.  Delaney. But you also make more money when you cross-
sell. There are two ways of looking at cross-sell. It's either 
really good for you or it's really good for the customer, 
depending upon whether they needed the product or not. I'm 
really getting at the board's responsibility, because your 
board is responsible to make sure that you're setting the right 
tone at the top.
    Mr.  Stumpf. Correct.
    Mr.  Delaney. You're also responsible for that. I'll come 
back to that in a second. But the board is responsible for 
actually examining the business practices of the bank. So did 
your board--you're the chairman of your board.
    Mr.  Stumpf. Correct.
    Mr.  Delaney. So you may not be there. They have executive 
sessions where they may ask you to leave. You're certainly not 
there when they discuss your compensation. But for most of the 
meetings, you're there. You set the agenda. You probably sit in 
on most of the committee meetings. I chaired a public company 
board for many years.
    Did you ever--did the board ever talk about whether the 
culture in the retail banking business, and all of the 
accolades you were receiving for your cross-sell success, and 
the fact that several analysts had focused on the fact that you 
were overly aggressive with respect to this, did they ever 
actually ask the question, should we look into this? Did they 
ever exercise their fiduciary responsibilities around this 
issue, in other words, ensuring that your customers were 
getting an appropriate service, which they obviously weren't?
    Mr.  Stumpf. Yes. And yes, the answer is yes. They--
    Mr.  Delaney. So you can get us evidence that the board 
actually has examined this issue across the last several years?
    Mr.  Stumpf. Yes, I can do that.
    Mr.  Delaney. Did you ever give speeches where you said it 
is as important to make sure we're putting our customers' 
interests first as it is to achieve our cross-sell objectives?
    Mr.  Stumpf. I don't recall; I give lots of speeches. But I 
always talk--when I am with team members or out in the public, 
I try to talk about the fact that what's good for customers is 
good for us. And I think it's really important, because you're 
asking some really good questions here, that the idea that 
somehow having a customer have more products that they don't 
use helps us is absolutely wrong. It only helps if they use 
them.
    Mr.  Delaney. Well, if they pay for them, it helps you.
    Mr.  Stumpf. Virtually all of them are free.
    Mr.  Delaney. Getting back to the tone at the top, can you 
find any evidence and share with us where you actually said, it 
is as important to make sure we put our customers' interests 
first as it is to achieve the sales goals we've set for this 
institution?
    Mr.  Stumpf. In fact, I don't know, I can't recall all my 
words, but I do know this: Every talk I talk about, it's about 
customers and putting them first.
    Mr.  Delaney. Now, your largest shareholder has a famous 
expression where he says: It takes your whole life to build 
your reputation and you can lose it in 5 minutes. Do you think 
you and your institution have permanently lost its reputation?
    Mr.  Stumpf. We have a lot of work to do to build it back, 
and I'm committed to do all I can to make that happen.
    Mr.  Delaney. Thank you.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    The Chair now recognizes the gentleman from Texas, Mr. 
Williams.
    Mr.  Williams. Thank you, Mr. Chairman.
    Mr. Stumpf, just like many hardworking Americans and 
members of this committee, I am really angry. And I also am a 
customer of your bank. But I'm amazed at what you do not know 
about your business. I am really amazed. And I've heard more, 
``I don't know's'' from a CEO than I think I've ever heard in 
my life.
    I came to Congress to deregulate, and because of your 
actions, it's really making it extremely difficult for me to 
advocate for Main Street or community banks. So I have one 
simple question for you: When are you going to resign?
    Mr.  Stumpf. I serve at the pleasure of the board. I am 
giving all my energy now to leading this company through this.
    Mr.  Williams. But you can resign without the board telling 
you, so I just wanted to know that answer.
    I'm also angry because a large number of Wells Fargo 
employees opened accounts for existing customers without their 
knowledge, which is pure wrong, it's just wrong. And I'm angry 
because Wells Fargo agreed to pay $190 million in collective 
fines and restitutions, which we talked about today, and you 
don't even have to admit any wrongdoing. And I have news for 
you, people don't care about your hurt, they care about their 
hurt, and I'm tired of hearing about that today. And I'm angry 
because, under the Dodd-Frank Act, Wells Fargo would still be 
eligible for taxpayer-funded bailout. And I'm angry because I'm 
a strong supporter of banks, both big and small, but today you 
really make it hard. What you've done has really hurt Main 
Street.
    And finally, Mr. Stumpf, I'm angry because I'm a business 
owner. I own a business right now. I'm a borrower. I've been in 
debt more than I've been out of debt in my life. For 44 years 
I've owned my business, and it sickens me to think that you 
took advantage of customers in the manner that you've done. 
Customers are important. They don't make that many customers.
    And, Mr. Chairman, I have also learned--if I've learned 
anything over the last 44 years, it's two things: The customer 
is always right. And you've tried to teach us your business 
today; we don't need to hear that.
    And reputation, which we've already talked about, is all 
you have when you go to bed at night. And when you lose your 
reputation, you've got nothing. And frankly, it's going to take 
Wells Fargo a long time before they can restore customer 
confidence in that reputation we're talking about.
    So let me start off with this: In the past, I've been part 
of a banking board like many have in here, big banks, small 
banks. So I understand what that entails. I certainly 
understand the charge that is given to that board to make the 
bank successful, but ultimately you answer to the shareholders. 
But as we heard you discuss with the Senate Banking Committee 
earlier today, top executives knew about the fraud under your 
watch in 2013. So, again, as someone who has sat on a board, I 
find it troubling that no action would be taken at all.
    So we've established that no action was taken by you or 
your board in 2013, but what about your outside auditors which 
we've talked about? Can you tell this committee again--and 
you've touched on it a little bit--who they were and if you 
advised them of this two-year-old systemic fraud?
    Mr.  Stumpf. So I'll get to your question. And our outside 
auditor is KPMG. They do a wonderful job. And this is on us. We 
should have done more earlier, and there's no question about 
that. And I don't, in any way, want to minimize whatever 
portion of those 2 million accounts were unauthorized. We take 
that seriously. And they are the ones we put first.
    Mr.  Williams. So let me move on. As CEO and chairman of 
the board of Wells Fargo, how often did you meet with your 
board of directors?
    Mr.  Stumpf. We have eight board meetings a year.
    Mr.  Williams. Did anyone on your board tell you to stop 
the incentive program, that they didn't like it, they didn't 
think it was good?
    Mr.  Stumpf. There is a committee of the board that is 
human resources and compensation, and that's not chaired by me. 
I'm not a member of that committee.
    Mr.  Williams. So you don't know?
    Mr.  Stumpf. I do know that we have incentive programs and 
we have controls and we have self-worth, and I don't--that's 
what I know about that committee and about our business.
    Mr.  Williams. Did anyone on the board raise any concerns 
with the incentive program?
    Mr.  Stumpf. There were people--as we started to understand 
this issue, the board took direct action to make sure that, 
along with management, we understood where the customer harm 
was, and to make sure that the sales process, that we did not 
have unethical behavior going on.
    Mr.  Williams. I'm running short on time. I'm from Texas.
    Mr.  Stumpf. I lived in Texas for 6 years.
    Mr.  Williams. How many people in Texas were affected by 
your mismanagement?
    Mr.  Stumpf. There were 149,857 accounts that we could not 
rule out as a possibility of being unauthorized.
    Mr.  Williams. Thank you, Mr. Chairman, I yield back.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    Pursuant to clause (d)(4) of Committee Rule III, the 
gentleman from Washington, Mr. Heck, will be recognized for an 
additional 5 minutes upon the conclusion of the time allotted 
to him under the 5-minute rule. The gentleman from Washington 
is recognized.
    Mr.  Heck. Thank you, Mr. Chairman.
    Mr. Stumpf, after sitting here patiently for nearly 4 
hours, my takeaway, frankly, sir, is that you are in denial. 
And I say that because I can't reconcile much of what you have 
said with the known fact pattern. You have said, I didn't know, 
in essence. You said, a very small percentage of our dedicated 
workforce was actually engaged in this behavior. You said 
you're sorry; in fact, you're very sorry. And you said, we're 
going to fix it.
    But the facts are that 5,300 of your employees were fired 
for inappropriate behavior. And they were fired because they, 
in effect, misappropriated millions of dollars in fees without 
the agreement of your customers, an act which you yourself 
agreed with Congressman Duffy constituted stealing. And 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 with those facts and I can, 
therefore, only conclude that you are in denial.
    Some here, several, have said you should resign. Frankly, I 
don't personally see how you survive. I don't know this. But I 
too have been on a board of directors, and it's virtually 
inconceivable to me that your board of directors would see fit 
to claw back $41 million in bonus and incentive pay without 
also concluding you're no longer the correct person to lead 
this organization.
    But the truth is, it's not your survival that I am 
concerned about. I am concerned about your company, your bank, 
your institution, the 268,000 people that you employ, and more 
importantly, the millions and millions of depositors. I'm more 
concerned about the trust level in Wells Fargo and in the 
financial sector, banks and credit unions, because it is, in 
fact, vital and the heartbeat of a market-based and capitalist 
economy. And I'm very concerned about what you and the company 
have done in the way of damage to that.
    I'm not going to suggest that you resign. I don't think 
it'd do any good, because I think you are in denial. But I am 
going to remind you of some things that you have said. I know 
right from wrong. I tried to lead with courage. I'm going to 
make it right. You also said that you feel privileged to lead 
Wells Fargo.
    Mr.  Stumpf. Right.
    Mr.  Heck. And on that, sir, I'm going to take you at your 
word. And so my hope, my request--and this is not a question. 
In fact, I would suggest that it's beyond a hope, it's a 
prayer--that in the quiet and solitude of your home and in 
discussions with your family, you ask yourself what's in the 
best interest of Wells Fargo? What's in the best interest of 
Wells Fargo, sir, not you.
    I do have a quick question. I think some other people have 
noted that it looks like you're repeating some mistakes in the 
facts of this case, falsified applications, consumers being 
pushed into products they don't want, and all driven by 
aggressive sales goals that are almost identical to your 
practices that led to a record fine against you in 2011. In 
fact, in 2012, you paid violations for violating the 
Servicemembers Civil Relief Act (SCRA) for foreclosure of homes 
in violation of Federal law.
    I am privileged beyond measure to represent 20,000 
uniformed personnel at Joint Base Lewis-McChord. You're under 
investigation again, sir, for violating the Servicemembers 
Civil Relief Act for foreclosing on cars. Also prohibited. We 
don't want men and women in uniform--
    Mr.  Stumpf. Correct.
    Mr.  Heck. --worrying about that when they're putting their 
life in harm's way. And I'm going to predict that you're going 
to pay another fine for violation of SCRA in the millions of 
dollars.
    So rather than ask a question, I'll just say, this pattern 
just keeps repeating itself. You pay a fine, you promise to fix 
it, and then lo and behold, a few years later, we're back at 
it, the same thing again.
    And with that, Mr. Chairman, I would like to yield the 
balance of my time to the ranking member from California.
    Ms.  Waters. Thank you very much, Mr. Heck, for yielding 
this time to me.
    As you know, as the ranking member, I have the 
responsibility for some kind of leadership here, and I'm very 
pleased that I was able to work with the chairman of this 
committee, Mr. Hensarling, today to get this hearing. But as I 
have sat here, recognizing the size of Wells Fargo, $1.9 
trillion in assets, with over 6,200 bank branches, 268,000 
employees, it's really striking me how huge this bank is.
    I'm also concerned about whether or not, as chairman and 
CEO, you can really know what is going on at the bank. I am 
concerned about the length of time it took you to know what's 
going on, and I'm concerned that maybe you don't have a handle 
on your management and what the reporting process is that would 
make you aware of what's going on.
    You praised Ms. Tolstedt for her management of the 
division, even though she had fired 1,000 employees for this 
fraud in 2011, and yet supposedly it took you 2 years to know 
about what had happened. She didn't tell you. She withheld the 
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 that we have been sitting here fighting to implement 
Dodd-Frank and trying to work out some of the problems that 
have been identified with Dodd-Frank. But you are on the board 
of directors of the Financial Services Roundtable. It's an 
advocacy group for the banking industry that has worked to 
defund the CFPB, hobble its structure, and remove its ability 
to curb abusive practices. Now I want to know perhaps what you 
think, now that Wells Fargo has been caught by the CFPB for all 
of this fraud, and I wonder if you denounce the Financial 
Services Roundtable's actions to get the CFPB.
    In addition to that, while we've been sitting here, I have 
learned that maybe not only is Wells Fargo too huge to manage, 
but maybe the reason you don't know some of the detail is 
because you also sit on a number of big boards. You're sitting 
on the board of Chevron for $375,000 in total compensation per 
year, and you're on the board of Target Corporation for 
$272,000 in total compensation per year. You have a 
responsibility to them. You have a fiduciary responsibility. 
And in addition to that, during this hearing, Bloomberg sent 
out an alert that you will be facing a $20 million penalty for 
improperly repossessing cars from members of the military. It 
appears that the company can't even make it through this 
congressional hearing without us learning more and more 
information about what is going on at Wells Fargo.
    I appreciate your apology. I appreciate the clawback and 
all of that.
    But, Mr. Chairman and Members who are left, I have come to 
the conclusion that Wells Fargo should be broken up. It's too 
big to manage. I served on the conference committee for Dodd-
Frank. We talked a lot about the living wills and how to learn 
more about how these banks are put together and how they 
operate. And, of course, the five largest banks in this country 
have failed the living wills test, including Wells Fargo. And 
so I'm looking at living wills and the inability to pass the 
test. I'm looking at stress testing. I'm looking at size. I'm 
looking at this particular fraud that has gone on, and I'm 
worried for the whole banking community that the public cannot 
and will not continue to trust our banks, which we need in this 
economy in order to do the business to make the economy work 
and run. But they're looking at us and they're saying for all 
of you, particularly those of you who serve on the Financial 
Services Committee, you're letting us down, you're not 
protecting us.
    And so, with that, Mr. Chairman, I'm going to be talking 
with you and the members of this committee who showed their 
outrage here today. I'm moving forward to break up Wells Fargo 
bank.
    Mr.  Stumpf. May I respond to that, please?
    Chairman  Hensarling. We'll give the witness an opportunity 
to respond.
    Mr.  Stumpf. As I said before, I'm sorry that we didn't get 
this right. I take this very seriously. I'm not in denial. And 
we will get this right. We will fix this. We do a lot of things 
really great. California is our home State. We've been there 
for 164 years. We are a major employer, a major philanthropic 
institution, and we are privileged to serve so many great 
customers there, and we'll do that the best way possible.
    Chairman  Hensarling. The time of the gentleman from 
Washington has expired.
    Pursuant to clause (d)(4) of committee rule 3, the 
gentleman from Arkansas, Mr. Hill, will be recognized for an 
additional 5 minutes upon the conclusion of the time allotted 
to him under the 5-minute rule.
    Mr.  Hill. Thank you, Mr. Chairman. I thank the ranking 
member for holding this hearing.
    Mr. Stumpf, thank you for being willing to appear today. I 
appreciate your forthright testimony.
    I have been a customer of your company and I've admired 
your company and I've used your company as an example for my 
own businesses in the past 20 years in developing what I 
thought were best practices and goal-setting for retail bankers 
across the businesses that I was associated with in the 1990s 
and the 2000s. And during that period of what has happened 
recently, I've recommended your company as a company to do 
business with and a stock to own.
    So that comes with a pretty heavy burden for me. I have the 
same knot in my stomach that you probably have.
    Mr.  Stumpf. Yes.
    Mr.  Hill. Because, in my view as a former person who has 
worked in finance on and off for 35 years, this just isn't a 
one-off situation down in the Los Angeles basin that Wells 
Fargo is struggling with. It really is a systemic compliance 
failure inside the, I assume principally, the retail portion of 
the bank.
    And I know that it's a huge frustration for those of us on 
this committee and for your members of your board and your 
management team, and very hurtful to the customers that have 
been damaged by it, their reputations, their credit 
potentially, including the 933 people in Arkansas who have been 
affected by this, that resulted in 4 people who apparently 
worked for you in Arkansas who were fired as a part of the 
sweep across your company.
    So you've told us today about line management between you 
and the branch manager, many layers, branch managers, regional 
managers, area managers that report up, I assume, to Carrie 
Tolstedt who has been discussed today. Is that generally right?
    Mr.  Stumpf. Yes. There's a new leader now in that retail 
banking business. Her name is Mary Mack. And they have--and 
she's now in charge of that organization.
    Mr.  Hill. And did Carrie report to Tim Sloan or report to 
you?
    Mr.  Stumpf. She reported to me until maybe about a year 
ago or so. I don't recall the exact date. But then she reported 
to Mr. Sloan after that.
    Mr.  Hill. And the credit card issue I assume doesn't 
report to her. Does that report to the consumer lending 
executive or to the community bank?
    Mr.  Stumpf. That's--that--the--there's a relationship 
there, but it reports in someplace else. That's right.
    Mr.  Hill. Okay. So it's a matrix management to the retail 
side, but through the consumer lending channel is where credit 
cards--
    Mr.  Stumpf. I would describe it this way: That the retail 
bank would talk to customers and then they would send the 
request over to the credit card group, which would do the 
underwriting and fulfillment.
    Mr.  Hill. And all those people that I named all sat on 
your operating committee of management. And how often does that 
group meet and is it by teleconference--
    Mr.  Stumpf. No.
    Mr.  Hill. --or is it face-to-face?
    Mr.  Stumpf. It's largely face-to-face. It's every Monday.
    Mr.  Hill. Every Monday. And so unrelated to the board, 
which meets just--I think you said in 2015, you had nine 
meetings of the board.
    Mr.  Stumpf. I thought it was eight. But it might have been 
nine.
    Mr.  Hill. Yes. And you had 14 meetings of the audit 
committee during 2015, according to your proxy. But that 
operating committee meets every Monday.
    So one question I have is, do you remember this being 
talked about at that operating level when line managers bring 
their top concerns to you, and was it in this same timeframe? 
It wasn't until maybe 2 years after this was really manifesting 
itself in Los Angeles?
    Mr.  Stumpf. Yes. It was being managed within the business 
in 2011. Each business has their own corporate--or their own 
compliance, their own sales efficacy and so forth. So it was 
brought out of the sales part into the line's control function. 
And then by 2012, they were reducing goals. In 2013, is where 
we brought the corporate resources in, like corporate human 
resources, corporate investigations and so forth, because we 
saw a spike in that behavior.
    Mr.  Hill. Right. So now your lead director. Steve Sanger, 
who's the former CEO of General Mills, is conducting an 
independent investigation that he's hired--independent of the 
corporation, he's hired his own resources, and that's commenced 
recently. Is that right?
    Mr.  Stumpf. As I understand it, Steve Sanger, as our lead 
director, along with the other independent directors, have 
hired counsel, and they are doing their investigation.
    Mr.  Hill. When do you expect they'll finish their work?
    Mr.  Stumpf. I'm not part of that process so I don't know, 
but I know they're going to do a full comprehensive review.
    Mr.  Hill. I hope that gets released to the public once the 
board has seen it and reviewed it, and that it could be posted 
out on your website. Because I think that sort of independent 
review renews confidence in the corporate governance system, 
and I would encourage that to be done.
    When I was at the Treasury Department in 1990, 1991, we had 
a little problem in the government securities business. And 
your largest shareholder, Mr. Buffett, became the CEO of 
Salomon Brothers in the midst of that crisis. And Salomon 
Brothers was found guilty of manipulating the U.S. Treasury 
market at that time.
    Have you talked to Mr. Buffett about this or sought his 
advice on this matter you're facing?
    Mr.  Stumpf. I have talked to a lot of our investors, and I 
have had one conversation with Warren Buffett.
    Mr.  Hill. Because Warren Buffett, in 2 minutes before the 
Senate Banking Committee in 1991, probably did the best job, I 
think, on behalf of corporate America. Do you remember what he 
said at that time?
    Mr.  Stumpf. I've read a lot of his things. I think there 
was something about, I'd rather make less money, and about 
integrity and--but go ahead and read it to me. I don't remember 
that testimony.
    Mr.  Hill. Well, I'm going to paraphrase it. He said--first 
of all, he wanted every employee to be their own compliance 
officer, his or her own compliance officer. And he wanted every 
employee, every day when they came to work, to think about the 
actions they took on behalf of customers, that they could read 
that in their own hometown newspaper written by a critical 
journalist.
    But he summarized it, and what I think you need to 
summarize, if you're going to be successful in this endeavor, 
he made this quote, which I think people have quoted now for 25 
years, ``Lose money for the firm, and I will be understanding; 
lose a shred of reputation for the firm, and I will be 
ruthless.''
    Mr.  Stumpf. That's what I was trying to refer to and 
that's what I remember from that, and I agree with him.
    Mr.  Hill. Well, that's where we are, because I agree with 
my colleagues, this is hurting the ability of the banking 
industry to do consultative selling. Something that we all 
pride ourselves on in financial services is that we seek to 
understand the needs of our customers and try to meet them. And 
this damage by what has happened at Wells Fargo is going to 
hurt that effort on behalf of community banks all over this 
country and cause sweep investigations of incentive sales 
programs and cross-selling programs or consultative selling, 
which is really what we're talking about.
    But I hope that we will also ask our regulators where they 
were at this time. The OCC clearly needs to improve rating for 
you in compliance and some intensive work you were doing over 
those 2 years. But I see no evidence so far that the CFPB, 
which actually has the statutory obligation to be engaged here, 
was taking action.
    So the last thing I'll ask you about is, Mr. Himes talked 
about materiality. And in any one quarter, accountants and 
lawyers and bean counters and companies in your finance 
department tell you what's material and what's not. But we see 
sometimes the trees for the forest in that situation. And 
you've got the ability and your board has that ability to 
address that. In the chairman's letter to your shareholders--
you don't need a lawyer to tell you what to write in your 
chairman's letter. And when you spend 50 percent in fines and 
penalties of your net income over a 3-, 4-, 5-year period, 
that's material. Ten billion compared to 22 billion, it's a big 
deal, no matter how many small bites at the apple that it comes 
in.
    And I hope in your 2016 letter to shareholders, that you 
and your lead director, Mr. Sanger, will address what I think 
is a systemic failure in a few areas of Wells Fargo that's 
tarnished this beautiful almost 2-century reputation of your 
company.
    And, with that, I yield the balance of my time to Mr. 
Guinta from New Hampshire.
    Mr.  Guinta. I thank the gentleman from Arkansas.
    Mr. Stumpf, I want to follow up a little bit on the 
regulators. How many regulators did the OCC have on-site at the 
time?
    Mr.  Stumpf. I didn't hear the question. Please.
    Mr.  Guinta. OCC. How many examiners did they have at Wells 
Fargo at the time?
    Mr.  Stumpf. I think I testified earlier, I think it's 
around 80.
    Mr.  Guinta. Okay. And how many do they have at Wells Fargo 
today?
    Mr.  Stumpf. I don't have that number, but I think it's 
about the same number.
    Mr.  Guinta. Same number? How about the Federal Reserve?
    Mr.  Stumpf. I don't know that number.
    Mr.  Guinta. And how about the CFPB today?
    Mr.  Stumpf. I don't know that number.
    Mr.  Guinta. Did anyone at the CFPB instruct you or your 
team or advise you not to share those numbers with Congress?
    Mr.  Stumpf. I have not spoken with the CFPB on that.
    Mr.  Guinta. Has anyone on your team, to your knowledge?
    Mr.  Stumpf. Nobody on my team has said anything to me 
about not sharing any numbers.
    Mr.  Guinta. I ask that because--
    Mr.  Stumpf. On that issue.
    Mr.  Guinta. I ask that because you seem very reluctant to 
share the information with us as to how many examiners from the 
CFPB either were or are currently at Wells Fargo, and that 
concerns me.
    Mr.  Stumpf. I want to make sure I'm very clear on this. I 
happen to know the OCC number because I was talking with the 
OCC, but I don't know the other ones.
    Chairman  Hensarling. The time of the gentleman from 
Arkansas has expired.
    Now the gentleman from Colorado, Mr. Tipton, is recognized.
    Mr.  Tipton. Thank you, Mr. Chairman.
    Mr. Stumpf, I have a letter from someone who has never had 
an account with Wells Fargo, had an account fraudulently 
opened, and was sent back from your compliance department, the 
Wells Fargo financial crimes manager, telling someone who 
wasn't your client that he needed to be able to provide a 
complete, signed, notarized return affidavit of identify theft, 
provide documentation, collection letters he may have received, 
request a letter of verification for Social Security number 
from the Social Security Administration, send a copy of the 
police report stating he was a victim of identify fraud, send a 
copy of his driver's license, send proof of address, send a 
copy of previous bills, statements, invoices during the time 
frame of fraud. He didn't even have an account with you. Isn't 
that a little bit burdensome? And what are you doing to be able 
to respond to people who have no connection with Wells Fargo 
but yet are now swept up in the net of the challenges that your 
organization has created?
    Mr.  Stumpf. Yes. So on that issue, I would like to see it 
so our people could take a look at it. I don't know that issue 
specifically, but that sounds to me a lot like identify theft 
by someone else.
    Most of what we saw, and I can't say exclusively, but of 
the 2 million accounts that could not be excluded, those were 
accounts that people already had at the bank and one of our 
bankers improperly opened a second account that our system 
closed. So this sounds a lot like identify theft to me. But I 
don't know that situation in particular. I'd like to look at 
it.
    Mr.  Tipton. I'd like to be able to get a little personal 
assessment by you of you. Would you label yourself as CEO/
chairman of Wells Fargo as aware and engaged?
    Mr.  Stumpf. Well, I believe I am. I love this company. 
I've been here a long time, and I spend most of my waking hours 
thinking about this company.
    Mr.  Tipton. I'd like to be able to follow up a little bit 
maybe on Mr. Neugebauer's question in regards to the board. You 
said you think about it a lot, all of your waking hours. When 
did you make the board aware of the issues?
    Mr.  Stumpf. The board was made aware, generally, of issues 
by--in committees at high levels in the 2011-2012 timeframe. By 
2013, we had talked about maybe in one--I can't remember which 
committee it was. Surely by 2014. And then when we finally 
connected the dots on customer harm in 2015, the board was very 
active on this.
    Mr.  Tipton. So you discovered it in 2013. You were aware, 
you were engaged. We are now in 2016, and now you're rapidly 
starting to respond. There seems to be a little bit of a 
disconnect in terms of the response mechanism that you're 
having there. Mr. Hill had just brought up, and you gave a 
response, saying that you had a sense of urgency. Who have you 
fired?
    Mr.  Stumpf. As I mentioned, we fired managers, managers' 
managers, and managers of managers. And we're doing a full 
review of anybody who was responsible for any behavior of any 
kind that would not put customers first.
    Mr.  Tipton. So are you trying to be able to say really 
that these were just kind of lone wolves acting independently? 
Or were they following policies that came from the engaged, 
urgent manager who is the CEO and chairman of Wells Fargo?
    Mr.  Stumpf. They were doing exactly the opposite of what a 
CEO wanted them to do. Everything I've talked about, everything 
that we train, everything that we publish--
    Mr.  Tipton. So do you have a problem with monitoring from 
the top down?
    Mr.  Stumpf. We should have done more. It was our 
monitoring that found this behavior. We should have done more 
sooner. I give you that, Congressman.
    Mr.  Tipton. You have an infrastructure that is set up, a 
chain of command, in terms of your organizational chart. 
Somebody was overseeing the manager of the manager--however you 
want to be able to describe that.
    Mr.  Stumpf. Yes.
    Mr.  Tipton. Are there going to be any consequences at that 
level?
    Mr.  Stumpf. We're going to let the facts take us where 
they are, and people will be held accountable. I can guarantee 
that.
    Mr.  Tipton. Do you have any kind of timeframe for that?
    Mr.  Stumpf. I don't want to foreclose anything that we do 
to make sure we do it right and people are held accountable.
    Mr.  Tipton. There was a report that came out of The Wall 
Street Journal that said that a person in charge of creating 
the yearly sales plan for the community banking unit didn't 
know that the numbers were exaggerated. Can you identify 
exactly, though, when you're looking at this, where the 
breakdown did first start?
    Mr.  Stumpf. I don't--I didn't read that article. I don't 
know what that's referring to. But I know that a lot of us, 
including myself, should have done more earlier.
    Mr.  Tipton. Thank you.
    Mr. Chairman, my time is up. I yield back.
    Chairman  Hensarling. The gentleman yields back.
    The Chair now recognizes the gentleman from Maine, Mr. 
Poliquin.
    Mr.  Poliquin. Thank you, Mr. Chairman. I appreciate it 
very much.
    Mr. Stumpf, you're the CEO and the chairman of the board of 
Wells Fargo. Is that correct?
    Mr.  Stumpf. That is correct.
    Mr.  Poliquin. How long have you had that position?
    Mr.  Stumpf. I was named CEO in the summer of 2007 and I 
was named--
    Mr.  Poliquin. Okay. So roughly--
    Mr.  Stumpf. --chairman in, okay, beginning of 2010.
    Mr.  Poliquin. Okay. So 6, 8, 9 years in that--roughly in 
that position?
    Mr.  Stumpf. Yes.
    Mr.  Poliquin. How long have you been at the bank?
    Mr.  Stumpf. I've been at the bank--it will be 35 years 
in--
    Mr.  Poliquin. Okay. So you've been at the bank a long 
time. And one could conclude, and I think you would agree with 
me, you know the bank pretty well.
    Mr.  Stumpf. I love this company, yes.
    Mr.  Poliquin. Yes, okay. You know what really bothers me, 
Mr. Stumpf, along with other things? It's that I'm looking at 
this pattern of you folks ripping off your customers, getting 
caught, paying a fine, and doing the damn thing all over again. 
Now, we just had on the board a minute ago, 13 instances of 
this in the last 6 years. And you paid a total of $11 billion 
in settlement fines.
    Now, you just stood here before us and told us several 
times you know the difference between right and wrong. You're 
the head banana over there. I look at you, I look at Wells 
Fargo. I know it's a big organization. 268,000 employees. 
268,000 jobs. Thank you for that, sir. But you know something? 
I don't think management, which means you, knows the difference 
between right and wrong.
    But I'll tell you who does. The people I represent in 
Maine. I represent 650,000 of the most honest, hardworking 
people you can ever find anywhere. They know the difference 
between right and wrong. And one thing I want to just throw out 
in your lap right now, be very clear. I don't know where this 
is going. But I will not support in any way, shape, or form any 
kind of bailout using taxpayer money for Wells Fargo. You will 
have to get through me, and through a lot of other people on 
this committee.
    Now, here's what I worry about. I don't worry about Wells 
Fargo. You have 268,000 employees. How many attorneys do you 
have over there?
    Mr.  Stumpf. I don't have that number.
    Mr.  Poliquin. Okay. Do you have more than 10?
    Mr.  Stumpf. Yes.
    Mr.  Poliquin. Do you have more than 1,000?
    Mr.  Stumpf. I don't--no, I don't--
    Mr.  Poliquin. Okay. You have a lot of attorneys, right?
    Mr.  Stumpf. Yes.
    Mr.  Poliquin. I don't worry about you folks. Somehow, some 
way you're going to make your way through this. You know who I 
worry about? I worry about our 31 community banks, local banks 
in the district that I represent. Highly rural, Mr. Stumpf. 
Thirty-one community banks, 500 branches, 9,200 employees. Good 
paychecks, good jobs with good benefits. We also have 58 credit 
unions with 196 branches and 2,250 employees. These folks are 
relied upon in their communities. They take their paychecks, 
and they trust the teller, and they trust the bank manager. But 
do you know what happens? When this happens, it flows downhill.
    And that's exactly what happened in the financial meltdown 
7, 8 years ago, is that all of a sudden because of a small 
handful of big money center banks that took too much risk with 
the problem with the regulators, I understand this, everyone 
was culpable. But all of a sudden, we have this very smothering 
set of financial regulations that are choking off home loans, 
mortgages to the folks in my district. They can't get a small 
business loan to put a new diesel in their lobster boat.
    Now you come along. I don't know where this is going to go, 
but I will tell you this. The probability will be high that 
your organization and the actions of you in your organization, 
this systemic pattern of misbehavior and gross mismanagement, 
and it looks like fraud, is going to find its way to the 
community banks and the folks who rely on them in rural Maine. 
You ought to be ashamed of yourself.
    What do you tell a family? What do you tell a family who is 
looking to add their fourth child to their family and they need 
to put a put a new bathroom in their house in Ellsworth, Maine, 
and they can't get a loan because of the regulations? And now 
it's going to get worse. What do you tell them?
    Mr.  Stumpf. Senator, I'm--
    Mr.  Poliquin. Congressman.
    Mr.  Stumpf. Congressman.
    Mr.  Poliquin. You're asleep over there.
    Mr.  Stumpf. I'm so sorry, Congressman. I'm sorry for what 
we've done. Our people also live and work in these 
neighborhoods, in these communities, and we're trying to do the 
right thing. I can't--
    Mr.  Poliquin. You should have been trying to do the right 
thing, Mr. Stumpf, during these 13 settlements, fines, call 
them what you want, over 6 years totaling $11 billion. That's 
the pattern that I see.
    Mr.  Stumpf. Yes. Well, there's no question that we've had 
a lot of settlements. And every one we've learned from and 
we're trying to do a better job. Thank you much.
    Chairman  Hensarling. The time of the gentleman has 
expired.
    There are no other Members in the queue. I wish to thank 
our witness for his testimony today.
    The Chair notes that some Members may have additional 
questions for this witness, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to this witness and to place his responses in the record.
    Mr. Stumpf, we will expect you and your organization to 
respond promptly and to fully cooperate with our ongoing 
investigation.
    Also, without objection, Members will have 5 legislative 
days to submit extraneous materials to the Chair for inclusion 
in the record.
    This hearing stands adjourned.
    [Whereupon, at 2:10 p.m., the hearing was adjourned.]




                            A P P E N D I X



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