Merkley Questions Wells Fargo CEO John Stumpf on Illegal Accounts — Transcript

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1. 0:00Senator Merkley uh thank you m Mr stump
2. 0:03did Wells Fargo create a pressure cooker
3. 0:05sales culture that put personal bankers
4. 0:07and tellers in impossible situation
5. 0:09between a rock and a hard place I do not
6. 0:12believe that because 90 you know the
7. 0:16vast majority let me let me continue uh
8. 0:19you got got your answer thank you so uh
9. 0:21Rita merilla a branch manager says
10. 0:24Regional bosses required hourly
11. 0:25conferences on her Florida Branch's
12. 0:27progress toward daily quotas for opening
13. 0:29accounts and sing customers extra such
14. 0:31as overdraft protection an issue that
15. 0:33hasn't been addressed yet employees who
16. 0:35lagged behind had to stay late and work
17. 0:37weekends then came the threats anyone
18. 0:40falling short after two months would be
19. 0:42fired we were constantly told we'd be
20. 0:44working for McDonald's if we did not
21. 0:46make the sales quotas we had to stay for
22. 0:48after school detention it felt like or
23. 0:50report to a call session on Saturdays is
24. 0:54that a pressure culture situation
25. 0:55putting tellers and personal Bankers in
26. 0:58an impossible situation Sen
27. 1:00that has no place in our culture I've
28. 1:02actually read that and it hurt to hear
29. 1:04those words and people like that do not
30. 1:06belong here Eric Estrada former Wells
31. 1:09personal banker and business specialist
32. 1:11said managers coached workers on how to
33. 1:13inflate sales number employees open
34. 1:15duplicate accounts sometimes without
35. 1:16customers knowledge they used a database
36. 1:19ID of customers who had been
37. 1:20pre-approved for credit cards and
38. 1:22ordered them they were coached on it is
39. 1:25that a setting in which a pressure
40. 1:28culture pressure cooker culture really
41. 1:31puts the personal Bankers in an
42. 1:32impossible situation that has no place
43. 1:35in Wells Fargo there's nothing that we
44. 1:37did to encourage that nothing you did
45. 1:39but bank managers were being coached on
46. 1:42how to coach their employees on how to
47. 1:45do this let's how about a branch manager
48. 1:48in the Pacific Northwest where I come
49. 1:49from she was very upset finding
50. 1:52employers had talked to homeless woman
51. 1:54in opening six checking accounts she
52. 1:55said it's all manipulation we are taught
53. 1:58exactly how to sell multiple accounts it
54. 2:02sounds good but in reality it doesn't
55. 2:04benefit most
56. 2:05customers or let's talk about yenia
57. 2:08guitron who in
58. 2:112008 after being hired for two months
59. 2:14found that this was happening these
60. 2:16false accounts are happening she went to
61. 2:18her trainer then she went to her
62. 2:20manager and she was
63. 2:25basically found she was she was pushed
64. 2:28very hard to shut up in all kinds of of
65. 2:31different ways so you say well the
66. 2:34employee could have gone to somebody she
67. 2:36did and um eventually she filed a
68. 2:40whistleblower suit and why did Wells
69. 2:42Fargo say that that was not legitimate
70. 2:45I'll just save you the time the answer
71. 2:47is because Wells Fargo said we fired her
72. 2:48because she didn't meet her
73. 2:50quotas so here we have a situation where
74. 2:53employees are written up they have to
75. 2:56stay late they have to come in on
76. 2:58weekends to be coached they're at risk
77. 3:00of being fired that sounds like a
78. 3:03systemic management strategy for cross-
79. 3:06selling but you refuse to take any
80. 3:09responsibility blaming it on the
81. 3:11personal ethics of individual employees
82. 3:14who are at risk of losing their job if
83. 3:16they didn't meet their quote daily
84. 3:17Solutions Target can you even
85. 3:20conceivably Place yourself in the
86. 3:22position of an ordinary working person
87. 3:25has a child in daycare they're told
88. 3:27they're going to be fired if they don't
89. 3:28meet these Solutions they're being
90. 3:29coached on how to do it by their manager
91. 3:31and say that there was no culture
92. 3:34established that caused these problems
93. 3:37sir Senator I am very sorry that that
94. 3:41happened that was not what we wanted to
95. 3:43have happen when those things happened I
96. 3:46I wish we would have rooted all of it
97. 3:48out and the vast majority of our people
98. 3:50did it the right way Sheriff Kellogg
99. 3:52said the branch managers were always
100. 3:53asking how many solutions that's signing
101. 3:56up new accounts did you sell today they
102. 3:58wanted three to four a day in my mind
103. 4:00that was crazy that's not how people's
104. 4:02Financial lives work I was always
105. 4:04getting written up for failing to bump
106. 4:07up my Solutions numbers some employees
107. 4:10would ask local business owners who they
108. 4:12knew well to open additional accounts as
109. 4:14favors to them it seems as though you'd
110. 4:17have to be willing fully ignorant to
111. 4:19believe that these goals are achievable
112. 4:22through any other
113. 4:25means cross- selling is a major Pride
114. 4:28point for the management of Wells Fargo
115. 4:30including your reports to to annual
116. 4:33annual reports to customers it was so
117. 4:36high because you created a culture of
118. 4:38cross- selling that pushed everyone to
119. 4:39the maximum and the casualties are these
120. 4:42folks who were going to be fired because
121. 4:44they'd lose their jobs if they didn't
122. 4:45meet it and yet you can only sit here
123. 4:48and say it was there was no coaching
124. 4:51there was no management strategy cost
125. 4:53selling was at the heart of Wells Fargo
126. 4:55program and you were at the top of this
127. 4:59for a very long time let's go back to
128. 5:032005 2007 2010 you had one major
129. 5:07position in promotion after another
130. 5:09Crossing was at the heart of it and you
131. 5:11just sit here and blame the little
132. 5:13person who was pressured into an
133. 5:16impossible situation isn't that really
134. 5:18kind
135. 5:19of for one of another word a failure to
136. 5:23accept responsibility Senator I started
137. 5:26out today by accepting full
138. 5:28responsibility we like the full
139. 5:31responsibility for establishing a
140. 5:32culture that put people in impossible
141. 5:34situation would be to resign as my
142. 5:36colleague suggested it would be to
143. 5:38return your funds and help fund
144. 5:40assistance for all these people who were
145. 5:42fired because of the culture you
146. 5:43established and that you personally
147. 5:44benefit enormous amount from but all you
148. 5:47say you say I accept responsibility and
149. 5:49by the way it's the fault of those 5,000
150. 5:51people who just weren't ethical enough
151. 5:54and and open an account they shouldn't
152. 5:56have opened that's not accepting
153. 5:57responsibility this was a system MC
154. 6:00problem that you benefited from
155. 6:02enormously the bank benefited from
156. 6:04enormously and you are scapegoating the
157. 6:07people at the very bottom Senator I am I
158. 6:11I I just need I don't want to be
159. 6:13confrontational but I want to just tell
160. 6:15you that the vast majority did the right
161. 6:17thing we love the idea of having deep
162. 6:21mutually beneficial relationships with
163. 6:22our customers having a product that a
164. 6:25customer does not use does not need or
165. 6:27does not want does not help the customer
166. 6:30it does not help me and it does not help
167. 6:32the shareholder you signed Ox Banes
168. 6:35sarban Oxley reports did you ever reveal
169. 6:40the problems with this high pressure
170. 6:42sales strategy in terms of fraudulent
171. 6:44credit accounts anytime in that course
172. 6:47towards 2 million 2 million fraudulent
173. 6:50accounts did you ever disclose that to
174. 6:51your investors well let me just say well
175. 6:54yes or no simple question Senator the
176. 6:57question is 2 million project there was
177. 6:592 million accounts that we could not
178. 7:01rule out as a possibility that they
179. 7:03weren't authorized I'm so glad you
180. 7:05crossed that tea and dotted that eye did
181. 7:07you ever disclose the systemic problem
182. 7:10of fraudulent accounts to your investors
183. 7:12it it was it was not a material event so
184. 7:15you bragged on the one end about the
185. 7:18Intensive ability to get cross selling
186. 7:21and how that would be beneficial but the
187. 7:24problems that came from that strategy
188. 7:27the very problems that dozens and dozens
189. 7:29of people have shared their stories
190. 7:31about how it was on the ground and you
191. 7:34can only blame them for ethical lapses
192. 7:37you never disclosed you had a systemic
193. 7:39problem again you signed those reports
194. 7:41personally that's what sarban o was
195. 7:43didn't you think that that was material
196. 7:46when you're saying this is our big This
197. 7:48Is Our Big Win is our crossselling
198. 7:51strategy not to disclose that it also
199. 7:53had a dark side there there was a lot of
200. 7:56things that our customers do and a lot
201. 7:58of businesses that we have this is one
202. 8:00ratio and most of this business first of
203. 8:03all all of deposit accounts are off the
204. 8:04books they most of them went on and off
205. 8:06within the same quarter in which they
206. 8:08happen having a customer have a product
207. 8:10that they do not need is not helpful
208. 8:12it's not what we want I'm going to close
209. 8:15just by saying I would like to hear
210. 8:18about the the the amount of slamming
211. 8:20that went on on overdraft protection
212. 8:22since that's come up in a number of the
213. 8:23employees talk about how they were
214. 8:25pressured into adding that do you have
215. 8:27details on that I I do not I
216. 8:30exensive details on that I I don't know
217. 8:32that issue uh uh at the top of my head
218. 8:35but I'll have my staff uh instruct them
219. 8:38to work with your team as quickly as
220. 8:39they can can you can you get the
221. 8:41information for the full committee I I
222. 8:43I'll I'll have my team work with your
223. 8:44team I don't even know exactly what
224. 8:46we're talking about you don't know what
225. 8:47overdraft protection is I know what
226. 8:49overdraft protection is I know that we
227. 8:51had a credit card product for an
228. 8:54overdraft protection but I I'll have my
229. 8:56team work with your team and please get
230. 8:58the information to the full committee
231. 8:59thank thank you Senator Brown you have