Less than a week after Wells Fargo was slapped with a historic $185 million fine to settle customer fraud allegations, CEO John Stumpf is starting to open up about the scandal.
But instead of taking responsibility for what’s been described as a “pressure-cooker sales culture,” Stumpf seems to be blaming low-level Wells Fargo employees for opening up millions of fake bank and credit card accounts and billing customers for services and products they didn’t request.
In a Tuesday interview with The Wall Street Journal, Stumpf refused to say who was responsible for the corporate culture that regulators say led to the creation of more than 2 million deposit and credit card accounts that customers didn’t necessarily authorize.
Stumpf insisted there was nothing in Wells Fargo’s atmosphere that encouraged these practices. “There was no incentive to do bad things,” he told the Journal.
Instead, he appeared to lay blame at the feet of what he characterized as a minority of bad employees who didn’t “honor” the bank’s culture. Wells Fargo has said that at least 5,300 employees were fired over a five-year period for “inappropriate sales conduct.”
Not everyone in the financial industry accepts Stumpf’s assertion that Wells management knew nothing of the shady practices.
“Stumpf has clearly forgotten Harry Truman’s maxim that ‘the buck stops here.’ He’s responsible for how the org runs,” said Helaine Olen, a financial columnist at Slate and the author of the personal finance industry exposé Pound Foolish.
“It takes a particular level of what my grandmother called ‘chutzpah’ to ― when you are earning millions of dollars annually ― to turn and dump the blame on what are fairly low-paid employees,” Olen told The Huffington Post.
Shifting the blame to employees is “an astonishing indictment of how people in power think,” she said.
““Come on...this went on for years and they didn’t smell anything in the air about fake accounts?””
Sen. Elizabeth Warren (D-Mass.), who is set to grill Stumpf next week when the Senate Banking Committee holds a hearing on Wells Fargo’s fake customer accounts, has been equally dubious that the company’s higher-ups were in the dark about the sales practices.
“Come on...this went on for years and they didn’t smell anything in the air about fake accounts?” Warren told CNN last week.
In a later appearance on CNBC’s “Mad Money,” Stumpf modified his stance somewhat, telling host Jim Cramer that “the buck stops with all of us” and “especially me.”
Stumpf also pushed back on the idea that he should resign in the wake of the scandal, telling Cramer the best thing he can do right now is to lead the company.
Olen and Cramer both pointed to E. Scott Reckard’s bombshell 2013 story in the Los Angeles Times that exposed the very culture Stumpf denied knowing about ― even as the practices raised in the report prompted employee dismissals.
“From that day forward, Wells had to know it had a problem,” Olen said. “But the settlement last week did not take on any of the higher-ups, and that is concerning.”
Olen said Stumpf’s denials “could come back to bite him” if the Securities and Exchange Commission decides to investigate Wells Fargo and finds evidence that contradicts his claims.
On Wednesday, federal prosecutors said they plan to investigate the bank. No civil or criminal charges against anyone with Wells Fargo have been announced, but prosecutors have issued a subpoena for documents.
A spokeswoman for Wells Fargo declined to comment to HuffPost.
“We’ve seen that very few in the financial services sector are held to account for anything right now,” Olen said. “I find it hard to believe that if there’s already this [Consumer Financial Protection Bureau] settlement, when there’s a fairly decent body of evidence saying Wells had to know about this. It defies reason that they were unaware of this.”