Tester Grills Wells Fargo CEO About Culture of Deception

Sen. Tester: “Thank you Mr. Chairman and Ranking Member Brown for having this hearing. I’ve been on this committee for nearly 10 years now. You have done something that has never happened in the past 10 years by uniting this committee on a major topic — and not in a good way. Credit card accounts were opened, folks didn’t know about them. There were fees charged, potentially fines charged. And if customers were unaware that these accounts were opened up, there must have been many instances — since there were two million accounts opened up — when negative information was sent to credit bureaus. Is that accurate?”

Mr. Stumpf: “The part that’s accurate is there’s 565,000 credit cards that were opened up that were never activated. About 400,000 of those have customer signatures on them. And less than 6% of those accounts that we opened during that time were not activated, which is a pretty standard industry practice, because people might have them. We’re going to go back to each one of those customers now and find out if that was a legitimate signature and an open and if it’s not we’ll make it right…”

Sen. Tester: “Ok, but that’s not what I asked. I asked was negative information turned into the credit bureaus because of these actions.”

Mr. Stumpf: “I don’t know the algorithms of how credit bureaus…but I want to answer your question. I know that when a credit bureau is requested, it has an impact on your credit score.”

Sen. Tester: “Well, this is a big deal.

Mr. Stumpf: “Yes it is.”

Sen. Tester: “And I’m telling you, it is a big deal. I could ask you for the age breakdown on these two million accounts that were opened up, but I am telling you that if information was sent into the credit bureaus, because of these falsely-opened accounts, the impacts on this are far, far, far more than the fees or fines that could be associated with that. What is Wells Fargo doing about that? Or did that information not get reported to the credit bureaus?

Mr. Stumpf: “Well when we pull a credit…”

Sen. Tester: Just tell me. Did the information, if there were fees and fines involved, and the credit bureaus request it, or even if they didn’t, did that information get forwarded to the credit bureaus?”

Mr. Stumpf: “Sir, I’m trying to work with you.”

Sen. Tester: “A yes or no works.”

Mr. Stumpf: “Yes, yes, we pull a credit bureau for each one of these cards.”

Sen. Tester: “Ok, so what’s Wells doing about fixing that problem — and be concise.”

Mr. Stumpf: “Ok, we are calling each credit card customer to find out if this truly was a card they wanted. If they want it, we don’t want to take away their credit. If they did not want it, we’re going to go back and make sure that it’s made right by the credit bureau and made right by the customer.”

Sen. Tester: “And what’s the time frame for that?”

Mr. Stumpf: “We already started that process.”

Sen. Tester: “Ok, so now this took five years, it’s been documented. 2011 — and maybe it even started before that — but 2011 to fairly recently. Now, if I had had a credit card issued in that first volley and in the meantime, between 2011 and now, I decided to buy a house and that information was reported to the credit bureau, it could make, you probably know the figure, maybe half a percent difference, maybe more than that. And on a $500,000 mortgage the difference between three and a half and four percent is fifty grand over thirty years. What’s being done about that?”

Mr. Stumpf: “We will look at each one of those and determine what…”

Sen. Tester: “So you’re going to go back in and find out — even if they didn’t do business through Wells — if they bought a house, and what Wells did impacted their credit rating, you’re going to go back and find those folks?”

Mr. Stumpf: “I’m going to go back…we’ve committed to go back to all of our credit card customers and find out…”

Sen. Tester: “What about the ones that got…you’ve refunded all their fines, you’ve refunded all their fees, you’ve went back to the credit bureau and re-established their credit rating as of today, what about the folks that may have bought a house through Chase and got a higher interest rate because of it. How are you going to find those folks?”

Mr. Stumpf: “We’re working on that. I’ve told our people: ‘Go back and make it right.’ As we start going through that, I’m happy to have our team come back and report to you how we’re working on that.”

Sen. Tester: “I think it’s really important that you understand that this is a big deal. I mean, it’s a big deal. And I know you feel bad about it, we feel bad about it, but the truth is there’s real world implications here on young families — and old families — that are going to be put into a poverty situation because of this. Even though we think it’s just a few hundred bucks in fees. It’s more than that. Much more than that. So…you found out in 2013 — and I don’t want to beat this horse anymore — but did you find out they were actually setting up accounts with fraudulent signatures in 2013?”

Mr. Stumpf: “You know, I learned that some of our team members were not doing the right thing and they were opening accounts on customers and then we truncated those.

Sen. Tester: “Because it would seem to me that if you guys knew about that, a simple edict would have been pretty helpful: Don’t do this. If you do this, you’re gone.”

Mr. Stumpf: “And that’s…we had even more than that. And what we should have done is get rid of our incentive program.”

Sen. Tester: “The last thing — and this is just a statement — but I can tell you, you’ve said multiple times here that 5300 people went and that’s basically one percent of your workforce. Every time you say that, you give ammunition to the folks who want to break up the big banks. 5300 people are more people than live in most towns in Montana. Two million people is twice the population of the entire state. This is a major screw-up that went on for far, far, far, far too long and I think you know that but man, there’s gonna be a lot of work that has to be done to rectify this situation, if it ever can be rectified. Thank you Mr. Chairman.”