Farmers Elevator Company of Alvarado

Home
About Us
FECA Services
Seed
Cash Bids
Personnel
 


 
Printable Page Headline News   Return to Menu - Page 1 2 3 5 6 7 8 13
 
 
Wells Fargo CEO to Face Lawmakers      09/29 06:26

   WASHINGTON (AP) -- Wells Fargo's CEO, newly stripped of tens of millions in 
compensation in a scandal over sales practices, will face lawmakers with more 
defenses than he had in the last round, when some senators called for his 
resignation.

   Chief Executive John Stumpf comes into Thursday's hearing before the House 
Financial Services Committee able to cite the millions he and another top 
executive will forfeit, her departure from the bank, and an earlier date for 
the aggressive sales quotas to end.

   Whether the unusual takeback from his salary and stock will be enough to 
save Stumpf's job is hard to say, and his testimony at Thursday's session could 
play a role.

   It was "a step in the right direction, but there are still dozens of 
unanswered questions," said Sen. Sherrod Brown of Ohio, the Senate Banking 
Committee's senior Democrat. He and the other Democrats on the panel asked 
Stumpf on Wednesday to answer a series of 58 questions, including nearly two 
dozen that they said he failed to answer at the hearing last week or for which 
he promised to provide fuller information.

   "We still don't know how many customers were harmed and how long this fraud 
continued," Brown said in a statement. "We also don't know how many low-paid 
employees got fired for failing to meet quotas that Wells Fargo now recognizes 
were too high."

   Bank employees, in a feverish drive to meet sales targets, opened up to 2 
million fake deposit and credit card accounts without customers' knowledge, 
issued and activated debit cards, and signed people up for online banking 
without permission, according to regulators. The abuses are said to have gone 
on for years, unchecked by senior management.

   U.S. and California regulators fined San Francisco-based Wells Fargo $185 
million. California Treasurer John Chiang also said Wednesday he's suspending 
some of the state's business with the bank. He plans to stop using Wells Fargo 
as the managing underwriter on certain categories of bond sales, will avoid 
buying Wells Fargo securities and won't use the bank as a broker for investment 
purchases for the next 12 months.

   Chiang also said Stumpf should resign, and that the Wells Fargo board should 
separate the chairman and CEO positions that he now holds.

   The consumer banking giant, which is also the biggest U.S. mortgage lender, 
fired about 5,300 employees starting in 2011 in connection with the sales 
practices. The revelations sparked investigations by federal agencies and 
bipartisan outrage in Congress.

   At the highly charged hearing last week, Stumpf was barraged with criticism 
from senators who accused the bank of outright fraud. He was chided for 
scapegoating lower-level employees --- bank tellers, customer service reps and 
branch managers --- rather than focusing on senior management's failures.

   Stumpf apologized and promised action to make things right for customers who 
were affected, a sentiment he is expected to reiterate Thursday. Customers 
already have been refunded $2.6 million in fees slapped on unauthorized 
products, the bank says.

   The Wells Fargo board acted Tuesday to strip Stumpf and the executive who 
ran the retail banking division of millions of dollars in pay, a move known as 
a "clawback" that falls within company directors' authority. Stumpf, who earned 
$19.3 million last year, will forfeit $41 million in stock awards.

   He also is giving up any bonuses for this year, as is Carrie Tolstedt, the 
former head of the retail operation. Tolstedt announced in July that she would 
retire from the bank this year and had been expected to leave with as much as 
$125 million in salary, stock options and other compensation. She is forfeiting 
$19 million of her stock awards, and her departure was made immediate.

   The outside directors on the bank's board didn't rule out the possibility of 
pursuing additional repayment from Stumpf or Tolstedt, depending on the results 
of an investigation they're conducting.

   Few top bank executives have had their compensation clawed back in the years 
since the financial crisis starting in 2008. While unusual, the move by the 
board "was the right thing to do," said Charles Elson, a professor and director 
of the Weinberg Center for Corporate Governance at the University of Delaware.

   Short of forcing Stumpf to resign, the board may move to split the CEO and 
company chairman roles that Stumpf holds, Elson suggested. Stumpf, CEO since 
2007, added the chairman title in January 2010.

   "It may be that he's asked to retire in a year or so," said Gene Grabowski, 
a crisis management consultant who's a partner at the firm kglobal.

   Tamar Frankel, a law professor at Boston University whose area of study 
includes corporate governance, believes the best scenario would be for Stumpf 
to keep his job but institute real changes.

   "At the highest level, what went wrong was culture," Frankel said. The 
guiding ethic was "if you bring in money, you're OK. If you don't, you're no 
good."


(KA)

 
Home   Product   Services   About   Contact
Copyright 2006 Farmers Elevator Company of Alvarado