Receiving Wide Coverage ...
How long?: Wells Fargo CEO John G. Stumpf told the Senate Banking Committee the bank's pervasive pattern of illegally opening banking accounts without its customers' permission may have gone on even longer than previously believed. "Although the bank has traced the illegal account openings to 2011, it is investigating whether they may have begun even sooner," Stumpf told the panel, according to the New York Times. Stumpf said he found about the situation in 2013, with the board the board being apprised in 2014. "It was not fast enough, not far enough," Stumpf said. "I apologize for that."
Stumpf faced "bipartisan outrage" during his more than two hours of testimony, the Wall Street Journal reported. "You have done something I've never seen in 10 years," Sen. Jon Tester, D-Mont., told Stumpf. "You have united this committee — and not in a good way."
No senator was harder on the Wells CEO than Sen. Elizabeth Warren, D-Mass., who called on Stumpf to resign and for him to be criminally prosecuted. "Have you returned one nickel of the money that you earned while this scandal was going on?" Warren asked. "Have you fired any senior management, the people who actually oversaw this fraud?" to which Stumpf answered, "No." "Your definition of accountability is to push this on your low-level employees. This is gutless leadership," she added. The only way Wall Street bankers will change is if they serve jail time, she asserted.
When questioned, Stumpf said he had never considered firing Carrie Tolstedt, the executive who formerly headed the bank's retail banking unit, the focal point of the scandal, given "her full body of work." That set Warren off again. "Seriously?" she asked. "You found out that one of your divisions had created two million fake accounts, had fired thousands of employees for improper behavior and had cheated thousands of your own customers and you didn't even once consider firing her ahead of her retirement?" Tolstedt stepped down from the post in July and plans to retire at the end of the year. Warren and other senators have asked Stumpf if the bank intends to claw back any of the $20 million in annual bonuses Tolstedt received over the past five years.
Banking regulators also came in for some criticism at the hearing for failing to unearth Wells' cross-selling practices earlier. "Where were the federal regulators during these years?" Sen. Richard Shelby, R-Alabama, the chairman of the committee, asked in his opening statement. "If there were ever a textbook case where consumers needed protection, this was it. How many millions of unauthorized accounts does it take before the CFPB notices?"
Senators also wanted to know what Wells plans to do about its customers' credit scores that may have been damaged by taking on unwanted credit card and other accounts. "There's real-world implications here on young families, on old families," Tester told Stumpf, who replied, "My instructions have been to make it right by every customer." But that may not so easy to do.
On board: JPMorgan Chase named Todd Combs, one of Warren Buffett's two main stock pickers, to its board of directors, "bringing the patina of Berkshire Hathaway to the bank," in the words of the Wall Street Journal. Berkshire doesn't have a stake in JPMorgan, but Buffett and JPM CEO Jamie Dimon are friends and mutual admirers. "Although senior Berkshire executives occasionally sit on boards of companies in which Mr. Buffett's company owns a stake, it is less common for a Berkshire executive to sit on an outside board," the Journal said.
No mas: Santander ended talks to acquire Williams & Glyn from Royal Bank of Scotland after submitting a formal offer last month to buy the 300 W&G branches, the Financial Times reported. The pullout by the Spanish bank "is a significant setback for RBS, which is 73 per cent-owned by the UK government, after it has spent seven years and £1.5 billion attempting to separate itself from Williams & Glyn." RBS has until the end of next year to unload Williams & Glyn as part of its £45 billion bailout. Ross McEwan, RBS's CEO, has also said a sale is a precondition for returning excess capital and dividends to stockholders.
In the black: OakNorth, an online-only U.K. bank that focuses on small-business loans, said it made money in its first year, "the first such digital lender to turn a profit within 12 months," the Financial Times reported. "Doubt has been cast by some analysts about the ability of start-ups to attract customers from established banks, as well as increase lending amid uncertainty in the wake of the UK's vote to leave the EU." But OakNorth said its loan volume has nearly doubled since the Brexit vote.