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23–001 PDF 2017

S. HRG. 114–510 

AN EXAMINATION OF WELLS FARGO’S UNAUTHORIZED ACCOUNTS AND THE REGULATORY 

RESPONSE 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

ON 

EXAMINING WELLS FARGO’S UNAUTHORIZED ACCOUNTS AND THE 

REGULATORY RESPONSE 

SEPTEMBER 20, 2016 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.fdsys.gov/ 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

RICHARD C. SHELBY, Alabama, Chairman 

MIKE CRAPO, Idaho 

BOB CORKER, Tennessee 

DAVID VITTER, Louisiana 

PATRICK J. TOOMEY, Pennsylvania 

MARK KIRK, Illinois 

DEAN HELLER, Nevada 

TIM SCOTT, South Carolina 

BEN SASSE, Nebraska 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

JERRY MORAN, Kansas 

SHERROD BROWN, Ohio 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

JON TESTER, Montana 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

ELIZABETH WARREN, Massachusetts 

HEIDI HEITKAMP, North Dakota 

JOE DONNELLY, Indiana 

WILLIAM D. DUHNKE III, Staff Director and Counsel 

MARK POWDEN, Democratic Staff Director 

DANA WADE, Deputy Staff Director 

JELENA MCWILLIAMS, Chief Counsel 

BETH ZORC, Senior Counsel 

SHELBY BEGANY, Professional Staff Member 

LAURA SWANSON, Democratic Deputy Staff Director 

GRAHAM STEELE, Democratic Chief Counsel 

DAWN RATLIFF, Chief Clerk 

TROY CORNELL, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

(II)

C O N T E N T S 

TUESDAY, SEPTEMBER 20, 2016 

Page 

Opening statement of Chairman Shelby ................................................................ 1 

Opening statements, comments, or prepared statements of: 

Senator Brown .................................................................................................. 2 

WITNESSES 

John G. Stumpf, Chairman and Chief Executive Officer, Wells Fargo & Co. .... 5 

Prepared statement .......................................................................................... 71 

Responses to written questions of: 

Senators Brown, Reed, Schumer, Menendez, Tester, Warner, 

Merkley, Warren, Heitkamp, and Donnelly ........................................ 160 

Senator Brown ........................................................................................... 111 

Senator Reed .............................................................................................. 115 

Senator Menendez ..................................................................................... 122 

Senator Warner ......................................................................................... 128 

Senator Merkley ........................................................................................ 134 

Senator Sasse ............................................................................................ 135 

Senator Warren ......................................................................................... 151 

James Clark, Chief Deputy, Office of the Los Angeles City Attorney, on 

behalf of Michael N. Feuer, City Attorney, City of Los Angeles, California ... 51 

Prepared statement of Michael N. Feuer ....................................................... 74 

Thomas J. Curry, Comptroller of the Currency, Office of the Comptroller 

of the Currency ..................................................................................................... 53 

Prepared statement .......................................................................................... 75 

Richard Cordray, Director, Consumer Financial Protection Bureau ................... 54 

Prepared statement .......................................................................................... 81 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Written statement of Khalid Taha, before the Congressional Progressive Caucus Briefing: ‘‘Banking on the Hard Sell,’’ on June 10, 2016 ........................... 184 

Written statement of Julie Miller, before the Congressional Progressive Caucus Briefing: ‘‘Banking on the Hard Sell,’’ on June 10, 2016 ........................... 186 

National Employment Law Project Report, ‘‘Banking on the Hard Sell: Low 

Wages and Aggressive Sales Metrics Put Bank Workers and Customers 

at Risk,’’ by Anastasia Christman ...................................................................... 188 

(III)

(1) 

AN EXAMINATION OF WELLS FARGO’S 

UNAUTHORIZED ACCOUNTS AND THE REGULATORY RESPONSE 

TUESDAY, SEPTEMBER 20, 2016 

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The Committee met at 10 a.m., in room SD–538, Dirksen Senate 

Office Building, Hon. Richard Shelby, Chairman of the Committee, 

presiding. 

OPENING STATEMENT OF CHAIRMAN RICHARD C. SHELBY 

Chairman SHELBY. The Committee will come to order. 

Today, we will learn more about the events and the circumstances that led to the enforcement action against Wells Fargo 

by the Los Angeles City Attorney, the OCC, and the CFPB. But 

first today we will receive testimony from John Stumpf—he is 

Wells Fargo’s CEO and Chairman—who is with us today. Welcome, 

Mr. Stumpf. 

We will then hear from the Los Angeles City Attorney’s Deputy 

Chief whose office was the first to commence an action against 

Wells Fargo on this issue and, finally, from the OCC and the 

CFPB. We look forward to hearing from both panels because much 

remains unclear about what transpired at Wells Fargo and the regulators’ response. 

It appears that Wells Fargo’s own analysis concluded that thousands of its employees opened more than 2 million accounts that 

may not have been authorized. 

Subsequently, Wells Fargo terminated approximately 5,300 em- ployees and has agreed to pay $185 million in fines and $5 million 

in customer remediation. 

Sales data show that Wells Fargo has been an industry leader 

in its ability to cross-sell products, such as credit cards, checking 

accounts, and home equity loans. 

A number of former Wells Fargo employees have described a 

work environment characterized by intense pressure to meet 

aggressive and unrealistic sales goals. 

In a 2010 letter to shareholders, Mr. Stumpf wrote that Wells 

Fargo’s goal was eight products per customer because eight 

‘‘rhymed with great.’’ 

The result was a corporate culture that drove company ‘‘team 

members’’ to fraudulently open millions of accounts using their customers’ funds and personal information without their permission. 

2 

I have often said that banking is based on trust, and that trust 

was broken at Wells Fargo. 

While much has been written about these events, I believe there 

are several questions that warrant answers. 

First, when did this conduct start at Wells Fargo and why were 

the regulators unaware of this growing problem? 

Second, when did Mr. Stumpf and his senior management become aware of these activities and how did they respond? 

Third, have all of the appropriate Wells Fargo employees been 

held accountable and to what extent? 

Finally, where were the Federal regulators while certain Wells 

Fargo employees were taking advantage of unsuspecting customers 

over a period of many years? 

Here is what we do know: Wells Fargo’s internal review only covers unauthorized accounts dating back to 2011. News reports and 

court documents suggest these problems might have existed long 

before then. 

The 2013 Los Angeles Times articles led to the LA City Attorney’s Office investigation into Wells Fargo’s sales practices. 

Thousands of man-hours by a dozen dedicated LA City Attorneys 

culminated in a lawsuit filed against Wells Fargo in May of 2015. 

This timeline begs the question: Where were the Federal regulators during those years? If the OCC and the CFPB were aware 

of these issues before the LA City Attorney’s lawsuit, why did they 

wait until 2016 to bring an enforcement action? Why did it take a 

Los Angeles Times reporter to uncover what should have been uncovered by Wells Fargo’s regulators? 

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? And while the Bureau is billing this as the largest settlement in its history, it is unclear whether it had any significant role in discovering or investigating the 

bank’s conduct. 

Just as it is fair to ask Mr. Stumpf what he knew, when he 

learned it, and what he did about it, it is also fair to ask those 

same questions of Wells Fargo’s regulators. 

These are simple facts-and-circumstances questions that both the 

OCC and the CFPB should be able to answer without violating any 

confidentiality restrictions. 

I look forward to today’s hearing as both Congress and the American people—especially the aggrieved consumers—have been kept 

in the dark for far too long. 

Senator Brown. 

STATEMENT OF SENATOR SHERROD BROWN 

Senator BROWN. Mr. Chairman, thank you for calling this hearing. I want to commend the city of Los Angeles, the OCC, and the 

CFPB for their actions, and the Los Angeles Times for bringing this 

to light. I was stunned when I learned of the breadth and the duration of the fraud committed by Wells Fargo. I hope today we can 

begin to understand what went wrong and what needs to be done. 

I call it ‘‘fraud’’ because I got tired of the euphemisms a long 

time ago. I think the American people did, too. 

3 

This is not a matter of customers who ‘‘ . . . received products 

and services they did not want or need,’’ as Wells Fargo puts it. 

That makes it sound like there was a mix-up under the Christmas 

tree and I got the right-handed baseball glove that was meant for 

my brother Charlie. 

This is 5,300 employees—Wells Fargo calls them ‘‘team members’’—5,300 team members forging signatures, stealing identities, 

Social Security numbers, and customers’ hard-earned cash so as to 

hang on to their low-paying jobs and make money for the high-paid 

executives at Wells Fargo. And they did it for at least—at least— 

5 years. 

Wells Fargo’s reaction has been remarkable. It did not treat this 

as a big problem until it appeared in the newspapers. It did not 

begin to make customers whole until this year. And we do not 

know whether the bank chose to do so or was told they had to do 

so. 

Wells Fargo is taking out full-page ads claiming it is accountable 

and accepts responsibility. It has not admitted to responsibility for 

a single misdeed in the dealings with the city of Los Angeles and 

the Federal Government. 

Wells Fargo claims to have made things right with its customers, 

but its efforts have been incomplete. For example, it is not clear 

that PwC calculated the cost of a lower credit score, which might 

be paid every month for 30 years. 

At times, the bank has been downright hostile to aggrieved customers. 

Rather than letting fraud victims have their day in court, Wells 

Fargo forced customers to abide by the mandatory arbitration 

clauses in their real accounts. You heard that right: The bank invoked the fine print on a real account to block redress on a fake 

one that Wells Fargo had created. 

Wells Fargo team members, many struggling to support a family 

on $12 or $15 an hour—my understanding is Wells Fargo tellers 

make about $11.80 an hour. Wells Fargo team members, struggling 

to support a family on $12 to $15 an hour, followed their managers’ 

guidance to do whatever it took to make their quotas. Some may 

have worked off the clock; others cut corners to avoid being fired 

for missing goals—goals that Wells now admits were too high. 

They have been accountable, these low-income workers. The 

workers lost their jobs with no parachute of any color. 

And it is not just 5,300 team members who paid the price, because many more were fired when they could not meet the quotas, 

and still more chose to quit rather than cheat. 

By contrast, Ms. Carrie Tolstedt, the Senior Executive Vice President for Community Banking, has done quite well. She knew of 

this problem at least 5 years ago and is retiring with a package 

that may be worth more than the CFPB’s record fine of $100 million. 

So 5,300 team members, earning perhaps $25,000, $30,000, 

$35,000 a year, have lost their jobs, while Ms. Tolstedt walks away 

with up to $150 million. 

Despite firing thousands of team members, Ms. Tolstedt apparently decided it was not important enough to alert the head of the 

4 

company, Mr. Stumpf, or the board of directors or anyone else for 

2 years, if ever, even though you both sat on that bank’s board. 

Senior management and the board of directors apparently 

agreed. Once the scandal became public, remedial actions were 

stepped up against front-line team members, but the praise and 

performance bonuses continued to be lavished upon Ms. Tolstedt 

until as recently as 2 months ago. 

You would think the lessons of the financial crisis, which came 

at such a high cost to our country, would change the way the banks 

do business. 

And to be fair, many banks did take the lessons of the financial 

crisis to heart. But for the largest banks in this country, every 

week we hear of a new lawsuit or enforcement action against one 

of them—week after week after week after week. 

What are some of these lessons? First, the culture in these banks 

needs to change. That starts at the top. 

Second, there must be a reliable way for legitimate complaints to 

end up in the C-suite rather than the circular file. 

Third, in the wake of the rampant robosigning fraud that we saw 

at Wells Fargo and other places, banks need better controls. 

Because, fourth, if you pay people on the basis of how many 

products they sell, that is what they will do, whether it is in the 

interests of the customers or not. And base pay needs to be increased. 

Finally, change the pay structure, or at least make incentives deferred, so it is clear that customer and company interests are 

aligned and enduring. 

Wells Fargo has come up short on all five counts. That conclusion 

is not just based on this, its latest scandal. 

Last year, Wells settled with the OCC for, among other things, 

11 years’ worth of deceptive practices in selling enhanced identity 

theft protection. So at the same time—think about this. At the 

same time the bank was stealing customer identities, it was charging for protecting them. 

If the Wells’ ID theft product that they sold did not discover the 

fraudulent Wells’ accounts, perhaps some refunds are due. 

This April, Wells settled a False Claims Act suit for $1.2 billion, 

in part because it had used bonuses to get staff to ‘‘churn out and 

approve an ever-increasing quantity of FHA loans . . . and applying pressure on loan officers and underwriters to originate and approve more and more FHA loans as quickly as possible.’’ Thousands 

of Americans, as we know so well—although, unfortunately, far too 

few of us know any of these people personally. Thousands of Americans lost their homes through mortgage foreclosures as a result. 

So I hope, Mr. Stumpf, you will level with this Committee and 

the public. Words that come like a San Francisco fog on little cat 

feet will not cut it. These were not magically delivered ‘‘unwanted 

products.’’ This was fraud—fraud that you did not find or fraud 

that you did not fix quickly enough. 

Instead of focusing on damage control, you need to admit to the 

problems and fix them and treat your customers in real life like 

you do in your vision statement. That would be the best damage 

control of all—for your customers, for your bank, for your industry, 

and for our country. 

5 

Thank you, 

Chairman SHELBY. Mr. Stumpf, will you rise and be sworn? 

Raise your right hand. Do you swear or affirm that the testimony 

that you are about to give is the truth, the whole truth, and nothing but the truth, so help you God? 

Mr. STUMPF. I do. 

Chairman SHELBY. You may be seated. 

Mr. Stumpf, your written statement will be made part of the 

hearing record. You may proceed as you wish. Welcome to the Committee. 

STATEMENT OF JOHN G. STUMPF, CHAIRMAN AND CHIEF 

EXECUTIVE OFFICER, WELLS FARGO & CO. 

Mr. STUMPF. Chairman Shelby, Ranking Member Brown, and 

Members of the Committee, thank you for inviting me to be with 

you today. 

I am Chairman and Chief Executive Officer of Wells Fargo, 

where I have worked for nearly 35 years. It is my privilege to lead 

this company, which was founded 164 years ago and has played a 

vital role in the financial history and development of our country. 

We employ more than 268,000 team members, 95 percent of whom 

are in the United States. One in every 600 working adults is a 

member of the Wells Fargo family, and we have a presence in all 

50 States. 

I am deeply sorry that we failed to fulfill our responsibility to our 

customers, to our team members, and to the American public. I 

have been through many challenges with Wells Fargo, but none of 

which pains me more than the one we will discuss this morning. 

Wrongful sales practice behavior in our retail banking business 

goes against everything regarding our core principles, our ethics, 

and our culture. It runs counter to our vision of helping our customers succeed financially, and it is not representative of Wells 

Fargo as an institution. 

I am here to discuss the situation today, tell you about the 

actions we have taken, and our commitment on how to move forward. 

Our entire culture is centered on serving our customers, and in 

this case, we let our customers down. Our retail banking practice 

issues, these sales issues, are not a reflection of our hardworking 

and talented team members who deserve thanks for helping our 

customers with their financial needs. 

I want to make very clear that we never directed nor wanted our 

team members to provide products and services to customers that 

they did not want. That is not good for our customers, and that is 

not good for our business. It is against everything we stand for as 

a company. 

That said, I accept full responsibility for all unethical sales practices in our retail banking business, and I am fully committed to 

fixing this issue, strengthening our culture, and taking the necessary actions to restore our customers’ trust. 

And, Senators, let me tell you here today, the Wells Fargo board 

is actively engaged in this issue. The board has the tools to hold 

senior management accountable, including me and Carrie Tolstedt, 

the former head of our retail banking business. Any board actions 

6 

taken with our named executive officers will be appropriately disclosed. And I want to be clear on this: I will respect and accept the 

decision of the board. 

Under new leadership we have already begun taking steps to ensure that the sales culture in our retail banking business is wholly 

aligned with our customers’ interests. 

On September 13, 2016, we announced a major decision that we 

will end product sales goals for everyone in our retail banking business because we want to make certain that nothing gets in the way 

of doing what is right by our customers. The new leadership team’s 

primary mission will be to provide the best possible service to our 

customers. 

I am also announcing today three new initiatives that will reinforce our commitment to our customers. 

First, we are expanding the scope of our account review and remediation to include both 2009 and 2010. 

Second, we will be contacting every single one of our deposit customers across the country using the same process that we agreed 

to with the city of Los Angeles for our California customers. 

And, third, we have begun contacting hundreds of thousands of 

our customers with open credit cards, including those for whom we 

have already refunded fees, to confirm whether they need or want 

their credit card. 

In addition, we have recently started sending customers a confirmation email within 1 hour of opening any new deposit account 

and an acknowledgment letter after submitting a credit card 

application. 

We recognize now that we should have done more sooner to 

eliminate unethical conduct or incentives that may have unintentionally encouraged that conduct. We took many incremental steps 

over the past 5 years in an attempt to address these situations, but 

we now know those steps were not enough. 

In 2011, a dedicated team began to engage in proactive monitoring of data analytics specifically for the purpose of rooting out 

sales practice violations. 

In 2012, we began reducing sales goals that team members 

would need to qualify for incentive compensation. 

In 2013, we created a new corporate-wide enterprise oversight 

team for sales practices issues. 

In 2014, we further revised our incentive compensation plans to 

align pay with ethical performance. 

In 2015, we added more enhancements to our training materials, 

further lowered goals, and began a series of townhall meetings to 

reinforce the importance of ethical leadership and always putting 

our customers first. 

Throughout this 5-year period, we identified potential inappropriate sales practices. We investigated those, and we took disciplinary actions that included terminations of managers and team 

members for sales policy violations—the 5,300 terminations over 

these 5 years that have been widely reported. 

Despite all of these efforts, we did not get it right. We should 

have realized much sooner than the best way to solve the problems 

in the retail banking business was to completely eliminate retail 

bank products sales goals. And one of the areas that we missed 

7 

was the possibility that customers could be charged fees in connection with accounts opened without their authorization. Because deposit accounts that are not used are automatically closed, we 

assumed this could not happen. We were wrong. And we took steps 

to refund fees that were charged and made changes so this could 

not happen again. 

In August 2015, we began working with a third-party consulting 

firm, PricewaterhouseCoopers (PwC), which conducted extensive, 

large-scale data analyses of all 82 million accounts, deposit accounts, and nearly 11 million credit card accounts that we had 

opened from 2011 through 2015. Of the 93 million accounts reviewed, approximately 2 percent, 1.5 million deposit accounts and 

565,000 consumers credit card accounts, were identified as accounts that may have been unauthorized. 

To be clear, PwC did not find these accounts had been unauthorized, but because it could not rule out the possibility, these accounts were further reviewed to determine if any fees had been 

charged. 

PwC calculated that approximately 115,000 of these accounts 

had incurred $2.6 million in fees, which had been refunded to those 

customers. Even one unauthorized account is one too many. This 

type of activity has no place in our culture. 

We are committed to getting it right 100 percent of the time, and 

when we fall short, we accept responsibility, and we will do everything we can to make it right by our customers. 

I will close by saying again I am deeply sorry that we have not 

lived up to our values in this way. I also want to take this opportunity to thank our 268,000 team members who come to work 

every day to serve our customers. Today I am making a personal 

commitment to rebuilding our customers’ and investors’ trust, the 

faith of our team members, and the confidence of the American 

people. 

I am happy now to address your questions. Thank you. 

Chairman SHELBY. Thank you, Mr. Stumpf. 

Mr. Stumpf, according to your testimony, Wells Fargo began 

making internal changes in 2011 to address the opening of unauthorized accounts. Did these problems start in 2011? Or could there 

have been unauthorized activity before then? Why 2011? 

Mr. STUMPF. Yes, I think we all know that not every team member will do everything right every day of every minute. And we do 

a lot of training of our team members, coaching. They each sign an 

annual ethics statement. And I cannot guarantee it did not happen 

before that time. We are trying to manage it within the business, 

and that is why I announced today that we are going back to 2010 

and 2009, because at that time, as you might recall, we were putting the Wachovia and Wells Fargo teams together, and we just 

thought we do not want to leave any stone unturned. 

Chairman SHELBY. Wells Fargo fired approximately 5,300 employees in connection with these practices. What were the criteria 

for termination? And were any personnel actions taken short of termination? And if so, what were they? In other words, I am sure you 

did not fire everybody, but did you discipline some, and why, and 

so forth? 

8 

Mr. STUMPF. Yes, so, Senator, thank you for that question, and 

it is a good one. We have a number of triangulations around how 

to understand when there might be improper behavior. If some customer, for example, all of a sudden shows up with three savings 

accounts, they probably do not need that. Or we have EthicsLines. 

We have a culture in the company, if you see something that you 

do not think is proper, raise your hand, talk to a manager. 

So we looked at a number of situations, and some of them were 

perfectly legitimate. But for those who broke our trust, were dishonest, put customers at risk, we do have a very bright line. And, 

after all, we are a regulated institution, and we have a fidelity 

bond, and people who behave in this way simply cannot work here. 

Chairman SHELBY. Mr. Stumpf, your testimony also does not 

address when the violations were brought to the attention of senior 

management. Specifically, when did you find out that thousands of 

your employees were opening unauthorized accounts or fraudulent 

accounts? Did it take that long? When did you find out? 

Mr. STUMPF. Thank you again, Senator. The business has their 

own audit and investigations and sales practices, efficacy and so 

forth, contained within the regional bank or the retail bank. After 

they had been working on this issue for a couple of years—and, 

again, this was way too many people, but it was 1 percent of our 

people. There are at any one time 100,000 team members in our 

banks, and after we noticed—after the business was dealing with 

this for a couple years, it was then brought to the holding company. 

And corporate assets, corporate audit, corporate compliance, the socalled second line of defense, got very active, and that is when I 

became much more aware of the issue. 

Chairman SHELBY. Does it bother you as the CEO of such a large 

bank that systemic fraud was not brought to your attention sooner 

by your employees? 

Mr. STUMPF. If I could turn the clock back—and I have thought 

about this a thousand times—of course, I wish I would have done— 

we all wish we would have done something more, earlier. We did 

not get on this fast enough. Again, recognizing that this was, you 

know, the vast majority of people who are doing the right thing. 

Chairman SHELBY. Let us go back to the question a minute ago. 

I do not believe you answered it specifically. When did the senior 

management—you and others you had deemed ‘‘senior management’’—learn about this fraud? 

Mr. STUMPF. I can speak for myself, and I know that other corporate executives at the corporate area outside of the business, I 

can speak to myself and I believe others, it was 2013. Before that, 

it was being dealt with with the audit and compliance within the 

business unit. 

Chairman SHELBY. Mr. Stumpf, the Board of Directors of Wells 

Fargo has awarded the then head of community banking, Carrie 

Tolstedt, millions of dollars—it could be $100 million, as Senator 

Brown says, or more—in incentive compensation for ‘‘success in 

furthering the company’s objective of cross-selling products’’ and 

‘‘reinforcing a strong risk culture,’’ according to the 2015 proxy 

statement issued by your bank. Explain to the American public 

today here what accountability at a large bank looks like when an 

executive departs with millions of dollars in compensation after 

9 

thousands of their employees defrauded customers? The question 

was raised by Senator Brown. 

Mr. STUMPF. I will try to get to all of those, and if I do not, 

please—but it is a good question. Carrie Tolstedt, as leader of the 

community banking business, had a lot of requirements and things 

that her performance was measured on, putting the Wachovia and 

Wells businesses together, doing common branding, making sure 

customers were treated properly. And throughout that entire period 

from 2011 until 2016, customer loyalty scores continued to improve. 

Today they are top of class, even by independent studies of large 

banks. 

Our team member engagement, we do a study every year—and 

today we have 15 people who are engaged in that business—for 

every one that is disengaged. Balances and customers had grown. 

Now, in this particular area, she did not do enough, and we decided—the chief operating officer, who she was reporting to at the 

time, with my consultation, decided that we would go in a different 

direction. 

But I also want to be clear: Carrie was eligible to retire. When 

she was told that we are going to go in a different direction, she 

chose to retire, and she got no retirement severance benefits, and 

her compensation that she received in the past, some of it which 

is not—which has been granted but not yet vested, and other compensation will be considered by the board of directors in an independent process that they have. And I will respect and accept 

whatever decision they make. 

Chairman SHELBY. That would be clawback? You have the ability 

at the bank to claw back, do you not? 

Mr. STUMPF. You know, I am not an expert in compensation, but 

I will get you whatever—— 

Chairman SHELBY. You are the CEO of the company, right? 

Mr. STUMPF. I am the CEO—— 

Chairman SHELBY. And so are you the Chairman of the Board? 

Mr. STUMPF. I am the Chairman of the Board. 

Chairman SHELBY. OK. Then—— 

Mr. STUMPF. But I do not—excuse me. 

Chairman SHELBY. And the buck stops here, so to speak. 

Mr. STUMPF. It stops—I am the senior officer. 

Chairman SHELBY. So are you going to look into this seriously 

about what this person did, her responsibility, and the big reward 

that she is getting that happened under her watch? 

Mr. STUMPF. Senator, we will—the board of directors, the compensation committee—and they will refer it to the board. I am not 

part of that process. I want to make sure that—that is a very independent process and nothing that I say would prejudice their deliberative process. But that is their decision, and they have all the 

tools available to them, whether she would have retired or she 

would have been fired. 

Chairman SHELBY. Mr. Stumpf, is not a lot of banking based on 

integrity or trust by your customers in the bank itself? They do 

business with you. They put their money there. They trust you. 

What has happened to the banking system? Not everywhere, but 

what has happened to the banking system? 

10 

Mr. STUMPF. You know, Senator, you think about it exactly the 

way I think about it. Trust is the core element of any relationship, 

and surely in the financial services business. And we know we have 

work to do in that area, and I intend to do all I can to help in that 

area. 

Chairman SHELBY. Do you believe you have violated that trust? 

Mr. STUMPF. There is no question with some of our customers we 

have violated trust, and we have to work hard to re-earn that. 

Chairman SHELBY. Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. 

Mr. Stumpf, I will make my questions short and ask you to be 

as concise as possible. I will start with your response to Senator 

Shelby. You became aware of the widespread fraud in 2013. Could 

you be more precise than that? When in 2013? 

Mr. STUMPF. Well, I became aware that the problems the local 

business was working on in rooting out this behavior by 1 percent 

of our team members, give or take—and I do not want to minimize 

that—that we were not making enough progress. 

Senator BROWN. And when did you become aware more precisely? 

Mr. STUMPF. It was later in—— 

Senator BROWN. Was it the Los Angeles Times article that you 

became—— 

Mr. STUMPF. Yes. It was later in 2013. Well, I had—actually, I 

do not remember the exact timeframe. I can get back to you and 

staff, but it was sometime in 2013. 

Senator BROWN. OK. Thank you for that. 

You mentioned the Wachovia merger, that you are willing to go 

back before 2011, to 2009 and 2010, in part because of the 

Wachovia merger. The emphasis on cross-selling dates back at 

least to the Norwest merger, right? I mean, this has been a Wells 

Fargo business plan for a number of years. What year was the 

Norwest merger? 

Mr. STUMPF. It was two thousand—well, it was announced—you 

are talking about—— 

Senator BROWN. The Norwest merger with Wells. 

Mr. STUMPF. That was 1998. 

Senator BROWN. And so this Wachovia merger, there clearly 

was—you are going back to 2009 and 2010. You are offering to do 

that. Why stop at 2009? We hear from people that it has gone on 

longer than that, with the cross-selling and the pressure and the 

sales goals. Why are you only willing to go to 2009? 

Mr. STUMPF. Well, Senator, I would tell you this: We want to 

make it right by any customer, and we already—we agreed with 

our regulators in our agreements to go back to 2011. We made a 

decision to go back to 2010 and 2009, and we want to make it right 

by any customer. 

Senator BROWN. Does that mean you are willing to go back earlier than 2009? 

Mr. STUMPF. Well, I do not—I cannot tell you that today. I would 

have to talk to our folks. I do not know about records and so forth. 

But I want to make sure any customer who has had harm of any 

kind, that we will do right by them. 

11 

Senator BROWN. Well, you have records before 2009. Is that a 

pledge from you to go back earlier than that if, in fact, there are 

customers that were harmed by unauthorized accounts? 

Mr. STUMPF. Senator, I will take that under advisement, and I 

will get back to you—— 

Senator BROWN. And I accept your good intentions that you are 

going back to 2009 to give restitution to those—can provide restitution to those customers. But why stop there if you know that—you 

say you have to go back and talk to staff. I mean, if you really do 

want to make sure these customers are made whole, you should go 

back as long as you possibly can. 

Mr. STUMPF. And, Senator, again, I think that is—you know, we 

will consider that. I am—we will take that under advisement, and 

I will get back—— 

Senator BROWN. Well, I hope you will more than consider it. 

Thank you. 

Talk about Chairman Shelby’s discussion on the clawback. Understanding I think you minimize your influence—to us at least 

you minimize your influence with the board. You are the chairman 

of the board. I understand that the board goes through a process, 

and I respect that. But you as the chairman, are you going to recommend to the Board—well, let me back up. You, I would assume, 

are more familiar with both the pros and the cons of performance 

from Ms. Tolstedt. You are aware that she is getting—she is slated 

to get, some news reports say, up to $120 million. You are also 

aware that most of the 5,300 people, team members that were 

fired, were low-income workers, as low as $11-something an hour, 

maybe up to $16 or $17 an hour, but were generally low-income 

workers, low-paid workers. So you are more familiar with that than 

probably any board member, at least as familiar. So will you with 

your knowledge and your stature and your position in the board 

make a recommendation to this board that they should claw back 

a significant amount of her compensation? 

Mr. STUMPF. Senator, I will answer that question, but I just 

want to put something in perspective. The lowest-paid worker we 

have, our entry level in our least-cost area is $12 an hour. Our lowest-paid worker in our high-cost area is $16.50 an hour. In addition 

to that, about $6 per hour is also—that does not include the benefits around health care, which we pay virtually all of it for low-paid 

people. But most of the people who lost their jobs because they violated our code of ethics, they were dishonest, were not—those were 

good-paying jobs. People lost their jobs who were bankers, bank 

managers, managers of managers, and even an area president. 

These were good-paying jobs, jobs that were—the averages I think 

were in the, you know, $35,000 to $60,000 area, if you just want 

to take an average. 

But with respect to your question specifically, I am not on the 

human resources and compensation committee. That is an independent committee. And they will take that under their deliberation. I do not want in any way to prejudice their activity, and I am 

going to accept and respect any decision that they make on 

anything. 

Senator BROWN. Thank you for saying that. So you are not willing to make a recommendation based on how this looks to the 

12 

public that—call them ‘‘good-paying jobs’’ at $16 or $17 an hour or 

not, compared to what, but I will put that aside. But whatever 

these workers were making, they were in the bottom some percentage of the workforce, whatever. They made mistakes, they were 

dishonest, they apparently deserved to be fired. I will not dispute 

that. 

You are not willing, as the CEO of this bank, to make a public 

recommendation that you think—to make a public statement that 

you think that Carrie Tolstedt did—you are not willing to say publicly to this Committee or to anyone that some of her compensation, 

over $100 million when she announced her retirement in the last 

several weeks, that any of it should be clawed back? 

Mr. STUMPF. I am going to let the process proceed, and the board 

has already met, and I made an affirmative comment in my testimony. 

Senator BROWN. OK. That is unfortunate. 

You said in your testimony that in August 2015, your words, ‘‘we 

began working with . . . PwC’’ to locate reimbursed customers who 

incurred fees. Was that your decision? Or were you directed to do 

so by the regulators? 

Mr. STUMPF. That was in consultation with regulators and with 

the City Attorney’s Office. 

Senator BROWN. So you did not on your own, after finding out 

in late 2013 of these problems, through the rest of 2013, a month, 

2 to 3 months in 2013, through all of 2014, and then into the first 

7 months of 2015, it never occurred to you that you should bring 

in somebody, without the regulators suggesting it or pushing or in 

consultation, it never occurred to you to bring in somebody to really 

find out who was hurt, what kinds of issues were going on? How 

do we find these customers to reimburse them? 

Mr. STUMPF. Senator, that is a good question, and I have thought 

about that, a lot about why, and it was—it was early in 2015, 

about the time that we were considering or talked about who we 

would bring in, that we finally connected a dot. And there is no excuse why we did not connect it before. 

Generally what happens when an account is opened that is not 

funded, the system eliminates it within a couple of months. If it 

does not get funded, it is not used, it is not started, it is truncated 

or closed. It never dawned on us—and, again, no excuses, and we 

were wrong. It never dawned that there could be a cycle where— 

a cycle, a 30-day cycle would have turned—would have been completed, and there could have been a fee associated with that. It was 

the first time that light bulb went on. 

Senator BROWN. I appreciate your candor about this, but in 2011, 

1,000 employees were fired; in 2012, a similar number; 2013 was 

the peak number. In 2013 was the Los Angeles Times article. In 

2015, throughout the year, nothing happened. It seemed to never 

occur to management to do any of this when it is just—and then 

today—and I do not question your integrity, but then today you 

come in and make all these announcements. It has been 5 years 

since—at least 5 years since all of this has been happening. Today 

you make announcements that you are doing—you apologize. We 

appreciate that. You make announcements you are doing the right 

things. We appreciate that. But it just sort of begs the issue of 

13 

where was management when these so many thousands of people 

were fired, stories were written, regulators were starting to come 

in. I understand this is a huge profit center for Wells, the retail 

banking, writ large, in terms of the unauthorized accounts and everything else. But it just does not seem quite right that it did not 

occur to anybody on the board apparently—or at least that had 

your ear, did not occur to the CEO, did not occur to top management that they should do something more affirmatively until that 

August 2015 date when the regulators sort of helped you suggest 

and come to that conclusion. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Corker. 

Senator CORKER. Thank you, Mr. Chairman. Mr. Stumpf, thank 

you for being here. 

Just as an observation, I know that you have a whole host of people here with you, and I am sure one of those people is a communications person. I would just make the observation, look, I know 

you talk daily with board members, and, you know, I have been on 

boards before myself. I would suggest, just again as an observation, 

that to not invoke some degree of clawback for yourself and others 

involved would be committing malpractice from the standpoint of 

just public relations. So at a minimum, I am sure that is going to 

take place. I would be surprised if it does not. 

You found out about this through reading the Los Angeles Times. 

Is that correct? 

Mr. STUMPF. No, I do not recall back in 2013 exactly the timeframe, but I learned about it later in 2013. Remember, the—— 

Senator CORKER. But it sounds like it really was brought to your 

attention after a story in a newspaper, or that is when the focus 

really began. I am not criticizing that. I am just asking. 

Mr. STUMPF. No, and I—the only thing I want to make clear, 

Senator Corker, is that we had dismissed a number of people, and 

that is what caused the Los Angeles Times—— 

Senator CORKER. The story, I see. 

Mr. STUMPF. Yes, because—— 

Senator CORKER. So you all had taken some actions, they wrote 

a story, and it—— 

Mr. STUMPF. Exactly, yes. 

Senator CORKER. Your board, you know, I know public boards 

today, you know, intense scrutiny, there are all kinds of committees that are set up. When did the board realize that you had a 

unit that was committing fraud? It seems to me that that is one 

of those things you flag pretty quickly, or at least a committee of 

the board? 

Mr. STUMPF. Yes, and I just want to say these team members— 

you are absolutely right—they did not do what was right. It 

was—— 

Senator CORKER. I did not ask that. I am asking you—— 

Mr. STUMPF. OK. It—— 

Senator CORKER.——when the board became aware that you had 

a unit that was involved in committing fraud. 

Mr. STUMPF. Yes, it would have been later 2013 and then 2014 

and on. 

14 

Senator CORKER. So they were not even aware of the Los Angeles 

Times story? 

Mr. STUMPF. I think that was later in 2013. I would have to go 

back and check my records, and it is the best to what I remember, 

but it was sometime, you know, later 2013, surely in 2014. 

Senator CORKER. I read a story about Ms. Tolstedt today. I do 

not know her. It actually, you know, sounds like she was an incredibly hard worker, got to work early, rode a bus, you know, micromanaged, signed leases herself. I do not know if any of this was 

true. But when you have somebody that is that involved in sort of 

micro details, is this a case of not raising their head up to 5,000 

or 10,000 feet and understanding the kind of culture that was 

being created by slogans like ‘‘Eight is great’’ and those kinds of 

things? I mean, it is just hard to—you know, it seems to me that 

within a bank, with all the data you use to contact customers—I 

mean, you can—with algorithms, I mean, you guys can pick this 

stuff up so quickly. It is hard to believe that there is not some report within the bank that would cause this to jump out at people 

and say something really bad is happening here. 

Mr. STUMPF. Yes, Senator Corker, I think that is—that is a good 

question, and in the retail business, where you have 100,000 people 

in seats at any one time in our 6,200 branches, there is a lot of 

turnover. And I am not justifying in—— 

Senator CORKER. Well, no, no. There is an officer, there is a compliance officer. 

Mr. STUMPF. Absolutely. 

Senator CORKER. And all banks have these. 

Mr. STUMPF. Sure. 

Senator CORKER. I mean, you are all regulated to death, and that 

is their job. And this kind of—this is something that you would 

think would be flagged and jump out at someone who was in that 

job. 

Mr. STUMPF. Thank you, and that is what I was trying to explain, that in her business, surely she was, I believe, in reporting 

situations where there was ethical breakdowns, and—— 

Senator CORKER. But not to the board. 

Mr. STUMPF. And it got to the board level—it got to the corporate 

level in 2013 because progress was not being made, and the board 

level in 2014, as the corporate researchers started to—and we had 

been actually seeing improvement since that time, but not enough. 

Senator CORKER. It does seem like there was—just in fairness, 

again, there does seem like a big disconnect there. 

So she left after 27 years, and I think it would be good for the 

audience at some point—not during my time—to explain the entire 

compensation. I think it is a little different than most people think 

based on some of the comments that have been made. But I assume her departure, after 27 years, was based on this issue. Is that 

correct? 

Mr. STUMPF. It was based on a number of issues. This was one 

of them. We wanted to take the business in a different direction, 

and we—— 

Senator CORKER. But she in essence was terminated over this 

issue. 

15 

Mr. STUMPF. No. Carrie chose to retire. Tim Sloan, our Chief Operating Officer, with my consultation, had a discussion with her— 

I think it was sometime in June or July—and said, ‘‘We want to 

go in a different direction. We want to put an end’’—‘‘we want to 

put more focus on this issue.’’ But it was a variety of things. And 

she was eligible for retirement, and she decided to retire. 

Senator CORKER. Well, my time is up, and out of respect for 

other Members, I will stop. I have a number of other questions. We 

thank you for being here. 

Mr. STUMPF. Thank you. 

Chairman SHELBY. Senator Reed. 

Senator REED. Well, thank you very much, Mr. Chairman, and 

thank you, Mr. Stumpf, for being here. 

Let me try to clarify a bit more your position going forward with 

respect to the issues of compensation, not just Ms. Tolstedt’s but 

even your own compensation. Will you formally recuse yourself 

from board deliberations? 

Mr. STUMPF. Well, I am not even—I am not even involved in 

board discussions around what the HRC does with anything with 

respect to me and/or as they recommend to the board. So there is 

no recusal required. But if—but I am happy to do that. But I am 

not even involved in that. 

Senator REED. It will ultimately come up, though, to the board 

for a vote of affirmation of the compensation committee, correct? 

Mr. STUMPF. It would, and I am not part of that. That is done 

in an executive session without me. It has always been done that 

way. 

Senator REED. In 2013, when you learned of this, what did you 

do? This has been asked several different ways. Did you inform the 

regulators or instruct someone to inform the regulators of a growing problem? 

Mr. STUMPF. Thank you, Mr. Reed. Yes, and I should have mentioned that earlier, but yes. Our primary prudential regulator was 

informed at that time. 

Senator REED. Did you inform the board at that time? 

Mr. STUMPF. Yes. I cannot recall the exact meeting, and—but I 

can—I can—it was sometime in 2013, and I know in 2014 various 

committees of the board were made aware of this—the risk committee, the audit and examination, the corporate responsibility. 

Senator REED. Did you take any steps to internally notify your 

employees of this type of behavior, which, going back, was, you 

know, in 2011, a thousand people had done, 2012, 2013, including 

an area manager? Did you communicate that? Or did you simply 

keep these discussions internal to the board? 

Mr. STUMPF. I do a team member townhall every quarter where 

I go to one of our various cities, and there will be a couple thousand people in the audience, and then we Web cast that broadly 

across our company. And I, you know, typically talk about ethics 

and doing what is right for customers, and in the case the vast majority do it, but I was trying to really bring home this fact. 

Senator REED. But given specific evidence of techniques used to 

essentially, in the words of some of my colleagues, ‘‘defraud 

customers,’’ those specific practices were not focused upon and 

16 

made very clear that they were not tolerated? Or was it—it would 

seem to be a generic discussion of follow the rules? 

Mr. STUMPF. Again, Senator Reed, at the time that the escalation 

happened in 2013, there were many different meetings and things 

happening, as I mentioned in my written—or my oral testimony, 

about reducing goals, talking about sales efficacy, having manager 

meetings, talking with leaders, putting more controls in place. And, 

again, not fast enough, not far enough, and I apologize for that. 

Senator REED. Well, it seems that, you know—and I would suspect, looking back, that the emphasis on meeting sales objectives, 

cross-selling, was unremitting. And yet you had examples here, 

specific examples of things that you knew were happening and 

should not be happening. And yet what I am hearing is more or 

less a generic, ‘‘Make those sales, oh, and by the way, you know, 

we have these ethical rules in place, too.’’ Again, you know, I think 

you have said it and it is obvious that the tone, emphasis, what 

the leader does, what the leader says, is sometimes more important 

than anything else. For a period there, this was recognized, but 

there was no specific, ‘‘Stop this stuff.’’ 

Mr. STUMPF. Well, I can tell you we said, ‘‘Stop this stuff,’’ and 

the thing about cross-sell is I would rather have a customer with 

two products that they use and they need and they want and they 

value than four products that are not used and valued. In the first 

case, the customer wins, we win, we all do well. In the second case, 

everybody loses. We lose money. It does not help us. 

So we have been—we tried very hard, and, again, we were not 

as effective as we could have been in talking about—you know, the 

goal here is not, you know, products. The goal here is deep relationships. We had the wrong tool for too long to make that happen. 

Senator REED. I would simply conclude that it just seems that it 

took too many months—years, literally—for some simple steps 

which should have been taken to be taken, and it was only, I think, 

as a result of what ultimately Los Angeles County and the regulators and others did that forced the issue. Thank you, Mr. Stumpf. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Toomey. 

Senator TOOMEY. Thank you, Mr. Chairman. Thanks for calling 

this hearing. I have to say what we have been learning is so deeply 

disturbing on so many levels. 

First, we discover that Wells Fargo had a sales culture that was 

blatantly antithetical to what is best for customers. We discover 

that management had far too few common-sense controls in place 

to prevent the kind of abuse that customers were subject to. We 

discover Wells Fargo executives completely out of touch. 

In a 2011 Forbes article, Wells Fargo was rated the best at crossselling its products. The only problem is we discovered Wells Fargo 

was not always cross-selling. Signing up customers for products 

when you know the customer does not want the product, failing to 

notify customers about these sham accounts opened, and this is not 

cross-selling. This is fraud. That is what this is. 

And then we discover way too little done to prevent it from continuing, even after it was discovered. So Wells Fargo employees 

continued for years to literally forge customers’ signatures—including my constituents’—on documents to open up accounts. 

17 

And then the case of Carrie Tolstedt, my understanding is that 

something on the order of over $20 million in bonuses for her between 2010 and 2015 were awarded because of strong cross-sell 

ratios. Yet we know in some cases she was hitting numbers by 

these fraudulent accounts. So this is unbelievable. 

Let me begin, Mr. Stumpf. Do you acknowledge that the employees who engaged in this activity were committing fraud? 

Mr. STUMPF. You know, I am not a criminal, you know, law enforcement officer, and I do not know the—I am not a lawyer. I do 

not know the legal term. I know this: They broke our code of ethics, 

they were dishonest, and we did everything we can to support law 

enforcement on these issues. 

Senator TOOMEY. So I am not a lawyer either. Neither are most 

adults in America. But I think most people understand the meaning of the word ‘‘fraud.’’ Black’s Law Dictionary does provide a useful definition. It says, ‘‘Fraud is a knowing misrepresentation or 

knowing concealment of a material fact made to induce another to 

act to his or her detriment.’’ 

How does falsely signing a customer up for an account they do 

not want, how does it not meet that definition? 

Mr. STUMPF. Well, and, again, I—if that is the definition that— 

you know, I can tell you this: It is absolutely wrong. We found this 

out. We got rid of those people. And they have no place—that behavior has no place in our culture. If that means fraud, that means 

fraud. 

Senator TOOMEY. At what point did you alert your regulators and 

law enforcement that you had probable criminal activity happening 

on a large scale? 

Mr. STUMPF. Well, again, it was 1 percent of our people, Senator, 

and I know that—— 

Senator TOOMEY. But 5,000 is a big number. 

Mr. STUMPF. It is bigger than my hometown. I do know that. And 

it was—but we also had the vast majority who did the right thing. 

But let us talk about those. Every time—and we made a very 

bright line. If it happened one time, it was one time too many. 

Senator TOOMEY. I have only 5 minutes here. 

Mr. STUMPF. And to answer your question—I am sorry—we sent 

it—we did everything we needed to do. 

Senator TOOMEY. Did you refer it to law enforcement? 

Mr. STUMPF. When it was—when it was required, we did. We did 

everything according to the rules. 

Senator TOOMEY. When did you begin to disclose in SEC filings 

that you had this potentially material adverse set of circumstances 

that could certainly have huge damage to your reputational value? 

Mr. STUMPF. Well, I do not—I do not—I cannot answer that. I 

would have to get to our legal team. I do not have that in front 

of me. But this was not a—I just—I would have to get back to you 

on that. I do not know. 

Senator TOOMEY. Well, we have not been able to discover such 

a disclosure, and the SEC very clearly requires disclosure of material adverse circumstances. And I do not know how this could not 

be deemed ‘‘material.’’ I think the market cap lost 9 percent over 

the last couple of weeks. That is pretty material. 

18 

Mr. STUMPF. Well, from a financial perspective, you know, $2.6 

million—and it is $2.6 million too much, and $185 million was not 

deemed ‘‘material.’’ 

Senator TOOMEY. I get that those dollar amounts may not qualify 

as ‘‘material’’ to a bank the size of Wells Fargo, but the 

reputational damage done to the bank clearly is material, and that 

has been manifested by this huge adverse movement in stock 

prices. 

Let me raise one other issue. You mentioned in your testimony 

and you state unequivocally that there was ‘‘no orchestrated effort, 

or ‘‘scheme’’ as some have called it, by the company.’’ But when 

thousands of people conduct the same kind of fraudulent activity, 

it is a stretch to believe that every one of them independently conjured up this idea of how they would commit this fraud. Is it not 

very probable that there was some orchestration that happened at 

some level, if not—I am not suggesting it was you personally by 

any means, but does it not defy common sense to think that there 

was not some orchestration of this? 

Mr. STUMPF. Senator, I do not know how—what motivated or 

why people did this, but we did fire managers and managers of 

managers, and in one case, an area president. So, again, you know, 

this 1 percent is way too many. I do not want to minimize it. But 

I also want to make sure that we recognize that the vast majority 

of the people did exactly the things we wanted them to do to help 

deepen customer relationships, help them succeed financially. And, 

also, we have put a number of other controls in place besides taking sales goals off the table. We now have—we do not open any deposit account today or any credit card without a signature. Well, 

there are a couple cases where ADA where they cannot—we will 

have a dual notice. We are also doing mystery shopping, and we 

are also giving customers a 1-hour notice by email or, if they do 

not have an email, by letter to make sure that we know exactly 

and they know exactly what they have opened. 

Senator TOOMEY. It seems like it took an awfully long time to impose those sort of basic controls. 

I see I am out of time. Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Menendez. 

Senator MENENDEZ. Thank you, Mr. Chairman. First of all, 

thanks for the response—I know you were already on the way, but 

to the letter that we sent asking you for this hearing, so I appreciate you holding it. 

Mr. Stumpf, let me just say I am personally appalled by the size, 

the scope, the duration, and the impact of the scandal. And I must 

say that I am shocked and incredibly disappointed by the response 

of Wells Fargo’s corporate executives. In the last week, you and 

your chief financial officer have taken to the press and laid the 

blame squarely on low-paid retail bank employees. And while I do 

not excuse what they did by any stretch of the imagination, I find 

that despicable. 

Wells Fargo touts to its investors and its customers that we will 

never put the stagecoach before the horses. Well, I tell you what: 

The bank recklessly rolled over 2 million of your customers in what 

in no way can be viewed other than a large-scale scheme to boost, 

19 

you know, your growth and whatever that meant for your shares 

and whatever that meant to your shareholders. 

So you did not fire 10 employees. Right? You did not fire 500 employees. You fired 5,300 employees. Is that right? 

Mr. STUMPF. Yes, 5,300 people did not honor our culture. 

Senator MENENDEZ. And they were not located in one branch or 

one district. Is that right? 

Mr. STUMPF. That is correct. 

Senator MENENDEZ. They were located across the country. Is that 

fair to say? 

Mr. STUMPF. That is fair to say. 

Senator MENENDEZ. Now, should not the workplace actions of 

employees reflect the values of the institution no matter what part 

of the country that they are in? 

Mr. STUMPF. I absolutely agree with that. 

Senator MENENDEZ. So do you believe that senior executives like 

yourself are responsible for nurturing and honing a company-wide 

culture for your employees and your employees’ actions? 

Mr. STUMPF. Absolutely. 

Senator MENENDEZ. So this is not the work of 5,300 bad apples. 

This is the work and the result of sowing seeds that rotted the entire orchard. And whether tacitly through sales guides and employee training manuals, some of which I have reviewed, or more 

explicitly through demands from hard-driving managers, you and 

your senior executives created an environment in which this culture of deception and deceit thrived. And yet, you know, I see this 

as a toxic combination of low wages—now, I know that in response 

to Senator Brown’s question of what does an average banker at 

Wells Fargo make, you said between $30,000 and $60,000. You said 

that is good money. How much money did you make last year? 

Mr. STUMPF. $19.3 million. 

Senator MENENDEZ. Now, that is good money. Now, that is good 

money. Is it a combination of low wages, punishing sales quotas, 

and a grossly misaligned compensation incentive throughout the 

bank’s organizational structure, as is evidenced that you removed 

it? 

Now, when you were holding these ethics sessions, did you ever 

specifically, seeing this information begin to blip up on your radar 

screen, and then more significantly, did you ever specifically say in 

those sessions, ‘‘We do not want to open accounts for our customers 

that they do not ask for’’? Did you specifically say that? 

Mr. STUMPF. Senator, I will get to that question, but I just want 

to go back for a second. When a team member opens an account 

that is not used, that does not help customers and it does not help 

us. And the vast majority did the absolutely right thing. 

Senator MENENDEZ. Did you specifically say—— 

Mr. STUMPF. And I specifically said, yes, we do not push products. We sit down with a customer. We have a needs-based analysis, and then based on what we hear where the customer is in 

their financial journey, we match products. 

Senator MENENDEZ. Did you specifically say that, in fact, ‘‘I do 

not want to see accounts open for customers that they did not ask 

for’’? 

Mr. STUMPF. Absolutely. 

20 

Senator MENENDEZ. When did you say that? 

Mr. STUMPF. I have said that many times in many townhalls. 

Senator MENENDEZ. Let me ask you, Ms. Tolstedt made about $9 

million in salary last year, did she not? 

Mr. STUMPF. You know, it is in the—it is in our public filings. 

Senator MENENDEZ. She made about $9.1 million in salary, 

bonus, and stock awards. According to Glassdoor, the average 

Wells Fargo bank teller salary is $24,545, and the average salary 

for a Wells Fargo personal banker is $37,560. So imagine—do you 

know what the poverty wage is for a family of three? 

Mr. STUMPF. I do not have that in front of me. 

Senator MENENDEZ. Well, let me just share it with you. I did not 

think you would. It is $24,300. For a family of three, it is $20,160. 

So imagine for a moment you are a single parent working with two 

young children as a personal banker in Wells Fargo’s branch. Let 

us say your base salary is somewhere in the $30,000 range. You 

have a hard-driving boss breathing down your neck to meet rigorous sales quotas. You have got to call into a call center when you 

do not meet those quotas. And if you do not meet the quota one 

day, it gets carried over to the next day, so you have got even a 

higher quota. And you are being told—forget about the incentive of 

making more money. In essence, this is about losing your job. And 

you think that that environment was the appropriate environment 

to protect your customers and to have the culture that you portray 

here that Wells Fargo had? 

Mr. STUMPF. Senator Menendez, I get your question. We had 

been reducing sales goals and bringing other goals into place even 

before we decided to get rid of the sales product goals. And the vast 

majority—the vast majority of employees—love Wells Fargo and, in 

fact, when we go to our regional banking—our retail banking people, 15 of our people in survey—it is actually a census done by Gallup—every year love the environment in Wells Fargo, and they put 

customers first. I cannot excuse the behavior of the 1,000. I know 

it is too many. But the culture is a very caring and collaborative 

culture. 

Senator MENENDEZ. I know my time is up, but let me just ask 

you a final question before hopefully the Chairman will have a second round. Did you or any senior executive at Wells Fargo suffer 

any 

financial consequence as a result of what has transpired over the 

years? 

Mr. STUMPF. The board will take—well, first of all—— 

Senator MENENDEZ. To date. To date, have you suffered any financial consequences? 

Mr. STUMPF. The board has gone through, and, yes, people have 

been held accountable. 

Senator MENENDEZ. Senior executive management? 

Mr. STUMPF. Senior executive—— 

Senator MENENDEZ. I would like for you to classify for me what 

that is. 

Mr. STUMPF. OK. Well, people that are in charge of risk in the 

retail bank, people that are in charge of sales efficacy, regional 

presidents who do not meet their goals around proper sales, yes, 

people are held accountable, and they will be held accountable. 

21 

Chairman SHELBY. Senator Heller. 

Senator HELLER. Mr. Chairman, thank you for holding this hearing and for our witness for being here today. I appreciate it. 

For years, the people of Nevada have struggled to regain what 

they lost in the aftermath of the housing crisis, and we all know 

that this housing crisis was caused by greed and excess. And for 

too long, Nevada often has had the unfortunate distinction of having one of the highest rates of unemployment, foreclosures, underwater homes, homes sold in short sales, and personal bankruptcies. 

So trust to some is the center point of any relationship with a business, and I assume it is the same that Wells Fargo has broken that 

trust. 

I consistently fight to ensure Nevadans retain the protections of 

their personal privacy, so I was shocked to hear the reports, Mr. 

Chairman, that the employees of Wells Fargo opened millions of 

bank accounts and credit cards without customers’ consent. The actions of some Wells Fargo employees directly took money from 

Americans’ pockets in order to artificially inflate company quotas. 

I had a constituent—and I have had a number of constituents 

call my office. This one happened to be from Henderson, Nevada, 

emailed me, and said she was affected by Wells Fargo’s tactics. She 

said she was insulted that leadership at Wells Fargo was unaware 

of these policies. 

Now, given the culture of wrongdoing that some of your employees exhibited, taking responsibility, refunding customers, and conducting internal investigations should only be the first step as we 

plan to fix this mess. Accountability and reform in putting your 

customers’ interests first should be Wells Fargo’s top priority. And 

so with that, Mr. Stumpf, just a couple of questions. 

Do my constituents have a right to be insulted? I have heard a 

number of comments probably more directed at you that you would 

take the Sergeant Schultz position that you knew nothing as this 

was moving ahead, that perhaps you even took—and I heard this 

from one of my constituents—the Hillary Clinton approach, a ‘‘what 

difference does it make?’’ attitude. And let me tell you why they are 

talking this way. I have got your letter to your valued customers 

as you tried to explain to them some of the problems: ‘‘You may 

have seen news recently that some Wells Fargo customers received 

products and services that they did not need.’’ 

You did not tell them you were sorry in your customer service 

letter. You came to this Committee and told us you were sorry, but 

you did not tell your customers you were sorry. Do they have a 

right to be insulted? 

Mr. STUMPF. Well, first of all, let me tell you, every—I had a 

number of media contacts last week, one broadcast and four in 

print, and I am sorry. I am accountable when we do not do it right 

100 percent of the time. And I was even—I was, I think, misquoted 

or misunderstood in one where I blamed team members. I do not 

like—we do not accept behavior that is not consistent with our culture, but I do accept responsibility, and I am sorry. 

Senator HELLER. This letter appears that you are downplaying 

some of the concerns. You said that some Wells Fargo customers— 

you know, we are talking almost 2 million accounts that were 

opened up. 

22 

Let me ask you this question: Was anybody on your board or 

yourself—did any of you have any open unauthorized accounts in 

your names? 

Mr. STUMPF. I do not know that. I have not seen a letter, you 

know, on mine, and I was not refunded any of the dollars. 

Senator HELLER. What would you have done if you had an unauthorized account where somebody forged your own name? What 

would you have done about that? 

Mr. STUMPF. Well, I have had that before where people have 

forged my name—— 

Senator HELLER. Your bank. 

Mr. STUMPF.——or stolen my identity. But, of course, I would 

be—I would be very disappointed, and I can surely understand 

your constituents’ disappointment, and we have a lot of work. Nevada is a wonderful, important State to us. We have been there a 

long time. And I apologize to all of the American people and our 

customers, and we will make it right. 

Senator HELLER. Can I go back to Carrie Tolstedt for a moment? 

You said you are not on the compensation board, but if the compensation board were to send you a recommendation to approve 

$100 million as a compensation package for her, would you support 

that? 

Mr. STUMPF. You know, I am not on that board, and I think it 

is probably maybe—if I could just take a second, as I understand— 

and I will get you the information about her $100 million—part of 

it is stock she has either purchased on the open market or exercised and owns for a 27-year career. There are some dollars that 

are in the money, options that she has not yet exercised. And then, 

finally, there is a part of future grants that will be vesting over the 

few number of years, and the board will consider all of those 

things. They will consider her entire situation in their deliberations. 

Senator HELLER. Would you approve that? 

Mr. STUMPF. You know, again, Senator, I want to be respectful 

of the committee and respectful of their process and not in any way 

bias their decision. 

Senator HELLER. Mr. Chairman, my time has run out. Thank 

you. 

Chairman SHELBY. Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman, Ranking Member 

Brown, for having this hearing. I have been on this Committee for 

nearly 10 years now. You have done something that has never happened in the last 10 years and united this Committee on a major 

topic, and not in a good way. 

Credit card accounts were opened. Folks did not 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—there were 2 million accounts 

opened up—that negative information was sent to credit bureaus. 

Is that accurate? 

Mr. STUMPF. The part that is accurate is there are 565,000 consumer credit cards that were opened up that were never activated. 

About 400,000 of those have customers’ signatures on them, and 

5.7 percent or less than 6 percent of those accounts that we opened 

23 

during that time were not activated, which is a pretty standard industry—because people might have them—we are going to go back 

to each one of those customers now and find out if that was a legitimate—to ensure an open—and if it is not, we will make it right. 

Senator TESTER. OK, but that is not what I asked. 

Mr. STUMPF. I am sorry. 

Senator TESTER. I asked: Was negative information turned in to 

the credit bureaus because of these actions? 

Mr. STUMPF. You know, I do not know the algorithms of how 

credit bureaus—— 

Senator TESTER. Well, this—— 

Mr. STUMPF. But I want to answer your question. I know that 

when a credit bureau is requested, it has an impact on your credit 

score. 

Senator TESTER. Well, this is a big deal. 

Mr. STUMPF. Yes, it is. 

Senator TESTER. And I am telling you, it is a big deal. I could 

ask you for the age breakdown on these 2 million accounts that 

were opened up, but I am telling you that if information was sent 

in to 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? 

Mr. STUMPF. Senator—— 

Senator TESTER. Or did that information not get reported to the 

credit bureaus? 

Mr. STUMPF. Well, when we pull a credit—— 

Senator TESTER. Just ask me—just tell me, did the information, 

if there were fees and fines involved and the credit bureaus requested it, or even if they did not, did that information get forwarded to the credit bureaus? 

Mr. STUMPF. I am trying—sir, I am trying to work with you—— 

Senator TESTER. But a ‘‘yes’’ or ‘‘no’’ works. 

Mr. STUMPF. Yes—yes, we—we pulled a credit bureau for each 

one of these cards. 

Senator TESTER. OK. So what is 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. 

Senator TESTER. OK. 

Mr. STUMPF. If they want it, we do not want to take away their 

credit. If they did not want it, we are going to go back and make 

sure that it is made right by the credit bureau and made right by 

the customer. 

Senator TESTER. And what is the timeframe for that? 

Mr. STUMPF. We already started that process. 

Senator TESTER. OK. So now, this took 5 years. It has been documented, 2011—maybe even started before that, but 2011 until fairly recently. Now, if I had had a credit card issued in the 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 could know the figure, but maybe half 

a percent, maybe more than that. And on a $500,000 mortgage, the 

24 

difference between 3.5 and 4 percent is 50 grand over 30 years. 

What is being done about that? 

Mr. STUMPF. We will look at each one of those and determine 

what—— 

Senator TESTER. So you are going to go back in and find out, 

even if they did not do business through Wells, if they bought a 

house and what Wells did impacted their credit rating, you are 

going to go back and find those folks? 

Mr. STUMPF. I am going to go back—we have committed to go 

back to all of our credit card customers and find out—— 

Senator TESTER. OK. What about the ones that got—you refund 

all their fines, you refund all their fees. You went back to the credit 

bureau and reestablished 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. You know, we are working on that. I have told our 

people, ‘‘Go back and make it right,’’ and I can—as we start going 

through that, I am happy to have our team come back and report 

to you how we’re working on it. 

Senator TESTER. Well, I think it is really important that you understand that this is a big deal. I mean, it is a big deal. And I know 

you feel bad about it. We feel bad about it. But the truth is there 

are 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 is just a few hundred bucks in fees. It is 

more than that, much more than that. 

So you found out in 2013—and I do not want to beat this horse 

anymore, but did you find out that 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. 

Senator TESTER. Because it would seem to me that if you guys 

knew about that, a simple edict would have been pretty helpful: 

‘‘Do not do this. If you do this, you are gone.’’ 

Mr. STUMPF. And that is—we had even more than that, and what 

we should have done is get rid of our incentive program. 

Senator TESTER. The last thing, and this is just a statement. But 

I can tell you that you have said multiple times here that 5,300 

people went, and that is basically 1 percent of your workforce. 

Every time you say that, you give ammunition to the folk who want 

to break up the big banks. Fifty-three hundred 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 is going to be a lot of work that has to be 

done to rectify this situation, if it ever can be rectified. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Crapo. 

Senator CRAPO. Thank you, Mr. Chairman. 

Mr. Stumpf, I want to follow up on the line of questioning that 

Senator Tester was just discussing with you, but first I want to ask 

a couple of questions about just data, basically. 

25 

Consumers expect that their private information is going to be 

protected at their bank and not used to open an unauthorized 

account. You have gone through that extensively today. Did the 

third-party analysis that you engaged in determine if these unauthorized accounts were created uniformly across the United States? 

Or were there areas in the United States where they were more 

heavily created? 

Mr. STUMPF. Yes, there was a heavy bias toward the Southwestern part of the country. 

Senator CRAPO. The information I have indicates that that even 

more specifically includes California and Arizona. Would that be 

correct? 

Mr. STUMPF. That would be correct. 

Senator CRAPO. I also have New Jersey here on my list. Was 

New Jersey more heavily impacted? 

Mr. STUMPF. Well, I have numbers by State, and it typically 

related to there was some over index or over—people did more 

wrong things, but more associated with the size of the business 

we’re a much larger bank in Southern California and Arizona, New 

Jersey. There were places where we are larger and it fit more the 

pattern of the size of our organization in those communities. 

Senator CRAPO. So because of that, it was not necessarily that 

the management in those communities were potentially the ones 

who were driving this more aggressively, but simply the size of 

your business in those communities? 

Mr. STUMPF. Senator, it was a bit of both. 

Senator CRAPO. All right. Thank you. Obviously, one of the questions that my constituents and constituents across the country 

have is, ‘‘Am I one of those who has had an unauthorized account 

created in my name?’’ And you have indicated that right now Wells 

Fargo is calling every customer. Is that correct? 

Mr. STUMPF. We are contacting all of our deposit customers and 

the credit—and, incidentally, virtually all of these accounts came 

on the books and were closed within a 60-day period. And so of the 

potential—again, the 2 million accounts that could not be eliminated—and I think I said that in my oral testimony. So I do not 

know—you know, we just could not eliminate them, or PwC could 

not. But we are calling all of our credit card customers and contacting all of our deposit customers, and we have a special call a 

number. We are asking people to come into our banks and talk to 

our people. 

Senator CRAPO. That was my next question. If there is somebody 

who does not want to wait for the call, what can they do? 

Mr. STUMPF. I mean, they are going to get a notice and say, you 

know, if you have an interest, you can email us, we will call you, 

we will do whatever it takes to make sure that—and I know our 

study was—PwC was very comprehensive. We tried to err on the 

side of the customer. In fact, we are getting people coming into our 

bank today saying, ‘‘I got a $25 check, but I wanted this service.’’ 

And I am not saying that—but I am just saying that we want to 

make sure that we do not hurt any customer and that if they 

wanted credit, they have it; if they did not want it, we will try to 

make it right by them. 

26 

Senator CRAPO. All right. Now, getting back to Senator Tester’s 

question about the credit impact, the simple opening of an account 

causes an impact to a credit rating, does it not? 

Mr. STUMPF. It does on—and, again, I am not an expert in this 

field, but I know on the credit card side we pull a bureau, and depending on how many bureau—well, I know that that is a strike 

against—it lowers your credit score, depending on how many 

requests are in that time. There is also a positive impact, and I am 

not here to justify or under—we will do what is right to make that 

right. 

Senator CRAPO. Well, and that is what I wanted to get at finally 

in the last minute I have in my questioning. You said to Senator 

Tester and you have just said again to me that you are going to 

make it right. How do you do that? For example, you said the calls 

have been being made. I assume that in the calls that the bank is 

making that they are finding customers, some, who have unauthorized and unwanted credit card accounts. How do you make it right 

with regard to the impact that that—and potentially charges on 

that account have caused to the credit rating of that card holder? 

Mr. STUMPF. And, Senator, that is—that is a very good question. 

We are just starting that process. I do not have enough to give you 

right now, but we would be happy to come back to the Committee 

and tell you more about what we learn as we do that. 

Senator CRAPO. All right. Thank you. In the little bit of time I 

have left, I want to shift topics. My understanding is that the primary regulators that you have been dealing with are the city of Los 

Angeles and the OCC and the CFPB. Is that correct? 

Mr. STUMPF. That is correct. 

Senator CRAPO. Could you just give me a timeline? When did 

each of those notify you? Or did you notify them at some point? In 

what order did they get involved and when? 

Mr. STUMPF. I do not know that I have precise dates, but I will 

give you a general timeline. The city of LA lawsuit was sometime 

in the May timeframe of 2015—well, 2013, maybe it was. I am 

sorry I am missing on dates here. And then the OCC was involved. 

We shared with them. And when we learned of their lawsuit, we— 

well, it was actually in 2015. I am sorry, 2015. May of 2015. And 

then we shared that information with the CFPB. But the OCC was 

involved with us prior to probably the 2013 timeframe. 

Senator CRAPO. So the OCC probably would have been involved 

first, even before the city of Los Angeles? 

Mr. STUMPF. They are our principal regulator, and yes. 

Senator CRAPO. All right. And then the CFPB would have been 

the final entity that was—the last—— 

Mr. STUMPF. We noticed—we called them, someone from our 

legal department called them I believe in the May timeframe of 

2015. 

Senator CRAPO. Sorry. I see my time is well over now. Thank 

you, Mr. Chairman. 

Chairman SHELBY. Senator Warren. 

Senator WARREN. Thank you, Mr. Chairman. 

Mr. Stumpf, the Wells Fargo Vision and Values Statement which 

you frequently cite says, ‘‘We believe in values lived, not phrases 

27 

memorized. If you want to find out how strong a company’s ethics 

are, do not listen to what its people say. Watch what they do.’’ 

So let us do that. Since this massive, years-long scam came to 

light, you have said repeatedly, ‘‘I am accountable.’’ But what have 

you actually done to hold yourself accountable? Have you resigned 

as CEO or Chairman of Wells Fargo? 

Mr. STUMPF. The board—I serve at the—— 

Senator WARREN. Have you resigned? 

Mr. STUMPF. No, I have not. 

Senator WARREN. All right. Have you returned one nickel of the 

millions of dollars that you were paid while this scam was going 

on? 

Mr. STUMPF. Well, first of all, this was by 1 percent of our people 

and—— 

Senator WARREN. That is not my question. My question—it is 

about responsibility. Have you returned one nickel of the millions 

of dollars that you were paid while this scam was going on? 

Mr. STUMPF. The board will take care of that. 

Senator WARREN. Have you returned one nickel of the money you 

earned while this scam was going on? 

Mr. STUMPF. And the board will do—— 

Senator WARREN. I will take that as a ‘‘no’’ then. 

Have you fired a single senior executive? And by that, I do not 

mean a regional manager or branch manager. I am asking about 

the people who actually led your community banking division or 

your compliance division? 

Mr. STUMPF. We have made a change in our regional—to lead 

our regional bank. 

Senator WARREN. I just said I am not asking about regional managers. I am not asking about branch managers. I am asking if you 

have fired senior management, the people who actually led community banking division, who oversaw this fraud, or the compliance 

division that was in charge of making sure that the bank complied 

with the law. 

Mr. STUMPF. Carrie Tolstedt—— 

Senator WARREN. Did you fire—— 

Mr. STUMPF. No. 

Senator WARREN.——any of those people? 

Mr. STUMPF. No. 

Senator WARREN. No. OK. So you have not resigned. You have 

not returned a single nickel of your personal earnings. You have 

not fired a single senior executive. Instead, evidently your definition of ‘‘accountable’’ is to push the blame to your low-level employees who do not have the money for a fancy PR firm to defend themselves. It is gutless leadership. 

In your time as Chairman and CEO, Wells has been famous for 

cross-selling, which is pushing existing customers to open more accounts. Cross-selling is one of the main reasons that Wells has become the most valuable bank in the world. Wells measures crossselling by the number of different accounts a customer has with 

Wells. Other big banks average fewer than three accounts per customer. But you set the target at eight accounts. Every customer of 

Wells should have eight accounts with the bank. And that is not 

because you ran the numbers and found that the average customer 

28 

needed eight banking accounts. It is because ‘‘eight rhymes with 

great.’’ This was your rationale right there in your 2010 annual report. 

Cross-selling is not about helping customers get what they need. 

If it was, you would not have to squeeze your employees so hard 

to make it happen. No. Cross-selling is all about pumping up Wells’ 

stock price, is it not? 

Mr. STUMPF. No. Cross-selling is shorthand for deepening relationships. We only do well—— 

Senator WARREN. Let me stop you right there. You say ‘‘no’’? 

Here are the transcripts of 12 quarterly earnings calls that you 

participated in from 2012 to 2014, the 3 full years in which we 

know this scam was going on. I would like to submit them for the 

record, if I may, Mr. Chair. [http://www.warren.senate.gov/ 

wellsfargo/] 

Chairman SHELBY. Without objection, so ordered. 

Senator WARREN. Thank you. 

Senator WARREN. These are calls where you personally made 

your pitch to investors and analysts about why Wells Fargo is a 

great investment, and in all 12 of these calls, you personally cited 

Wells Fargo’s success at cross-selling retail accounts as one of the 

main reasons to buy more stock in the company. Let me read you 

a few quotes that you had. 

April 2012: ‘‘We grew our retail banking cross-sell ratio to a 

record 5.98 products per household.’’ 

A year later, April 2013: ‘‘We achieved record retail banking 

cross-sell of 6.1 products per household.’’ 

April 2014: ‘‘We achieved record retail banking cross-sell of 6.17 

products per household.’’ 

The ratio kept going up and up. And it did not matter whether 

customers used those accounts or not. And guess what? Wall Street 

loved it. Here is just a sample of the reports from top analysts in 

those years, all recommending that people buy Wells Fargo stock 

in part because of the strong cross-sell numbers. And I would like 

to submit them for the record. 

Chairman SHELBY. Without objection, so ordered. 

Senator WARREN. Thank you, Mr. Chair. 

Senator WARREN. So when investors saw good cross-sell numbers—they did while this scam was going on—that was very good 

for you personally, was it not, Mr. Stumpf? Do you know how much 

money, how much value your stock holdings in Wells Fargo gained 

while this scam was underway? 

Mr. STUMPF. Well, first of all, it was not a scam, and cross-selling 

is a way of deepening relationships. When customers use—— 

Senator WARREN. We have been through this, Mr. Stumpf. I 

asked you a very simple question. Do you know how much the 

value of your stock went up while this scam was going on? 

Mr. STUMPF. It is—all of my compensation is in our public—— 

Senator WARREN. Do you know how much it was? 

Mr. STUMPF. It is all in the public filing. 

Senator WARREN. You are right. It is all in the public records because I looked it up. While this scam was going on, you personally 

held an average of 6.75 million shares of Wells stock. The share 

price during this time period went up by about $30, which comes 

29 

out to more than $200 million in gains, all for you personally, and 

thanks in part to those cross-sell numbers that you talked about 

on every one of those calls. 

You know, here is what really gets me about this, Mr. Stumpf: If one of your tellers took a handful of $20 bills out of the cash 

drawer, they would probably be looking at criminal charges for 

theft. They could end up in prison. But you squeezed your employees to the breaking point so they would cheat customers and you 

could drive up the value of your stock and put hundreds of millions 

of dollars in your own pocket. And when it all blew up, you kept 

your job, you kept your multi-million-dollar bonuses, and you went 

on television to blame thousands of $12-an-hour employees who 

were just trying to meet cross-sell quotas that made you rich. This 

is about accountability. You should resign. You should give back 

the money that you took while this scam was going on, and you 

should be criminally investigated by both the Department of Justice and the Securities and Exchange Commission. 

This just is not right. A cashier who steals a handful of twenties 

is held accountable. But Wall Street executives almost never hold 

themselves accountable, not now and not in 2008, when they 

crushed the worldwide economy. The only way that Wall Street will 

change is if executives face jail time when they preside over massive frauds. We need tough new laws to hold corporate executives 

personally accountable, and we need tough prosecutors who have 

the courage to go after people at the top. Until then, it will be business as usual. And at giant banks like Wells Fargo, that seems to 

mean cheating as many customers, investors, and employees as 

they possibly can. 

Thank you, Mr. Chair. 

Chairman SHELBY. Senator Vitter. 

Senator VITTER. Mr. Stumpf, what astounds so many Americans 

and virtually all of us is how significant this fraud was, how widespread it was, for how long a period of time. And related to that, 

I am very concerned about this timeline of when top corporate leadership like yourself knew about it. You have been talking in general about 2013. Is that when the issue was a focus of board discussions? Or was that the first time you knew of fraudulent activity 

and these unwanted accounts being opened against customers’ 

wills? 

Mr. STUMPF. Thank you, Senator Vitter. As I testified before, 

this—people in our regional bank knew that not every team member would do everything right every day, and they tried to root it 

out at the business level with their compliance and so forth. And 

then once—— 

Senator VITTER. When did you and folks at your level like board 

members know of this activity on any significant scale? Was it 

2013, which you have suggested, or was it earlier? 

Mr. STUMPF. 2013. 

Senator VITTER. OK. So in 2011, about 1,000 employees were 

fired over this. That is about 1 percent of the whole retail business. 

So 1 percent of a whole big part of your business was fired over 

fraud, and you were never told about that. 

Mr. STUMPF. That was dealt with in the business unit at that 

time. 

30 

Senator VITTER. Is it normal for 1 percent of a business unit to 

be fired over fraud—not high turnover, not incompetence, fraud— 

and this never is mentioned to you? 

Mr. STUMPF. In a large retail business that has other turnovers 

and so forth, if I could go back, I would have, you know, spent more 

time on this—— 

Senator VITTER. Why isn’t this crystal clear proof that an entity 

as big as Wells is not only too big to fail, but it is too big to manage 

and it is too big to regulate? One percent of a big part of your business is fired over fraud, but that does not rise to your level? 

Mr. STUMPF. And, Senator, that is a good question, and I have 

thought about that. This was a problem of focus and not of size. 

Today—— 

Senator VITTER. Let us talk about corporate culture. You have 

often referred to people not living up to the Wells culture. Culture 

is not something written in a handbook. Culture, as has been suggested, is an atmosphere and what is lived. 

Mr. STUMPF. I agree. 

Senator VITTER. Was not this practice, in fact, by the numbers 

part of the Wells culture by definition because it was so widespread 

for so long a period of time? 

Mr. STUMPF. I think this is not part of our culture. This was 

the—and, again, it is a large number, but the vast majority of our 

people do it right every day, and they provide great value, and they 

live according to our culture, vision, and values. 

Senator VITTER. And if it was a widespread practice for many 

years—I will just make a statement—that makes it part of the culture, in my opinion. So it seems to me your challenge is to change 

the culture, not to enforce the culture. 

Finally, what level of confidence, from 0 percent to 100 percent, 

do you have that this type of fraudulent activity does not exist in 

other Wells business lines? 

Mr. STUMPF. We have looked at other things, other businesses. 

They are different, and we believe that this is, you know, situated 

in our regional bank. Other areas have different levels of compliance and different volumes and different requirements. We have 

looked across a number of things, and I have confidence that we 

have this one solved, and we have made a lot of changes. 

Senator VITTER. So just as an example, Wells is the biggest participant in the SBA’s 7(a) loan program. I happen to chair the 

Small Business Committee, so I am focused on a lot of small business issues. Are you 100 percent confident that no fraudulent activity like this or no extreme quotas and goals exist in that 7(a) program? 

Mr. STUMPF. We do not have product goals to my knowledge in 

any one of our other businesses, and we have—of course, because 

of this situation, we have doubled down on compliance and review 

in a lot of our businesses across the board. 

Senator VITTER. Well, I am writing several of those compliance 

folks to urge a look at anything small-business related, including 

the 7(a) program since Wells is the leader in that activity. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Donnelly. 

Senator DONNELLY. Thank you, Mr. Chairman. 

31 

Mr. Stumpf, you had previously talked to me about Wells Fargo 

values and look at the mess we are in. A community banker from 

my State called the office, unsolicited, and is just sick, and he said, 

‘‘Here we go again where my bank is’’—a local community bank, 

‘‘My bank is going to be slandered because of what these guys are 

doing.’’ And he said, ‘‘If my bank had a widespread practice of 

opening unauthorized accounts and moving customer money without permission, I would be in jail. My bank would be sold, and my 

entire management team and board would be sued by the regulators for a lack of oversight.’’ And he is sick to his stomach about 

what has happened here. And so am I. 

Over 5,000 people from Indiana, 5,000 Hoosiers who every day, 

as everybody has talked about from their own States, every day 

these people work nonstop to try to pay the bills, take care of their 

family, make sure that they can make ends meet, and they hope 

that they can. Over 2 million-plus across the country but over 

5,000 Hoosiers who had unauthorized accounts opened. 

Now, the second many of these credit cards are opened, these 

folks’ credit was immediately dinged, and this is something Senator 

Tester was talking about. Then you go to take out a mortgage, and 

you have got a 30-year mortgage that is at half a point or a point 

higher because your credit rating has gone down. So what I want 

to know as one of these things is: Will you pay back every single 

extra dime that these people are going to incur over the 30 years 

because of the fraudulent action of the people at Wells? It was not 

Sam or Judy who works at the mill who is hoping to get a payment 

that they could afford. It was that their account had fraud committed to it, and now they have to pay more every single month 

for the next 30 years. How do you pay that back? 

Mr. STUMPF. Yes, and thank you, Senator. We have been thinking about that. We are starting to call, make those calls to our constituents and find out our customers—and I do not have a final answer for you, but we will—our intention is to make it right by 

every customer. 

Senator DONNELLY. So do you promise to pay back every single 

extra dollar these people are going to incur over the next 30 years? 

Mr. STUMPF. Senator, I want to work with you, and I am trying 

to be cooperative. I just do not have all those answers today. But 

I surely get the issue, and my instructions have been to make it 

right by every customer. 

Senator DONNELLY. One of the things that rubs everybody wrong 

around here, but not just here, around the country, Americans are 

fair people, and everybody in this country tries to make sure that 

there is a square deal done. It is not a square deal when the people 

that are fired are the tellers who make 15 bucks and the senior 

execs walk off with $100 million. Americans can smell an unfair 

deal a mile away. And when this teller—these 5,300 tellers, they 

did not come up with this scheme on their own. This is the only 

way they could keep their jobs because of what was going on. And 

you called them dishonest. And my question is: Ms. Carrie 

Tolstedt, the head of all this, is she dishonest? And how do you fire 

someone making 15 bucks and not the person—that is like firing 

the guy throwing coal in the engine and letting the captain go 

strolling off to a $100 million new ship. How do you do that? 

32 

Mr. STUMPF. Yes, I think that is an important question. First of all, most of the people were bankers who were not making $15 an 

hour, managers of those, and managers of those. And there is 

something very different about violating our code of ethics and putting customers at risk and being dishonest. First, as someone who 

did not spend enough time making sure that this issue had been 

closed, I see a very big difference. 

Senator DONNELLY. Well, I think one of the things that the 

American people are just disgusted about is it seems like it all 

flows downhill, and the people down the hill get fired, do not even 

know if they can pay their mortgage because of the job they had 

and they are gone, and that the people up on the top of the hill 

make $20 million, $10 million. You know, the fellows who started 

the Wells Fargo stagecoach, this was not their plan. This is not 

what we do. And the only last question I have—and I apologize, 

Mr. Chairman, but it is this: For 5 years—5 years. And so when 

folks say this is too big to fail, for 5 years you were not able to end 

this. And you look and you go for 5 years Americans were taken 

advantage of and were cheated, had their credit ratings ruined, 

had accounts opened that they never even knew about. And this 

bank, either you did not know, or you knew and it was great for 

the story. You know, under any circumstance none of the conclusions is good. 

Mr. STUMPF. I could not agree with you more. We did not move 

fast enough. We should have done better. But I also want to remind you that the vast majority of our people also had families to 

feed, and they did exactly the right thing. But we are sorry, and 

we need to do better. Thank you. 

Senator DONNELLY. Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Scott. 

Senator SCOTT. Thank you, Mr. Chairman. Good morning, Mr. 

Stumpf. 

Mr. STUMPF. Good morning, Senator Scott. 

Senator SCOTT. I will tell you, as a Senator I am frustrated, 

angry, and really unhappy with what appears to be a toxic culture 

in parts of your sales organization. As your customer, with two or 

three mortgages, a couple of accounts, I am disappointed. I am disappointed in my financial institution that I have put so much confidence and trust in. 

I am, however, thankful for the real heroes that we have heard 

so little about this morning, the heroes, the employees who went 

to the press, the customers who went to the OCC, bringing oxygen 

to a very important conversation, and hopefully resolution. 

I ask myself—and perhaps Rita Murillo gave me the answer— 

why did not these employees find a safe haven up the chain? If you 

will remember, I owned a couple of Allstate Insurance agencies, 

and so the sales culture that was so toxic is also incredibly important for folks looking to support their families, who are working 

paycheck to paycheck. And anyone who suggests that folks who 

make just a little money must cheat the system, it is an inconsistent suggestion. I know a lot of folks who are poor who would 

find that comment quite disrespectful, lots and lots—most poor 

folks have strong integrity and would never put themselves in this 

situation. 

33 

I would suggest that perhaps the higher you go in that chain in 

the sales organization, the more you find the problem, not the person making the 15 bucks an hour, to be honest with you. 

My question, though, is: Why was there not a safe haven? And 

have you created safe havens for employees who see things that are 

just running amok, do they have a safe place to go? And not to the 

Los Angeles Times, not to the OCC, but is there a culture that is 

being established—I know you are limiting some of your sales 

goals, which have unintended consequences as well. But is there a 

culture being established where the average employee feels empowered, encouraged to come forward and speak and be heard in Wells 

Fargo? 

Mr. STUMPF. Senator Scott, I really appreciate that line of questions because it is absolutely—and I should have mentioned it. 

Each team member, no matter where you are in your organization, 

is encouraged to raise their hand if something is being asked of 

them that they think is not right, not consistent with our values 

and our culture. They are asked to raise their hand. They are 

asked to go to a manager’s manager or HR. We also have an anonymous EthicsLine. They can speak up and show us and talk to us 

about anything they want. We want to hear from them, because we 

do not want this behavior. And I wish, you know, we would not 

have this behavior. But we have also instituted some things 

today—you know, and you mentioned getting rid of the sales goals. 

But we also today have an email we send within an hour of opening an account. No account can get opened today on a deposit side 

or credit card without a signature. And we are also doing a big 

mystery shopping program, with an independent third party to 

help tie it together. 

Senator SCOTT. Mr. Stumpf, I have to cut you off here. It is important for me to finish my line of questions. I am glad to hear that 

you are making progress. 

Mr. chairman, I would love for the record to have a better understanding of the culture of checks and balances that were not there 

that are now there that will help customers, thousands of customers throughout South Carolina, have more confidence in all financial institutions, and perhaps having done it wrong, you have 

become a model for doing it right. 

Mr. STUMPF. Thank you. 

Senator SCOTT. The second question I have goes back to the 

question we have heard from Crapo, from Tester, and so many others, that—and Donnelly. When you look at the impact on the consumer, the customer, you open the account—and I apologize now 

for going over my time for a minute or so. You have an account— 

I have a couple of accounts with the bank. 

Mr. STUMPF. Thank you. 

Senator SCOTT. I hope to keep them there. 

Mr. STUMPF. Thank you. We agree. 

Senator SCOTT. I hope to keep them there. 

Mr. STUMPF. Yes. 

Senator SCOTT. Someone opens an account, a fraudulent account. 

The definition of ‘‘fraudulent,’’ God bless Black’s Dictionary. If I did 

not sign for it, it is fraudulent. I like to have simple definitions. So 

it opens an account in my name. I do not know the account is 

34 

opened. So there are fees attached to some of the accounts. The 

fees that are attached are not paid because I am ignorant of those 

accounts. Those fees that are not paid because I do not know about 

them at some point are reported to a credit agency because I did 

not pay the fees, because I did not know about it because I did not 

open the account. 

So when these fees create a negative impact on my credit statement, it translates into higher interest rates, or, said differently, 

a different way of exacting resources out of my very limited pocket, 

especially for folks working paycheck to paycheck throughout South 

Carolina. 

Mr. STUMPF. Correct. 

Senator SCOTT. So when that happens, it is nearly impossible for 

us to figure out the actual dollar amount, as Senator Donnelly was 

looking for, of impact on all the customers that goes through. And 

I would like for it also to be included in the questions for the record 

some way of helping me and others understand how we create a 

solution for those customers who will obviously be identified by you 

or by a scoop of attorneys looking to sue. 

So I would love to understand and appreciate that process so 

that I can go back to my constituents who I work for and give them 

a plausible path forward for actual resolution for those who are injured and a clear path forward for restoring confidence in financial 

institutions, because my fear is that this is not going to simply be 

a Wells Fargo question. It will be a question for the entire financial 

footprint in our Nation. 

Mr. STUMPF. And I think it is a good point, and I think—and, 

again, I will need to check with our team, but I think we have already gone back on the deposit side and are making those fixes 

with the credit bureau and are working to rectify that. But I will 

make sure we get back to you and work with you on that issue. 

Senator SCOTT. Thank you, sir. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Heitkamp. 

Senator HEITKAMP. Thank you, Mr. Chairman, and thank you for 

calling this meeting. 

I know, Mr. Stumpf, there are probably many other places you 

would rather be right now, but I think this is a critical time as we 

look at the push that we have seen from so many financial institutions for lower regulatory burdens and trust us. What we have now 

lost has been trust not only between you and your customers, but 

in a very bipartisan way, between this Committee and large financial institutions. You have said repeatedly that one of your failures 

was that you did not act fast enough. Today you are sitting in front 

of this Committee, and I am telling you, you are still not acting 

fast enough. You still do not have the answers that we need to say 

that we are moving forward. 

And so let us start with remediation, and by that I mean repairing credit ratings, taking a look at refunds, taking a look at restoring to the customer what the customer lost. You have said repeatedly to the folks here, you know, ‘‘We are working on it. We are 

working on it.’’ You know, we start this story as far back as—we 

do not know, but let us start at 2011. At 2011, there is something 

going on, and Wells Fargo is addressing it. At 2013, there is 

35 

something going on, and Wells Fargo is addressing it. At 2015, 

there is something going on, and Wells Fargo is addressing it. But 

yet it did not get done. And now you are coming to us and saying, 

‘‘Trust us. We now get it. Now we know. Now we have figured it 

out.’’ 

And so we need a clear dialogue, but I think that one of the failures today is you have not come with a whole lot of remediation; 

you have not come with a whole lot of dialogue to us on, ‘‘This is 

what we are doing to restore customer confidence.’’ And like Senator Scott, I am one of your customers. My whole family is. You 

are not doing what you need to do to restore customer confidence. 

But you are also not doing what you need to do to restore confidence with this Committee and with the American public. 

I want to talk about changing culture. There is no one on this 

Committee who believes that 5,000 people independently act with 

impunity and with dishonesty. No one here believes that, and if 

they do—I have done law enforcement. This is a behavior that was 

created by the culture that was allowed, created by a whole lot of 

folks saying, you know, ‘‘Let us do it this way.’’ This is not—and 

I get what you are saying, that it was not just the tellers, it was 

not just the lower level. But yet the one person, the one person who 

was responsible directly—other than yourself—for making sure this 

does not happen is not in front of this Committee today. In fact, 

she has walked off with a pretty good deal and hoping that all of 

this blows over. 

And the other thing, when you say you did not act quickly 

enough, the board should have already acted to claw back those 

salaries. If you had come here and said, ‘‘The board now is clawing 

back; these are the things that we are doing,’’ you would be in a 

lot better position sitting in that chair right now. And so I will tell 

you, you have not done enough to restore confidence today, and this 

dialogue will continue with this Committee and with the American 

public. 

Now, with that said, I want to turn to the 5,000 people, and I 

want to say maybe they deserve to have their reputation restored. 

Maybe they deserve to not be that person whose resume now says, 

‘‘Fired.’’ Maybe instead of just focusing on your customers, you 

ought to focus on the 5,000 people, who I am pretty sure did not 

unilaterally decide to be dishonest. And so it is an issue that has 

not been raised here, but I think it is a critical issue, because when 

you punish the guy at the end of the line and you do not punish 

in any way someone at the top, we end up with an attitude that, 

quite frankly, this is a corporate culture that does not care, they 

are just trying to get through the day. And I do not think that your 

day yet has ended. 

And so I want to thank you for appearing, but it is not enough, 

and it is not nearly what I had hoped you would come with today. 

Thank you. 

Chairman SHELBY. Senator Moran. 

Senator MORAN. Mr. Chairman, thank you. Mr. Stumpf, good 

morning. 

Mr. STUMPF. Good morning. 

Senator MORAN. As I understand the circumstances, the factual 

circumstances, many of the problems, while they were systemwide, 

36 

many of the problems were focused in the Los Angeles area within 

your banking system. Is that true? 

Mr. STUMPF. It is true that that is the largest part of our business, but they were also focused there, yes. 

Senator MORAN. And have you analyzed sufficiently to determine 

what was different about Los Angeles than places elsewhere in 

your banking system that would suggest that the number of times, 

the volume of fraudulent acts that occurred there—how do you explain that? 

Mr. STUMPF. Well, as Senator Heitkamp said—and if I did not 

share this, I want to make sure—I also agree 5,000 people just do 

not do 5,000 random things on their own. I am sure there were 

people talking to one another within a branch and so forth. But 

that analytical work is being done and has been done. I do not happen to have it here. I will have our team work with your staff to 

make sure that you have whatever you need on that. 

Senator MORAN. I would welcome that. I am interested in knowing if you see this as a customer issue, a more vulnerable population of banking customers, or as the word ‘‘culture’’ has been used 

here a number of times, was there something different about Los 

Angeles—which I assume—again, I think illegal behavior, immoral 

behavior, breaking the rules, is wrong wherever it happens. But 

our goal in management, your management of a financial institution, is to diminish the chances of that happening. 

Mr. STUMPF. Right. 

Senator MORAN. So you never condone bad behavior, but we 

want to make certain that the circumstances in which it is discouraged and never encouraged, and I do not have a feel for that circumstance. I do not know what really are the facts within the 

banking leadership that may have encouraged this behavior. 

We have seen this before. I serve, with a number of my colleagues, including Senator Brown, on the Veterans Committee, 

where we saw the consequences of a system that rewarded appointments for veterans who needed medical care. 

Mr. STUMPF. Correct. 

Senator MORAN. We saw a scandal across the country in which 

veterans were put on a list, suggesting they had an appointment. 

They did not. The circumstances in which those individuals were 

listed as having an appointment, the allegation certainly exists 

that there was death as a result of the failure of the VA system 

to provide necessary health care. 

Mr. STUMPF. Correct. 

Senator MORAN. I think a point that Senator Heitkamp made I 

would make to you again. There are a number of us on this Committee and in Congress who work to try to find the right regulatory 

balance for financial institutions, and just to stress with you the 

importance of then having our financial institutions behave, their 

behavior, their conduct be a certain level; otherwise, it undermines 

the efforts for that attempt to change the regulatory environment 

for financial success. And we particularly focused that on community banks, but we care about those financial institutions that have 

a relationship with their customers. And one of the arguments that 

has been made is those relationship bankers can rely upon the relationship. And what we are hearing from the circumstance that 

37 

we find at Wells Fargo is that relationship was taken advantage 

of; it did not accrue to the benefit of the customer. 

Mr. STUMPF. And, Senator, you are right for that portion, and 

what hurts so much is that we spend so much time trying to do 

the right thing, and when a customer gets a product that is not 

used or not benefiting them, that hurts them and it hurts us. We 

have no interest—and if I could just take 1 second, I want to correct, Mr. Chairman, or share something that I was not as clear on. 

On consumer deposit account fees, none of those were reported to 

credit bureaus. So the consumer credit bureau impact relates exclusively to credit cards, and we are going to run each one of those 

down. Thank you. 

Senator MORAN. Mr. Stumpf, let me ask a final question. So I do 

not think you have provided us with a precise timeframe in which 

regulators were notified, but I would be interested in knowing what 

regulators were notified when, who, and what steps they then took 

as regulators in response to the information they had. 

Mr. STUMPF. OK. And, again, my recollection is that our prudential regulator, the OCC, was involved and notified and active in the 

2013 timeframe. At about the time of the lawsuit from the city of 

Los Angeles, we informed the CFPB. And so I can tell you what 

we did. And I know you have a panel later with them, but that is 

my recollection. 

Senator MORAN. None of these actions at Wells Fargo came to 

light as a result of the regulators finding that behavior. It was reported to them subsequent. Is that true? 

Mr. STUMPF. You know, again, I want to be—I do not want to 

speak for them, and I do not know what part of this is confidential 

supervisory information. But my recollection of what we did was 

deal with this issue, terminate people, inform our prudential regulator, and after the city of Los Angeles, inform the CFPB. 

Senator MORAN. Finally, I would say that in my experience in 

dealing with the Department of Veterans Affairs and their circumstance, in way too many instances, in my view, the employees 

became the scapegoat for what I saw as actions or encouragement, 

behavior by their supervisors. And I would encourage you in your 

circumstance to make certain that the employees are not the scapegoat for behavior at higher levels. 

Mr. STUMPF. I think that is a great point, Senator, and I am— 

you know, the 268,000 that come to work every day of our team 

members, they are the most fabulous people, you know, and I just 

love them and what they do. But the 5,300, for whatever reason, 

they were dishonest, and I am not scapegoating, but that is not 

part of our culture. And some of those—many of those jobs, most 

of them, were very good American jobs. 

Senator MORAN. Thank you, Chairman. 

Chairman SHELBY. Senator Merkley. 

Senator MERKLEY. Thank you. 

Mr. Stumpf, did Wells Fargo create a pressure cooker sales culture that put personal bankers and tellers in an impossible situation between a rock and a hard place? 

Mr. STUMPF. I do not believe that, because 90—you know, the 

vast majority—— 

Senator MERKLEY. Let me continue. 

38 

Mr. STUMPF. OK. 

Senator MERKLEY. I got your answer. Thank you. 

So Rita Murillo, a branch manager, said, ‘‘Regional bosses required hourly conferences on her Florida branch’s progress toward 

daily quotas for opening accounts and selling customers extras, 

such as overdraft protection’’—an issue that has not been addressed yet. 

Employees who lagged behind had to stay late and work weekends . . . 

Then came the threats: Anyone falling short after 2 months would be fired. 

We were constantly told we would be working for McDonald’s . . . If we did 

not make the sales quotas—we had to stay for . . . after-school detention, 

it felt like, or report to a call session on Saturdays. 

Is that a pressure culture situation, putting tellers and personal 

bankers in an impossible situation? 

Mr. STUMPF. Senator, that has no place in our culture. I have actually read that, and it hurt to hear those words. And people like 

that do not belong here. 

Senator MERKLEY. Erick Estrada, a former personal banker and 

business specialist, said managers there coached workers on how 

to inflate sales numbers. Employees opened duplicate accounts, 

sometimes without customers’ knowledge. They used a database to 

identify customers who had been pre-approved for credit cards, 

then ordered them. They were coached on it. Is that a setting in 

which a pressure culture—pressure cooker culture really puts the 

personal bankers in an impossible situation? 

Mr. STUMPF. That has no place in Wells Fargo. There is nothing 

that we did to encourage that. 

Senator MERKLEY. Nothing you did, but bank managers were 

being coached on how to coach their employees on how to do this? 

How about a branch manager in the Pacific Northwest, where I 

come from? She was very upset, finding employees who had talked 

a homeless woman into opening six checking accounts. She said, ‘‘It 

is all manipulation. We are taught exactly how to sell multiple accounts. It sounds good, but in reality it does not benefit most customers.’’ 

Or let us talk about Yesenia Guitron, who, in 2008, after being 

hired for 2 months, found that this was happening, these false accounts were happening. She went to her trainer, then she went to 

her manager, and she was basically found—she was pushed very 

hard to shut up in all kinds of different ways. 

So you say, ‘‘Well, the employee could have gone to somebody.’’ 

She did. And eventually she filed a whistleblower suit. And why 

did Wells Fargo say that that was not legitimate? I will just save 

you the time. The answer is because Wells Fargo said, ‘‘We fired 

her because she did not meet her quotas.’’ 

So here we have a situation where employees are written up, 

they have to stay late, they have to come in on weekends to be 

coached, they are at risk of being fired. That sounds like a systemic 

management strategy for cross-selling. But you refuse to take any 

responsibility, blaming it on the personal ethics of individual employees who were at risk of losing their job if they did not meet 

their ‘‘daily solutions target.’’ 

Can you even conceivably place yourself in the position of an ordinary working person, who has a child in day care, they are told 

39 

they are going to be fired if they do not meet these solutions, they 

are being coached on how to do it by their manager, and say there 

was no culture established that caused these problems? 

Mr. STUMPF. Sir, Senator, I am very sorry that that happened. 

That was not what we wanted to have happen. When those things 

happened, I wish we would have rooted all of it out. And the vast 

majority of our people did it the right way—— 

Senator MERKLEY. Sharif Kellogg said: 

The branch managers were always asking, ‘How many solutions’—that is 

the signing of new accounts—‘did you sell today?’ They wanted three to four 

a day. They wanted three to four a day. In my mind, that was crazy. That 

is not how people’s financial lives work. I was always getting written up 

for failing to bump up my solutions numbers. 

Some employees would ask local business owners who they knew 

well to open additional accounts as favors to them. ‘‘It seems as 

though you would have to be willfully ignorant to believe that these 

goals are achievable through any other means.’’ 

Cross-selling is a major pride point for the management of Wells 

Fargo, including your reports to—annual reports to customers. It 

was so high because you created a culture of cross-selling that 

pushed everyone to the maximum, and the casualties are these 

folks who were going to be fired because they would lose their jobs 

if they did not meet it. And yet you can only sit here and say there 

was no coaching, there was no management strategy. Cross-selling 

was at the heart of Wells Fargo’s program, and you were at the top 

of this for a very long time. 

Let us go back to 2005, 2007, 2010. You had one major position 

and promotion after another. Cross-selling was at the heart of it, 

and you just sit here and blame the little person who was pressured into an impossible situation. Isn’t that really kind of, for 

want of another word, a failure to accept responsibility? 

Mr. STUMPF. Senator, I started out today by accepting full responsibility. We like the idea—— 

Senator MERKLEY. Accepting full responsibility for establishing a 

culture that put people in an impossible situation would be to 

resign, as my colleague suggested. It would be to return your funds 

and help fund assistance for all these people who were fired because of the culture you established and that you personally benefited an enormous amount from. But all you say, you say, ‘‘I accept 

responsibility. And, by the way, it is the fault of those 5,000 people 

who just were not ethical enough and open an account they should 

not have opened.’’ That is not accepting responsibility. This was a 

systemic problem that you benefited from enormously, the bank 

benefited from enormously, and you are scapegoating the people at 

the very bottom. 

Mr. STUMPF. Senator, I am—I just need—I do not want to be 

confrontational, but I want to just tell you that the vast majority 

did the right thing. We love the idea of having deep, mutually beneficial relationships with our customers. Having a product that a 

customer does not use, does not need, or does not want does not 

help the customer, it does not help me, and it does not help the 

shareholder. 

Senator MERKLEY. You signed Sarbanes-Oxley reports. Did you 

ever reveal the problems with this high-pressure sales strategy in 

40 

terms of fraudulent credit accounts at any time in that course toward 2 million—2 million—fraudulent accounts? Did you ever disclose that to your investors? 

Mr. STUMPF. Well, let me just say—— 

Senator MERKLEY. Well, ‘‘yes’’ or ‘‘no.’’ It is a simple question. 

Mr. STUMPF. Senator, the question is 2 million fraudulent—there 

were 2 million accounts that we could not rule out as a possibility 

that they were not authorized. 

Senator MERKLEY. I am so glad you crossed that ‘‘t’’ and dotted 

that ‘‘i.’’ Did you ever disclose the systemic problem of fraudulent 

accounts to your investors? 

Mr. STUMPF. It was—it was not a material event. 

Senator MERKLEY. So you bragged on the one end about the intensive ability to get cross-selling and how that would be beneficial, 

but the problems that came from that strategy, the very problem 

that dozens and dozens of people have shared their stories about 

how it was on the ground, and you can only blame them for ethical 

lapses. You never disclosed you had a systemic problem. 

Mr. STUMPF. Again—— 

Senator MERKLEY. When you sign those reports personally—that 

is what Sarbanes-Oxley was—didn’t you think that that was material when you are saying, ‘‘This is our big win, our cross-selling 

strategy,’’ not to disclose that it also had a dark side? 

Mr. STUMPF. There was a lot of things that our customers do and 

a lot of businesses that we have. This is one ratio, and most of this 

business—first of all, most of the deposit accounts are off the 

books. Most of them went on and off within the same or next quarter in which they happened. Having a customer have a product 

that they do not need is not helpful. It is not what we want. 

Senator MERKLEY. I want to close just by saying I would like to 

hear about the amount of slamming that went on on overdraft protection since that has come up, and a number of the employees 

talked about how they were pressured into adding that. Do you 

have details on that? 

Mr. STUMPF. I do not. I can have my staff—— 

Senator MERKLEY. Can you get extensive details on that? 

Mr. STUMPF. I do not know of that issue off the top of my head, 

but I will have my staff—I will instruct them to work with your 

team as quickly as they can. 

Senator MERKLEY. Can you get the information for the full Committee? 

Mr. STUMPF. I will have my team work with your team. I do not 

even know exactly what we are talking about. 

Senator MERKLEY. You do not know what overdraft protection is? 

Mr. STUMPF. I know what overdraft protection is. I know that we 

had a credit card product for an overdraft protection, but I will 

have my team work with your team. 

Senator MERKLEY. And please get the information to the full 

Committee. Thank you. 

Chairman SHELBY. Senator Brown, you have another question? 

Senator BROWN. Thank you, Mr. Chairman, and thank you for 

starting a second round. I appreciate that. There is so much more 

to discuss. 

41 

First, I ask unanimous consent to enter into the record the testimony in the House by Khalid Taha and Julie Miller, two people 

who worked at Wells Fargo. 

Chairman SHELBY. Without objection. 

Senator BROWN. Thank you, Mr. Chairman. 

Senator BROWN. A couple of clarifications of points and then two 

or three more questions, Mr. Stumpf. We have discussed who was 

fired, whether the employees were fired. Understand—and just for 

those watching and listening and for the record especially—90 percent of the people fired were not managers. That means they were 

tellers, $12 to $15 an hour; personal bankers, $16 to maybe $18 or 

$19 or $20 an hour; but most of the people fired were not branch 

managers and were not regional managers. 

Second, there was a mention that only credit cards would affect 

credit scores in the answer to one of these questions. But if funds 

were moved out of a checking account and someone bounced a 

check for a car payment, that could end up affecting credit scores. 

So while it may narrowly be only credit cards, it really is not in 

that definition. 

A couple of questions. Senator Scott asked about where employees can go with ethics concerns, Mr. Stumpf. It sounded from whistleblower lawsuits that an ethics complaint often resulted in confronting the very managers condoning this behavior. Is that true? 

Mr. STUMPF. I do not believe that is true. I do not know. I can 

get back to you on that. 

Senator BROWN. How do you register an ethics complaint other 

than calling CFPB or the LA County Attorney or the Los Angeles 

Times? 

Mr. STUMPF. As I understand how our EthicsLine works, you 

call. It is an anonymous call. It is handled by a third party outside 

of the company who does work on that and then reports it to the 

company. 

Senator BROWN. I would like more on that, because my understanding is that at least initially you have to confront your supervisor, who has much to say about it. 

Senator BROWN. Now that we know what we do, will Wells Fargo 

continue to take the position in court that contractual agreements 

on mandatory arbitration—this is a question about mandatory arbitration, the fine print of so many of these contracts, if you will. 

Will Wells Fargo continue to take the position in court that contractual agreements on mandatory arbitration covering real accounts will apply to fraudulent ones as well and that customers 

will be forced into arbitration rather than having access to the 

courts? 

Mr. STUMPF. Well, I have instructed our team to do whatever it 

takes within reason to take care of these customers. I would have 

to talk to my legal team, and we can get back to you on that. 

Senator BROWN. All right. Understanding what has happened in 

the past, these mandatory arbitration clauses, which many of us I 

know on this Committee do not think are fair generally and most 

customers do not understand that they are part of a mandatory— 

do not even know what it is and part of a mandatory arbitration 

arrangement, that that has been applied to these fraudulent accounts in addition to the ones that were not fraudulent. 

42 

Understand that is what has happened, and I hope your answer is 

specifically in response to that. 

Mr. STUMPF. Well, again, I will talk to our team, and we will get 

back to you. Again, I am not an expert in that. 

Senator BROWN. Ms. Tolstedt reported directly to you. How frequently did you talk to one another? 

Mr. STUMPF. We had at least weekly meetings. 

Senator BROWN. And from 2007, when you both took your respective roles, until the end of 2013, did none of this firing for fraudulent accounts and all, did none of this ever come up in your weekly 

or more-than-weekly meetings? 

Mr. STUMPF. I remember being—at least it making an impression upon me in 2013. 

Senator BROWN. But from 2007, when you had your respective 

roles—so for 6 years, regular meetings with one of your most important—one of your most important managers, this discussion of 

1,000 people a year, beginning in 2011—but we may go earlier than 

that, we think—those discussions, you have no recall that that ever 

came up? 

Mr. STUMPF. Not in the way I had in 2013. 

Senator BROWN. OK. Over the past 10 years, your bank has had 

approximately 39 enforcement actions, just a few of which have 

come up today. Many were related to failure to serve or abusive 

conduct toward customers and investors. You talk much about 

Wells’ culture, how proud you are of it, and its ethics. What does 

this say—if you have had 39 enforcement actions, what does this 

say about Wells’ culture and compliance programs? 

Mr. STUMPF. We have more work to do, and we are trying very, 

very hard to build out all the compliance that we need to be—you 

know, to treat customers fairly and to make sure that we do things 

right every day. 

Senator BROWN. The last question, Mr. Chairman. I appreciate 

your indulgence. 

Chairman SHELBY. Senator Menendez—— 

Senator BROWN. No, could I just do this last question? I am 

sorry, Mr. Chairman. 

We know about the 5,300 employees who you say committed 

some—many people up here have said that the pressure on them 

was so great that they did things that they should not have, or 

maybe you have—you said they all—I think you said they deserved 

to be fired. What about the people who got—understanding, too, 

that is 5,300. Then there were at least hundreds more who refused 

to cheat or quit just because they did not want to be part of this 

and they saw what happened to others. But what about the people 

who got fired for not meeting goals that you now are saying were 

ill-advised? So there was a large—I think certainly a significant 

number of people who were fired for not meeting their goals. Now 

you say those goals were ill-advised. What do you do to make those 

employees—how do you identify them? How many are there? And 

what do you do to make those employees whole? 

Mr. STUMPF. Yes, I have to talk with our team. I do not know 

about those numbers. I do not know how significant or widespread 

that is, and I can get back to you on that. 

43 

Senator BROWN. Well, more precisely—I understand. I expected 

you not to know that number. But if there is one, that is one. If 

there are a hundred or a thousand. For those that were fired for 

not meeting those goals that you say are now ill-advised, do you 

have plans to make them whole? 

Mr. STUMPF. Yes, I would have to talk to our team. Again, I do 

not know the numbers, and I just—I frankly have not worked 

closely—— 

Senator BROWN. I did not expect you to know the numbers, but 

does it—in your mind and your conscience, does it say those people 

were fired because they did not meet goals, reach goals, the goals 

were ill-advised, shouldn’t you make it up to them? 

Mr. STUMPF. Well, again, I do not even—you know, I know where 

you are going with your line of questioning. I am trying to be cooperative. I just have not—I have not talked to our HR team. I do 

not know the numbers. I do not know the situations. I do not know 

if there are other things involved. So I—— 

Senator BROWN. Again, I am less concerned about the numbers 

than the morality of it. I would like to at least ask you to do this, 

then: Once you have made that determination of how many there 

are, I would like you to make them whole; and if you are not willing to make them whole, I would like a written response about why 

you have made the decision not to make them whole. 

Mr. STUMPF. OK. I will talk to our team, and we will get back 

to you. 

Senator BROWN. Thank you. 

Chairman SHELBY. Senator Menendez. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

Mr. Stumpf, let me give you a real-life example. We are talking 

about people whose credit scores were hurt. Linda Edwards and 

her daughter are Wells Fargo customers from New Jersey. Accounts were opened in the name—without their acquiescence, 

knowledge, including credit cards—of her daughter who was just 

starting college. She has a negative consequence on her credit 

score, which has not been resolved by Wells Fargo. She happened— 

you got the wrong person when you did it to this lady because she 

happened to be a former staffer at the New Jersey Division of 

Banking and Insurance. And when she called your company and 

asked for the fraud division, she was told, ‘‘No. Just call customer 

service.’’ 

So to this day, that question of her daughter’s credit score, who 

is starting college and obviously wants a good credit score, is affected. So there are real live people who Wells Fargo has not responded to. 

Let me ask you this: Is cross-selling an industry-wide reality, as 

is evidenced by Wells Fargo? Or is it unique to Wells Fargo? 

Mr. STUMPF. I do not know what other companies do. I know 

that we view it as an important metric as it relates to depth of relationship, and relationship—— 

Senator MENENDEZ. You do not know if other banks do this? 

Mr. STUMPF. I would—I do not know. 

Senator MENENDEZ. You do not review what your competition is 

doing to figure out whether there is something you should be doing, 

and so you do not have any idea if they do cross-selling? 

44 

Mr. STUMPF. I do not know that. 

Senator MENENDEZ. OK. We will have to ask the regulators. Let 

me ask you this: You said it was not a material event to Senator 

Merkley. Not a material—— 

Mr. STUMPF. A material financial event. 

Senator MENENDEZ. How about a material event for the SEC disclosure, which you said you never made? 

Mr. STUMPF. You know, I am not a lawyer, and I rely on my legal 

team—— 

Senator MENENDEZ. Based upon what has happened to the stock 

for your shareholders, it definitely was a material event that 

should have come forward. 

Let me ask you this: Ms. Tolstedt—in response to one of the 

questions, you said that you and I think the COO met with her and 

said you wanted to move in a different direction. 

Mr. STUMPF. Correct. 

Senator MENENDEZ. And she decided to leave. That sounds to me 

a lot like you can either leave or you are not going to—you are 

going to be fired, maybe. But is it that you created a situation to 

give her the option to leave because you were concerned about 

what she might say about practices of the bank and higher-ups? 

Mr. STUMPF. In fact, when Tim Sloan, our Chief Operating Officer and President, talked with her, said we want to go in a different direction, there were a number of things he was thinking 

about doing different in the business, and we had not made 

enough—along with my consultation, not made enough progress 

here, and she was retirement eligible. She decided to retire. It 

never went beyond that. 

Senator MENENDEZ. You had no concerns of what she might say 

if brought before the Senate or any other entity and put under oath 

about what she might say about what was known or not known? 

Mr. STUMPF. That did not even come into the—— 

Senator MENENDEZ. Well, let me ask you this: What were the repercussions of not meeting sales quotas besides not getting the 

bonus? Can you tell me how many workers faced discipline over the 

same 5-year period for failing to meet sales goals? How many workers that failed to meet those sales goals were terminated? 

Mr. STUMPF. I do not have those numbers, but I will tell you this, 

Senator—— 

Senator MENENDEZ. Well, I think it is important to know those 

numbers. You do not know how many people you terminated—you 

know how many people you terminated who you said did the wrong 

thing, but you do not know how many people you terminated because they did not meet the overwhelming cooker boiler that you 

put them under? 

Mr. STUMPF. I do not have those—I do not have those numbers. 

Senator MENENDEZ. Well, I would like you to get those numbers 

to the Committee. 

Mr. STUMPF. I will talk with our team, and I will, as far as I can. 

Senator MENENDEZ. You said to Senator Scott that, of course, 

there were opportunities, when he asked about safe harbors. You 

could raise your hand. There was an anonymous EthicsLine. There 

was no pressure cooker. 

Now, do you read your emails, Mr. Stumpf? 

45 

Mr. STUMPF. I read my emails. 

Senator MENENDEZ. OK. So I would like to read to you an 

excerpt from an email one my constituents sent to you in 2011. She 

was a branch manager at Wells Fargo, and I spoke to her yesterday about her experiences at Wells Fargo. In 2011, she wrote to 

you, and I am quoting now: 

I am currently an Assistant Vice President Manager at—— 

——and I will leave the location out—— 

——in northern New Jersey. I have been an employee of Wachovia for over 

22 years, which Wells Fargo acquired. I am writing to you because as a 

team member I feel hurt and disappointed with this company. There are 

challenges that team members are faced with, but those should not be the 

reason to move money from one account to another and to fool the 

motivator—— 

——the person who you had to go to who constantly was badgering 

you about whether or not you had opened enough accounts—— 

——that we have new accounts. These funds that are moved to new accounts to show growth when in actuality there is no net gain to the company’s deposit base is wrong. In the past months, I was placed on warning 

for not meeting these goals, and the reason that the bankers underneath 

me do not is because I will not tolerate the movement of existing money 

just because we need checking account solutions and profit proxy to move 

to the motivator. These accounts make no sense for the customer. 

Did you read that mail? 

Mr. STUMPF. I do not remember that one. 

Senator MENENDEZ. OK. Well, she was fired. So much for the 

safe haven, so much for coming forth. She went to the President 

and CEO of the company—that is about as good as it gets—and she 

found no safe haven there. 

Finally, let me ask you this: In 2012, Wells Fargo, then and now 

the largest mortgage lender in the country, agreed to pay $175 million to settle accusations that the bank discriminated against African Americans and Hispanic borrowers in their mortgage lending 

from 2004 to 2009. An investigation by the Department of Justice’s 

Civil Rights Division found that Wells Fargo discriminated by 

steering approximately 4,000 African American and Hispanic borrowers into subprime mortgages when non-Hispanic white borrowers with similar credit profiles received prime loans. 

When I look at this history, I get concerned with what is going 

on here. Do you have demographics of those customers who were 

hurt in this process? And can you share it with the Committee? 

Mr. STUMPF. Yes. Let me just go back to that particular case. I 

regret that. That was done through a wholesale business. Other 

people outside of our company originated those mortgages, and we 

were closing them, and we shut down that division. 

In this case, we do not—when we take applications or when we 

do business for deposits and credit card, we capture age, and there 

was no—in fact, deposit accounts skewed toward, you know, younger to middle-age Americans. 

Senator MENENDEZ. Well, I would suggest you read page 36(d), 

item 36(d) on page 9 of the Los Angeles City Attorney’s 2015 complaint filed against Wells Fargo describing a Wells Fargo gaming 

practice of targeting individuals holding Mexican consular cards. 

Mr. STUMPF. I do not—I will look at that yes. 

46 

Senator MENENDEZ. Thank you, Mr. Chairman. 

Chairman SHELBY. Senator Schumer. 

Senator SCHUMER. Well, thank you, and I apologize to the witness. It has been a busy morning. 

First, I want to just say—and I know other people have spoken 

about this—in terms of rescinding the bonuses, to the average 

American it just seems appalling that somebody who could make 

such large mistakes should be rewarded with almost an obscene 

amount of money, $120 million. And so I would simply—I am not 

going to—I know this has been discussed. I would say your bank 

has overall a good reputation. For the reputation of your bank, for 

the value of your shares, as well as relationships with customers, 

I would urgently urge you to not allow those bonuses to occur and 

urge that the compensation committee—I know which you sit on— 

to do that. That is just a statement for the record. 

Now, I would like to talk a little bit about the CFPB because 

they have done incredible work over the past 5 years. But this case 

exemplifies why the CFPB was created. The Consumer Financial 

Protection Bureau was formed to ensure that financial institutions 

that harm consumers through unfair, deceptive, or abusive practices are held accountable and that the consumers are made whole 

again. In fact, over the course of its short history, it has gotten $12 

billion in relief and restitution. Today’s hearing reminds us why 

the CFPB was formed. We needed a cop out on the beat. The incentives and practices that cross-selling goals promoted at Wells Fargo 

were very, very wrong and bad, as I am sure you said. They infected the work environment at branches in the country, and including in New York. 

Beyond the financial damage, Wells Fargo’s actions violated consumer trust. Wells will have to work long and hard to regain the 

trust of millions of Americans, but those Americans can rest assured now more than ever, knowing that there is a CFPB out 

there. 

So I would just ask you, Mr. Stumpf, given what you have been 

through—and I know it has not been a pleasant experience—do you 

agree that Federal regulators like CFPB and OCC serve a valuable 

role in promoting safety and stability as well as necessary consumer protections? I am saying this because a lot of our friends on 

the other side of the aisle want to either get rid of or greatly reduce 

the power of the CFPB. 

Mr. STUMPF. We share the mission of all of our regulators created by Congress, including the CFPB, and we are working with 

all of them. 

Senator SCHUMER. So you think the CFPB is a necessary thing? 

Mr. STUMPF. Well, again, it is created by Congress, and we agree 

to work with all of them, and we have worked closely on this matter with them. 

Senator SCHUMER. OK. And do you believe that the reforms—I 

will let the answer speak for itself. We think the CFPB has done 

an outstanding job, and what has happened at the bank, whether— 

you know, however it happened, shows the need for it. 

OK. Do you believe that the reforms that Wells committed to and 

goals required under the consent agreement you signed with the 

47 

CFPB will allow Wells to go back on a path of protecting customers’ interests in putting consumers first? 

Mr. STUMPF. Yes, we believe—we have a lot of work to do. 

Senator SCHUMER. OK. As per the terms of the consent agreement, will you work with the CFPB to ensure that Wells’ customers 

that were negatively impacted are made whole? 

Mr. STUMPF. Yes. 

Senator SCHUMER. Good. OK. Were you aware that the CFPB 

was aware of the cross-selling and looking into concerns about 

cross-selling as early as 2013? 

Mr. STUMPF. I only know what we did. I do not know what the 

CFPB—— 

Senator SCHUMER. OK. They were. So they were on this case I 

think before at least your top management discovered this, which 

is to their credit. 

Mr. STUMPF. I do not know that. 

Senator SCHUMER. OK. Well, Director Cordray will be here—- 

Chairman SHELBY. In a minute. 

Senator SCHUMER.——in a little bit, so we will ask him and see 

if that was the case. I believe it to be the case. 

And, finally, do you believe that the actions taken by the CFPB 

here will lead other financial institutions to reevaluate and reconsider their own cross-selling practices? 

Mr. STUMPF. Yes, I would have no idea on that. 

Senator SCHUMER. Yes, I think they will. I think they will, and 

I think the CFPB has had a very salutary influence, and I would 

hope you would come around to the view that it is a necessary part 

of our system of banking and governing. 

Thank you, Mr. Chairman. 

Mr. STUMPF. Thank you. Mr. Chairman, if I just might make one 

comment. 

Chairman SHELBY. Go ahead. 

Mr. STUMPF. Thank you, Senator Schumer, for your questions. 

You made a comment that I am on the human resources and compensation committee. I am not. I just want to make sure that is 

part of the record. 

Senator SCHUMER. OK. Well, I would still urge you to—is that 

the committee, though, that is in charge of the bonuses? 

Mr. STUMPF. That is the one that makes the recommendation to 

the full board, and, of course, I am not part of the full board in 

those decisions. 

Senator SCHUMER. OK. I would urge you to urge everybody who 

is on these committees to do just what we had asked. 

Mr. STUMPF. OK. Thank you. 

Senator SCHUMER. OK? Thank you. 

Chairman SHELBY. Senator Warren. 

Senator WARREN. Thank you, Mr. Chairman. And I want to say 

again thank you very much for being so responsive to us, for holding this hearing when we sent you a letter to ask you to do it, and 

thank you for being so generous about time. 

Chairman SHELBY. I hope I am responsive to the American people—— 

Senator WARREN. I hope so, too. 

Chairman SHELBY.——not just to you. 

48 

Senator WARREN. Thank you very much. I really appreciate your 

holding this hearing. 

Mr. Stumpf, as you know, some of my colleagues and I sent you 

a letter last week about the board’s plans to claw back compensation from senior executives who were responsible for overseeing 

this scam. Wells Fargo provided us with a response yesterday. I noticed that although we sent the letter to you, the response actually 

came from somebody else in the company, which I guess is another 

example of holding yourself accountable. 

I want to focus now on the mysterious circumstances surrounding Carrie Tolstedt’s retirement in July. As you know, Ms. 

Tolstedt ran the community banking division, the division where 

this scam occurred, for the entire time that the scam took place. 

She was in charge of all of the 5,300 employees who were fired, and 

she oversaw the creation of 2 million fake accounts. 

Now, in July of this year, just 2 months before the settlement 

was announced, and before those facts became public, Ms. Tolstedt 

retired at age 56. You indicated in the letter responding to our letter that she walks away with over $90 million in stock, stock options, and awards. Fortune Magazine says it is actually about $125 

million. But—and here is the key part—according to Fortune, if 

Ms. Tolstedt had been fired instead of retiring, she would have had 

to forfeit as much as $45 million of that award. 

Mr. Stumpf, the response to our letter confirms that you knew 

of this scandal before Ms. Tolstedt retired. It said—and this is from 

your letter: 

Senior management and the board were aware of the pending litigation, investigation, and discussions with our regulators relating to sales practices 

when Ms. Tolstedt indicated her decision to retire. 

Is that accurate, Mr. Stumpf, what this letter says? Were you personally aware of the massive problem that occurred under Ms. 

Tolstedt’s watch in July when she announced her retirement? 

Mr. STUMPF. I was aware that we were involved in discussions 

with the City Attorney, the OCC, and the CFPB, yes. 

Senator WARREN. So you had some indication there was a massive problem? 

Mr. STUMPF. We had some indication that we had 1 percent of 

our people who were doing the wrong thing. 

Senator WARREN. Also known as a ‘‘massive problem.’’ 

Mr. STUMPF. Well—— 

Senator WARREN. If you knew this, did you consider firing Ms. 

Tolstedt before she retired? 

Mr. STUMPF. Well, at the time she was reporting to our President 

and Chief Operating Officer, and—— 

Senator WARREN. It is a simple question. You knew there was a 

problem. Did you consider firing her? 

Mr. STUMPF. No, because of her—— 

Senator WARREN. Seriously? You found out that one of your divisions has created 2 million fake accounts, had fired thousands of 

employees for improper behavior, and had cheated thousands of 

your own customers, and you did not even once consider firing her 

ahead of her retirement? 

49 

Mr. STUMPF. In fact, when I look at her full body of work and 

I look at the customer loyalty improvement and the customer service improvement—— 

Senator WARREN. Are you sure that those were not fake? 

Mr. STUMPF.——all the work that was done, she chose to retire. 

And I would also like to make one other comment, because you 

made—— 

Senator WARREN. No, just on this, you never considered firing 

her. So now Ms. Tolstedt has apparently retired, but is also staying 

with the firm through the end of the year. And in the response to 

our letter, you state—or the person writing it states, ‘‘Ms. Tolstedt 

is eligible to be considered for a 2016 annual incentive award.’’ An 

incentive award for doing a great job in 2016? Mr. Stumpf, that is 

unbelievable. You are the Chairman of the Board and the CEO. In 

those roles, do you think it would be appropriate for Ms. Tolstedt 

to get another bonus on top of the millions that she has already 

gotten as a reward for her role in this massive scam? 

Mr. STUMPF. The board will consider that, and I do not want to 

prejudice the board. But I also want to make one—— 

Senator WARREN. I do not understand that answer. You know, 

you and your board have already made changes. You have made 

changes to the compensation scheme for thousands of employees. 

You have sat here today and talked about that. You have removed 

sales quotas, I think you told us. You have reformed incentives. 

Why can that be done quick as a wink across the entire bank, but 

a question about cutting compensation for a highly placed executive 

who oversaw a massive fraud takes long deliberation? Why is that? 

Mr. STUMPF. Because there is a board governance process, and 

we want that to work properly. And whether Carrie was retired or 

she was fired, there would be no difference with respect to how the 

board can deal with that. 

Senator WARREN. I am sorry. If she was fired, it is my understanding she would not be entitled to large parts of her compensation. It is not just a clawback issue. We are talking about she does 

not get them to begin with if she gets fired. But you let her walk 

out of the door with a retirement. I do not quite understand. How 

do you explain this to your own shareholders? 

Mr. STUMPF. There is a process that the board goes through, and 

they will do that. They have already met, and we want to give 

that—— 

Senator WARREN. Mr. Stumpf, I do not understand. You keep 

saying, you know, ‘‘the board, the board,’’ as if these are strangers 

that you met in a dark alley. Under the by-laws of Wells Fargo— 

and I am quoting here—‘‘The chairman shall preside at all meetings of the board.’’ You were able to make changes. Why can you 

not make a change here? 

Mr. STUMPF. I am not on the human resources committee of the 

board. They have their own governance and structure. We want 

that to proceed in the process in which we have. 

Senator WARREN. All right. So we will do this your way. Our letter asked a number of questions about clawbacks of Ms. Tolstedt’s 

and other executives’ pay, including yours. Wells Fargo’s answer to 

our letter was just basically you punted, that the decision would be 

up to the board, the same punt you have given here. So you are 

50 

the chairman of the board. Let me ask it this way: Will you personally support clawing back all or part of Ms. Tolstedt’s pay? 

Mr. STUMPF. I am not going to in any way try to influence or 

prejudice the board as they do their deliberations. 

Senator WARREN. So you have absolutely no opinion on this? 

Mr. STUMPF. I am not going to opine on that—— 

Senator WARREN. You are not going to opine on it. You are going 

to say, ‘‘Get out there, defraud, cheat, lie, steal, and I have nothing 

to say about whether or not you ought to still be getting your 

bonus.’’ 

Mr. STUMPF. I have never said and we never say as our company 

to go out there and do any of those things. We try to do the right 

thing every day. 

Senator WARREN. But you say if you do them, you can count on 

Chairman Stumpf not to stand up and say you should not get your 

incentive bonus. 

Mr. STUMPF. The board has a process, and—— 

Senator WARREN. I think you started this whole thing by saying, 

‘‘Do not tell me what you say. Tell me what your actions are.’’ And 

your actions are people do this, and you are not going to take a single step to shut it down. So I guess I can ask this question again: 

Will you personally support clawing back any or all of the pay for 

the person in charge of compliance, someone we have not talked 

about much today, the person who is supposed to be responsible to 

make sure that the bank is following the law? Will you have any 

recommendation about that person? 

Mr. STUMPF. I am going to have the board do their process. 

Senator WARREN. You are going to have no recommendation at 

all, ever, at any point in this process? 

Mr. STUMPF. Whatever the board accepts—whatever they do, I 

will accept and I will support. 

Senator WARREN. You are not passive here. If you have nothing 

to do, what are you doing serving as chairman of the board? If you 

have no opinions on the most massive fraud that has hit this bank 

since the beginning of time, how can it be that you actually get to 

continue to collect a paycheck for being chairman of the board? 

Mr. STUMPF. First of all, I disagree with the fact this is a massive fraud. But, second, the board will do their work, and I am not 

going to prejudice their work. And I will be—and I will accept 

whatever they come up with, and I will be supportive. 

Senator WARREN. You accepted all along as this fraud built up, 

this massive fraud, you accepted all of the performance bonuses 

based on the cross-selling that is at the heart of this. You watched 

your own stock go up by more than $200 million based in part on 

exactly this massive fraud. You got out and you pumped it to Wall 

Street, and you said to Wall Street, ‘‘Hey, we are doing such a 

great job cross-selling here at Wells Fargo. You should tell everybody to buy our stock.’’ And now you turn around and say, ‘‘I shall 

remain passive and simply accept what Wells Fargo wants to do.’’ 

You know, in 2008, Wall Street promised change, but it looks like 

it is business as usual. A giant bank cheats the little guys, and the 

executives line their own pockets. Mr. Stumpf, you make it clear 

that Wall Street will not change until we make it change. 

Thank you, Mr. Chairman. 

51 

Chairman SHELBY. Mr. Stumpf, thank you for appearing today. 

We have some questions for the record. We have another panel. I 

hope you will answer these questions for the record. We have a 

number of them. 

Mr. STUMPF. OK. Thank you very much. 

Chairman SHELBY. Thank you. 

Chairman SHELBY. In our next panel, we will hear from Mr. Jim 

Clark, the Chief Deputy for the Los Angeles City Attorney’s Office, 

whose office brought the 2015 case against Wells Fargo. 

Next we will hear from Mr. Curry, the Comptroller of the Currency, Wells Fargo’s prudential regulator. 

And then we will hear from Director Cordray of the Consumer 

Financial Protection Bureau. 

Gentlemen, we appreciate all of you. We appreciate your patience 

today. We have had a very important and lengthy hearing. 

Mr. Clark, we will start with you, but all of your written testimony will be made part of the record in its entirety. You start. Hit 

the mic. 

Mr. CLARK. Sorry about that. 

STATEMENT OF JAMES CLARK, CHIEF DEPUTY, OFFICE OF 

THE LOS ANGELES CITY ATTORNEY, ON BEHALF OF MICHAEL N. FEUER, CITY ATTORNEY, CITY OF LOS ANGELES, 

CALIFORNIA 

Mr. CLARK. Chairman Shelby, Ranking Member Brown, 

esteemed Members of the Committee, I am Jim Clark, the Chief 

Deputy City Attorney of the city of Los Angeles. I am appearing on 

behalf of our City Attorney, Mike Feuer, who submitted written 

testimony but could not be with us today. 

I would like to tell you briefly what our office did and why, what 

we discovered, and the relief for consumers we sought and 

obtained. 

On a Sunday morning in December 2013, Angelenos opened the 

Los Angeles Times to find a shocking story by Times reporter Scott 

Reckard. The story described Wells Fargo Bank’s sales culture and 

the harm that culture had caused its customers. The story read in 

part: 

To meet quotas, employees have opened unneeded accounts for customers, 

ordered credit cards without customers’ permission, and forged client signatures on paperwork. Some employees begged family members to open ghost 

accounts. 

Our City Attorney, like thousands of other California consumers, 

was appalled by what he read. He immediately convened a meeting 

of key lawyers in our office to begin an investigation of the allegations of the story and determine if an action should be brought by 

our office under the California laws designed to protect consumers 

against unfair business practices. 

California’s consumer protection laws do not afford our office prelitigation subpoena powers, so our investigation essentially consisted of good old-fashioned detective work. We conducted dozens of 

interviews with current and former Wells Fargo employees and 

customers, pored over public documents, including court documents 

that were records of wrongful termination suits brought by 

terminated Wells Fargo employees, and we went to the Consumer 

52 

Financial Protection Bureau and FTC consumer complaint databases. 

We found that the bank had victimized consumers by opening 

customer accounts and issuing credit cards and other products 

without the customer’s knowledge or authorization. Our investigation revealed that the bank had failed to notify consumers once 

these unauthorized accounts had been opened and had not refunded fees for those unwanted products and services once the 

misconduct had been detected. We found instances in which the 

bank made it difficult, if not impossible, for customers to receive 

accurate information as to what exactly had happened to them. 

Many consumers were told that the unauthorized accounts would 

be closed; however, often that was not the case. 

We also found that Wells Fargo’s business model imposed unrealistic quotas on salespeople, which incentivized employees to engage 

in highly aggressive sales tactics, creating a perfect storm for the 

unlawful activities we discovered. 

Our investigation consumed some 16 months and culminated on 

May 4, 2015, with our filing of a civil enforcement action in the 

name of the People of the State of California. That proceeding 

sought relief for consumers harmed by Wells Fargo’s conduct and, 

equally important, was intended to put a stop to the illegal practices Wells Fargo had employed. 

In the days following our lawsuit, our office received calls, letters, and emails from more than 1,000 Wells Fargo customers and 

current and former employees. They described a veritable litany of 

horrific experiences. The consumers had money withdrawn from 

their authorized account to pay fees assessed by Wells Fargo to 

their unauthorized accounts. They complained that their unauthorized accounts were sent to debt collection agencies, and derogatory 

notes were placed on their credit reports. 

For the Wells employees, we learned of the perverse sales incentives Wells used and the extreme pressure placed upon employees 

to achieve often unrealistic sales quotas. In short, what we learned 

both before and after we filed our case was not only that Wells Fargo’s conduct was inexcusable, but that it also seemed to be systemic 

and widespread. 

Earlier this month, we reached a settlement with Wells Fargo, 

which, in conjunction with the resolutions reached with the Federal 

agencies represented here today, provides for comprehensive remediation and corrective actions, and sends a strong message to Wells 

and its customers by imposing a $50 million penalty, the largest in 

the history of our office. Our agreement first establishes a complaint and mediation system for California consumers harmed by 

the bank’s practices, and it also requires Wells to continue a restitution program for those customers negatively affected by the 

practices. Wells Fargo also must alert all of its California customers who have consumer or small business checking or savings 

accounts, credit cards, or unsecured lines of credit to visit their 

local bank or call Wells Fargo to review their accounts, close accounts, or discontinue services they do not want, and resolve any 

remaining problems. Crucially, for the next 2 years, every 6 

months Wells Fargo must provide our office with audit reports 

53 

signed by an officer or director of the bank under penalty of perjury 

assessing the bank’s compliance with our agreement. 

It is critical to note that our settlement was coordinated with the 

enforcement efforts of our Federal partners: the Consumer Financial Protection Bureau and the Office of the Complaint of the Currency. As a result, remediation and corrective actions now extend 

nationwide. We would like to thank both agencies for their outstanding work. In our view, robust Government oversight is crucial 

to protecting consumers. When Federal, State, and local 

enforcement agencies collaborate and coordinate their efforts, protections consumers need and are entitled to are much more likely 

to be effective. 

There is a sacred trust that consumers put in their financial institutions—a faith that their hard-earned money will be safe and 

secure, and that all of their banks’ actions will be at the highest 

ethical standards. Wells Fargo broke that trust. It cannot be 

allowed to happen again. 

Thank you. 

Chairman SHELBY. Mr. Curry. 

STATEMENT OF THOMAS J. CURRY, COMPTROLLER OF THE 

CURRENCY, OFFICE OF THE COMPTROLLER OF THE 

CURRENCY 

Mr. CURRY. Thank you. Chairman Shelby, Ranking Member 

Brown, and Members of the Committee, thank you for holding this 

hearing related to the unsafe and unsound sales practices at Wells 

Fargo. 

Let me begin by stating clearly that the sales practices at Wells 

Fargo involving employees opening unwanted accounts and making 

unauthorized transfers of customer funds, even temporarily, are 

outrageous. These practices, driven by misplaced incentives and 

enabled by weak risk management controls, undermine the fundamental trust that goes to the heart of the bank-customer relationship. They are unacceptable and have no place in the Federal 

banking system. 

The OCC’s September 8th enforcement action builds on examination work that identified weaknesses in compliance risk management and consumer protection and subsequently focused on sales 

practices beginning in January 2014. The action requires Wells 

Fargo to pay a $35 million penalty to the United States Treasury, 

orders the bank to reimburse affected customers, and directs comprehensive corrective action to prevent such practices in the future. 

OCC examiners are closely monitoring the bank’s corrective action 

and its reimbursement of harmed customers. 

Our work on this matter continues. I have ordered agency staff 

to review individual misconduct and culpability in this case. I have 

also directed our examiners to review the sales practices at all the 

large and mid-sized banks we supervise and assess the sufficiency 

of controls with respect to sales practices. 

As we continue to review this matter, more facts may come to 

light. My written testimony provides further details about the 

OCC’s supervision of Wells Fargo leading to our enforcement 

action. 

54 

The actions the OCC took, together with the Consumer Financial 

Protection Bureau and the Los Angeles City Attorney, rightfully 

hold the bank accountable and require necessary corrective action. 

However, I believe the OCC can and must do better. To that end, 

I have asked my Senior Deputy Comptroller for Enterprise Governance to conduct a postmortem to identify potential gaps in our supervision, and I will address any identified gaps. 

Enforcement actions such as these require thousands of hours of 

examination and investigation work. I want to express my appreciation for the OCC staff, who worked tirelessly on this issue, as 

well as our colleagues at the CFPB and the LA City Attorney’s 

Office. The coordination in this case allowed us to take collective 

action that addressed the safety and soundness and the consumer 

protection aspects of the bank’s deficiencies. Together, the orders 

demonstrate that such practices will not be tolerated. 

Since I became Comptroller, I have worked to strengthen our supervisory effectiveness, including through the 2014 adoption and 

implementation of heightened risk governance standards for our 

largest institutions. These enforceable guidelines emphasize the 

importance of three lines of defense in the detection and mitigation 

of risk—front-line business units, independent risk management, 

and internal audit—as well as the vital role of the board in providing a credible challenge to management actions. Had these 

structural elements been functioning properly, they would have 

prevented the type of abuses we have witnessed at Wells Fargo. 

The continued application of OCC’s heightened standards for 

large banks will help ensure that they have the governance and 

controls necessary to prevent these sorts of practices in the future. 

The practices at the bank also demonstrate the importance of 

aligning incentives with appropriate behavior, which highlights the 

need to finalize the interagency incentives compensation rule sooner rather than later. As proposed, the rule would provide clear 

direction regarding the application of sound incentive compensation 

programs, including clawbacks, forfeiture, and other mechanisms to 

hold senior executives and other employees with significant responsibilities accountable. For those reasons, I support prompt completion of the final rule. 

Again, thank you for holding this important hearing today, and 

I look forward to answering your questions. 

Chairman SHELBY. Mr. Cordray. 

STATEMENT OF RICHARD CORDRAY, DIRECTOR, CONSUMER 

FINANCIAL PROTECTION BUREAU 

Mr. CORDRAY. Thank you, Chairman Shelby, Ranking Member 

Brown, and Members of the Committee. I will briefly discuss: one, 

what our investigations found about the sales practices at Wells 

Fargo; two, what we are seeking to achieve by our order; and, 

three, some thoughts about further steps to improve the culture 

and practices of the banking industry. 

On September 8th, the Consumer Bureau, together with our 

partners at this table, took an enforcement action against Wells 

Fargo Bank. Our investigations found that, in order to meet sales 

goals and collect bonuses for themselves, bank employees created 

unauthorized deposit and credit card accounts, enrolled consumers 

55 

in online banking services, and ordered debit cards for consumers, 

all without their consent or even their knowledge. Some of these 

practices involved fake email accounts and phony PIN numbers. 

The fraudulent conduct occurred on a massive scale. As detailed 

in our order, Wells Fargo opened at least 1.5 million deposit accounts that may not have been authorized, including transferring 

funds from some customer accounts without their knowledge or 

consent. Wells Fargo also initiated applications for more than a 

half million credit card accounts that may not have been authorized, by using consumers’ information without their knowledge or 

consent. These activities caused some consumers to incur fees. And 

even apart from that, they represent a staggering breach of trust 

and conduct that should never occur at any bank. Wells Fargo has 

demonstrated the epic scope of its failures by terminating at least 

5,300 people thus far, including branch managers and managers of 

managers. 

The gravity and breadth of the fraud that occurred at Wells 

Fargo cannot be pushed aside as the stray misconduct of just a few 

bad apples. As one former Federal prosecutor has aptly noted, the 

stunning nature and scale of these practices reflects instead the 

consequences of a diseased orchard. As our order identifies, Wells 

Fargo built and refined an incentive compensation program and 

implemented sales goals to boost the cross-selling of products, but 

did so in a way that made it possible for its employees to pursue 

unfair and abusive sales practices. 

And I have a question for you: Do we really believe that 5,300 

people applied for jobs with Wells Fargo over the years intending 

and expecting and wanting that they were going to go into the 

bank and abuse consumers’ trust and open phony accounts in their 

name? No. It was the Wells Fargo culture that made that happen. 

It appears that the bank did not monitor its program carefully, 

allowing thousands of employees to game the system and inflate 

their sales figures to meet their sales targets and claim higher bonuses under extreme pressure. Rather than put its customers first, 

Wells Fargo built and sustained a cross-selling program where the 

bank and many of its employees served themselves instead, violating the basic ethics of a banking institution, including the key 

norm of trust. 

Our order accomplishes several things. First, the details in the 

order that are a result of our investigation expose Wells Fargo’s illegal misconduct, including its scale, for all to see for themselves. 

It has spawned vigorous public scrutiny over the past 2 weeks that 

no doubt will continue. 

Second, the order helps answer one question many of you have 

asked me from time to time: What does the term ‘‘abusive’’ mean 

in our governing statute? Although we have been careful in analyzing all the ramifications of that new term, we did not hesitate 

for 1 minute to apply it emphatically to what we found here. In 

this matter, Wells Fargo engaged in abusive conduct toward its 

customers and consumers. We have said so, and executives, shareholders, and investors throughout the financial system will now 

have to consider what that means in their own efforts to address 

their cultures and practices going forward. 

56 

Third, we have ensured that all consumers who suffered financial 

harm as a result of these practices will be fully compensated for 

that harm. Wells Fargo is required to set aside $5 million to cover 

all of that, and if it turns out to exceed $5 million—and it now appears we are going to go back further years—the bank will cover 

that as well. 

Fourth, we fined Wells Fargo $100 million, the largest fine that 

the Consumer Bureau has imposed on any financial company to 

date. That is a dramatic amount as compared to the actual financial harm to consumers, but it is justified here by the outrageous 

and abusive nature of these fraudulent practices on such an 

enormous scale. Some have said maybe this is not enough; some 

have said it is too much. As for whether we have done enough here, 

it is notable that the order itself is generating considerable consequences, including market effects, shareholder activity, further 

potential lawsuits, and follow-up investigations by other public officials that may be either civil or criminal in nature. 

Fifth, the order requires independent consultants to be installed 

at Wells Fargo to ensure that all consumers are fully compensated 

and that changes in sales practices are fully implemented so this 

misconduct does not recur. The top executives at Wells Fargo and 

its board of directors will be directly engaged in this work. If the 

independent consultants identify any further issues or concerns— 

and they may—we will address those as well. 

Let me conclude with some more general concerns. As one of the 

biggest and best known banks in the United States, Wells Fargo 

is in a position to lead by example in terms of how every bank 

should treat its customers. In the wake of this order, it now must 

do so. Much bank growth these days occurs by cross-selling customers on more products and services. There is a right way to do 

that, which should lead banks to focus on strong customer service 

that produces high levels of customer satisfaction, which in turn 

generates repeat business from existing customers and positive 

word of mouth to others. 

There is also a wrong way to do that. As we have seen here, 

unchecked incentives and an unrealistic and uncaring culture of 

high-pressure sales targets can lead to serious consumer harm. Incentive compensation structures are common in businesses, and 

they can motivate positive behavior. Yet companies need to pay 

close attention to their compliance monitoring systems in order to 

prevent violations of the law and abusive practices. 

This action should serve notice to the entire industry. If sales 

targets and incentive compensation schemes are implemented in 

ways that threaten harm to consumers and lead to violations of the 

law, then banks and other financial companies will be held accountable. We have seen the risk such programs pose across the 

entire financial sector. We have dealt with it in debt collection, 

mortgage origination, credit card add-on products, and now here, 

and we will continue to take action to protect consumers. 

Thank you again to our partners here at this table—I am proud 

of our team and their teams—who worked with us on this 

important enforcement action, and I am happy to answer your 

questions. Thank you. 

Chairman SHELBY. I thank all three of you for being here today. 

57 

Mr. Clark, I will start with you. The LA City Attorney’s efforts 

are very important here. 

Mr. CLARK. Thank you, Senator. 

Chairman SHELBY. I applaud your efforts on this case by, as you 

say it, engaging in good old-fashioned detective work. And I just 

want to clarify the facts as I understand them and for the record 

from your written testimony. Correct me if I am wrong. 

Mr. CLARK. I will, Senator. 

Chairman SHELBY. A dozen or so attorneys in your office, the LA 

City Attorney’s Office, without subpoena power, conducted 

numerous interviews of former Wells Fargo employees, met with 

aggrieved victims, pored over public documents, including voluminous court records from wrongful termination lawsuits, searching 

for victims to uncover fraud. Is that correct? 

Mr. CLARK. Yes, it is, Mr. Chairman. 

Chairman SHELBY. Other than accessing the CFPB’s consumer 

complaint database, your first contact with the CFPB or the OCC, 

Office of the Comptroller of the Currency, did not come until after 

your lawsuit was filed in May of 2015. Is that correct? 

Mr. CLARK. That is correct. 

Chairman SHELBY. Mr. Cordray, the CFPB’s efforts, in your written testimony, sir, you state that Wells Fargo opened over 1.5 million deposit accounts that may not have been authorized. That is 

a lot of accounts. 

Mr. CORDRAY. The facts we found through our investigation, yes. 

Chairman SHELBY. Is that number based on PricewaterhouseCooper’s analysis? 

Mr. CORDRAY. It is based on our investigation, and there were internal documents Wells Fargo provided that confirmed and were 

consistent with what we found through our investigation. 

Chairman SHELBY. In your written testimony, you state that 

Wells Fargo also initiated applications for over 500,000 credit card 

accounts that may not have been authorized. Does that come from 

internal analysis? 

Mr. CORDRAY. These are staggering numbers. That is what we 

found through our investigation, which included civil investigative 

demands, disclosure of tremendous amounts of documents from 

Wells Fargo, investigative testimony, and working with our partners here and their staffs to uncover as much as we could. 

Chairman SHELBY. Also in your written testimony, you describe 

your engagement with the Los Angeles City Attorney’s Office—and 

you just a few minutes ago did—as a ‘‘partnership.’’ Prior to the filing of the City Attorney’s lawsuit in May of 2015, did CFPB personnel accompany Mr. Clark’s investigators as they did the following: conducted numerous interviews with former Wells Fargo 

employees, met with aggrieved victims, pored over public records, 

including court records from wrongful termination lawsuits by 

Wells Fargo? Did they? 

Mr. CORDRAY. So these investigations—— 

Chairman SHELBY. Or did you come later? 

Mr. CORDRAY. These investigations merged over time, work we 

were doing, work the OCC was doing, work the LA—— 

Chairman SHELBY. But they initiated the investigation, did they 

not? 

58 

Mr. CORDRAY. Well, they initiated their investigation. We initiated our own efforts in our office. 

Chairman SHELBY. After they—— 

Mr. CORDRAY. No. No, we first heard about these problems in 

mid-2013 through whistleblower tips. The Los Angeles Times investigative series confirmed that there were issues in this industry. 

Now, there were different kinds of issues, and we were looking at 

financial incentive programs on a number of fronts at that time. 

We were dealing with credit card add-on deceptive marketing actions, which got back billions of dollars for consumers. We were 

looking at debt collection, where we ended up having the largest 

enforcement action against debt buyers and debt sellers. 

Chairman SHELBY. Were you looking at Wells Fargo and other 

banks? 

Mr. CORDRAY. We have been looking at these problems in all of 

the banks and nonbank financial companies. Believe me, there has 

been a lot of problems to look at and a lot of problems to deal with. 

This is a fairly major one, and there have been other major ones. 

Our credit card add-on products work has led to billions of dollars 

in relief for consumers. 

Chairman SHELBY. Is there anything that the Bureau has 

learned from the work that the LA City Attorney’s Office did? Have 

you learned anything there? 

Mr. CORDRAY. So I think we learned from their investigation and 

they learned from our investigation. I do not want to speak too 

much of what other people did here, and I do not know that it matters. We do not sit around as partners and think about what percentage of the credit we should allocate to one another. We are 

looking to get a good result for consumers, and together we did 

that here. But they conducted various parts of the investigation. 

The OCC has conducted various parts of the investigation. We have 

conducted various parts of the investigation. We have been able to 

take this and turn it into nationwide relief for consumers, which 

the LA City Attorney’s Office is unable to do under California law. 

And we and the OCC going forward will be active in working to 

clean it up here and across the industry. 

And let me say something specific here about whistleblower tips. 

We are getting a large and increasing number of whistleblower tips 

all the time. When a bank like Wells Fargo here does not come forward quickly with a problem that they recognize is occurring at 

their bank, they should not assume that we are not hearing about 

it from employees or customers or others. We probably are. So it 

makes sense for them to come forward more quickly and to self-report. That was not done here. It was a very late contact from Wells 

Fargo on this problem, as I see it. 

Chairman SHELBY. Thank you. 

Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. And thank you all 

for being here and for your public service, all of you. 

Following up on this self-report, Mr. Cordray, are banks required 

to report to you when they uncover fraud against customers in 

their own banks? 

59 

Mr. CORDRAY. We think it is by far the best practice, and I know 

that the Comptroller would agree and we see eye to eye on this. 

We believe that—— 

Senator BROWN. A statutory requirement—— 

Mr. CORDRAY. We believe that compliance at a bank starts with 

the bank. They should not expect us to come along and make sure 

they are complying with the law. They have that responsibility in 

the first instance to do it themselves, and our job is to make sure 

that they are doing it. 

Senator BROWN. But no legal requirement? They have no legal 

requirement—— 

Mr. CORDRAY. There is no legal requirement for them to report 

a problem, but they are in more trouble when they do not. 

Senator BROWN. I understand. 

Mr. Curry, or for all three of you, and we will start with Mr. 

Curry. Your testimony states your agency started to receive customer and employee complaints about improper sales practices in 

early 2012. Mr. Cordray, your letter says your agency first learned 

about this from whistleblowers in mid-2013. You both heard Mr. 

Stumpf’s answer to my question—I assume you were watching. You 

both heard Mr. Stumpf’s answer to my question about when he 

learned. What does that say about the bank’s governance and priorities? Mr. Curry, if you would start with that. 

Mr. CURRY. Sure. Our supervisory activity really has focused historically—and this goes back to 2012—on the adequacy of their 

operational risk and compliance risk management systems. As our 

written testimony indicates, there have been repeated issues with 

the sufficiency of those systems and those controls, so this has been 

an ongoing issue. 

The sales practices issues that have been uncovered by the three 

agencies represented around this table are really a manifestation 

of the overall weaknesses in their risk management, particularly in 

the compliance area. 

Senator BROWN. I remember a discussion we had, I believe soon 

after you took this position, about the importance of a risk officer 

in a bank and the role they should play, and as you pointed out, 

some do it better than others. 

Mr. Curry, part of OCC’s supervisory activities began in 2013. 

You would have been meeting with executives, and in my understanding, you would meet regularly with the bank’s board. Correct? 

Mr. CURRY. Our teams meet regularly with management and 

with the boards of directors, particularly the independent members 

of the board. 

Senator BROWN. Not Mr. Stumpf, but those that are—— 

Mr. CURRY. Those who are independent from operating management. 

Senator BROWN. And we just checked. The compensation of board 

members ranges from, I believe, the high 290s up to the $400,000 

a year—again, making the contrast of the 90 percent of the employees who lost their jobs through various reasons, but acts they committed, you know, were not managers who were making under 

$35,000 or $40,000 a year. 

60 

Does it strain credibility that neither the board nor Mr. Stumpf 

really knew this was going on, as it sounded like from the testimony today? 

Mr. CURRY. I do not have personal knowledge what they knew 

or did not know, but our focus is in making sure that they have 

structures in place that facilitate the flow of important information 

about deficiencies in the complaint processing structure or in terms 

of escalating issues that arise in the compliance function or in the 

ordinary business of the bank. 

Senator BROWN. Thank you. I found it particularly telling—and 

then, Mr. Clark, I would like your comments just on this whole 

area—that Mr. Stumpf said he met pretty much weekly, sometimes 

more often, with Ms. Tolstedt, and these issues apparently never 

came up until he learned about them in 2013 and part from the 

three regulators—or three Government agencies. Mr. Clark? 

Mr. CLARK. We do not know precisely, Senator Brown, exactly 

what they knew and when they knew it, but I think as a long-time 

trial lawyer, one can draw inferences like courts and lawyers do, 

and it is difficult to believe, based on the information we developed 

in our investigation, both before and after we filed our complaint, 

that knowledge of this did not extend far beyond the regional manager level. 

Senator BROWN. Two more real quick questions of Mr. Curry and 

Mr. Cordray. Your agencies have the authority to make criminal 

referrals. Have you done so in this case? Is there anything you can 

tell us about actions in that way? Both of you answer that and 

then one more question. 

Mr. CURRY. Generally, our position is to cooperate with criminal 

law enforcement. Our focus now at the conclusion of our supervisory activity is really to look at the civil enforcement remedies we 

have at our disposal. That would be personal cease and desist orders, civil money penalties against individuals, or removal or prohibition from banking, which would prohibit someone from serving in 

any capacity at a bank. That process is ongoing now. 

Senator BROWN. Mr. Cordray? 

Mr. CORDRAY. So I have been told that I should not publicly 

acknowledge whether we have made criminal referrals or not. 

Thinking about this question, I thought there was something I 

think I can do without getting in trouble, which is quote our statute, 12 USC 5566. It says: 

If the Bureau obtains evidence that any person, domestic or foreign, has engaged in conduct that may constitute a violation of Federal criminal law, 

the Bureau shall transmit such evidence to the Attorney General of the 

United States, who may institute criminal proceedings under appropriate 

law. 

We follow that statute to the letter. 

Senator BROWN. OK. Mr. Cordray, a last question. I mentioned 

that a group of Wells Fargo customers sought compensation for 

their fraudulent accounts in 2013, even before the Los Angeles 

Times series was published. Rather than accepting responsibility, 

Wells Fargo forced them into arbitration, effectively preventing 

them from being made whole. How would the CFPB’s arbitration 

rule have helped Wells’ customers in that case? 

61 

Mr. CORDRAY. You know, I am not familiar with all the lawsuits, 

but my understanding is that these financial products typically did 

carry an arbitration clause. When that happens, as happened here, 

when there is massive wrongdoing on a wide scale but small 

amounts of harm to individual consumers, it would be very difficult 

to get any relief other than through a class action. And yet I believe an arbitration clause here might well defeat a class action. I 

think that is going to be litigated here, and courts will decide it. 

But they have often decided that it bars relief on an individual 

scale through a class action mechanism. 

Senator BROWN. Thank you. 

Chairman SHELBY. Senator Reed. 

Senator REED. Well, thank you very much, Mr. Chairman, and 

thank you, gentlemen. 

Mr. Clark, you and your colleague did a superb job. Looking 

back, when you filed your complaint, were you anticipating 

extended litigation? Or was Wells Fargo cooperative from the very 

beginning about recognizing this problem and settling? 

Mr. CLARK. It was interesting, Senator Reed. In the initial 

response the day after we filed, they said something to the effect 

of, ‘‘We do not give our customers any accounts or services or products they do not need.’’ They did not say in response to our complaint, ‘‘We did not give Wells Fargo customers anything they did 

not ask for.’’ That was pretty telling to us. 

We negotiated with Wells over a period of time. Ultimately, we 

were joined by our partners here before those negotiations were 

complete. But at the end, I think they cooperated in the sense that 

we ended up with what we believed to be a very robust series of 

reforms, the largest penalty in the history of our office. And because of the cooperation and working together with the other agencies here, those reforms and practice changes are nationwide. 

Senator REED. With respect to the negotiations, is it your view 

that the added weight of OCC and the CFPB made a decisive difference in terms of the outcome as well as the speed? 

Mr. CLARK. I cannot be sure of that, Senator, but I really believe 

that to be the case. 

Senator REED. Thank you. There was one other aspect, too, of 

your testimony. You said that Wells Fargo made it difficult, if not 

impossible, for customers to receive accurate and clear information 

as to how accounts had been opened up, which suggests to me at 

least it was not just the individual ‘‘bad apple’’ but it was larger 

than that. Is it your sense that there was some type of either deliberate or negligent sort of treatment of customers that contributed 

to this and is liable at the company level? 

Mr. CLARK. Yes, I do, Senator, in this sense: that customers 

would go into Wells Fargo’s branches, would ask about accounts, 

they got their statements either electronically or on paper, could 

not figure out what was going on, and they just could not get clear 

answers. And because the practices were improper, in our view, the 

Wells employees in the experience of our witnesses were not willing 

to come forward, and they did not really give them honest answers. 

Sometimes, as I said in my oral testimony here, accounts were 

asked to be closed, they were supposed to be closed, and they were 

not closed. 

62 

Senator REED. Thank you. 

Mr. Curry, you point out that, you know, culture is key in any 

organization, and I think that is obvious. It seems that for years 

the culture at Wells Fargo was profit rather than customer satisfaction and customer service. Do you think that has changed? Or 

is that an accurate view of what is happening recently? 

Mr. CURRY. This episode indicates how important it is, in fact. 

What we are looking for as a supervisor is to make sure that the 

institutions have a full understanding of the importance of culture, 

the reputational risk, and the financial consequences that can flow 

when you lose that reputation or engage in activity that calls into 

question the culture of the institution. And, again, our focus is 

making sure that they have the appropriate oversight structure. 

Incentives, incentive programs, compensation programs are 

something that we look at very closely in our heightened standards 

program because it does guide and dictate the culture of the 

institution. 

Senator REED. One of the impressions that emerges, and I think 

not just for myself but across a wide spectrum of opinion, is that 

the company might have been whispering about ethical standards 

and treating the customer right, but they were shouting about this 

is the way you make money, sell more of these. Is that fair? 

Mr. CURRY. I think that is possible, yes. 

Senator REED. Director Cordray, the CFPB has been engaged in 

this effort and, again, with your partnership, I think has done an 

outstanding job. Protection of consumer laws is something that you 

are expert in. Working with the Comptroller, working with the city 

of Los Angeles, you brought special expertise. Can you describe the 

special expertise you brought to the issue? 

Mr. CORDRAY. Yes, I think we all bring a different expertise to 

this. The Los Angeles City Attorney’s Office is working purely from 

an enforcement perspective. They brought a lawsuit. They are familiar with local conditions, which is tremendously valuable as we 

partner across the country, often with State Attorneys General or 

with State banking regulators, in some cases with local officials 

who are forward-leaning on consumer issues, like the LA City Attorney’s Office. 

The OCC brings its deep knowledge of safety and soundness regulation at the institutions and under this Comptroller, I will say, 

an increasing attention and focus on consumer compliance and how 

safety and soundness actually affects the individual consumer, 

which has been a point of collaboration with the Bureau. 

I think what we bring to this is both a unique ability to engage 

not only in supervisory but also enforcement activity, and we do 

both frequently. The fact that we have separate laws that we can 

enforce here, including identifying abusive practices, which is alone 

an authority granted to this agency, that we also bring a consumerfocused perspective and market analysis and expertise and the 

ability to use our CID power aggressively even outside the scope 

of a lawsuit in order to get information and process that information. And I think we brought those tools to the table. Each of these 

other teams brought their tools to the table. Together it makes for 

a strong result. 

63 

If you look back at our enforcement actions over our 5 years, 

many of them have been done with partners; many of them, I can 

tell you, almost all of them have been more effective for doing that. 

Sometimes it takes a little longer because working back and forth 

with other offices takes certain procedures and other things to get 

into place. But it is always the best answer if we can do it well. 

And people did it well here. 

Senator REED. Thank you very much. 

Chairman SHELBY. Senator Menendez. 

Senator MENENDEZ. Thank you, Mr. Chairman. Thank you all for 

your service and the work that you have done here. 

Director Cordray, the subject of today’s hearing is, in my mind, 

the ultimate affirmation of your agency and its employees. In the 

wake of the 2008–09 financial crisis, when unfair and abusive practices ran rampant in the industry, I know that as a Member of the 

Committee at the time, one of the things that I wanted to ensure 

that we did in the Wall Street reform legislation, and to fight tooth 

and nail to get it, is to empower a cop on the beat that would be 

on the side of consumers. And I must say you as the Director and 

your Bureau and agency have lived up to every bit of those expectations from my point of view. 

Now, I hope to use this as a teaching moment for some of my 

colleagues that are not aware of the Bureau’s latest list of accomplishments. I would point out that since its creation in 2011, the 

Bureau has recovered and sent back nearly $12 billion to 27 million consumers harmed by illegal practices of credit card companies, banks, debt collectors, mortgage lenders, and others—$12 billion to 27 million consumers. 

And it is amazing that, despite all of those accomplishments, my 

Republican colleagues are hell bent on killing this agency. Just 

three legislative days after the announcement of the settlement of 

Wells Fargo, one of my Republican colleagues introduced and the 

Majority Leader, Senator McConnell, fast-tracked a bill that would 

fundamentally alter the funding mechanism for the Bureau and 

subject it to the annual appropriation process. 

So in view of that, can you tell me, Director, what would it mean 

for the Bureau to be subject to the annual appropriation process 

vis-a-vis the work that you are doing? 

Mr. CORDRAY. Let me start in a general sense, which is what we 

can see here is there is a very big job to be done to change the culture and practices at the banks. It does not happen overnight. This 

is on top of the robosigning mortgage servicing scandal. It is on top 

of the mortgage origination scandals that led to the financial crisis. 

It will take considerable time for us to root out all of these things 

in the financial institutions, banks as well as nonbanks. 

But if we can remain on the job, if we can continue to exert our 

authorities in matters like this, if we can continue to work with our 

partners across the country, we will continue to make progress. 

Senator MENENDEZ. I appreciate that. What happens if you are 

put on the annual appropriation process? 

Mr. CORDRAY. Well, it would compromise our independence and 

make it harder for us to do our job, just as it is for all the banking 

agencies. 

64 

Senator MENENDEZ. Now, if the bill were to become law—and 

trust me when I tell you that we will not let it—how might it undermine the Bureau’s efforts to protect consumers from unfair, deceptive, and abusive practices? 

Mr. CORDRAY. Again, anything that is attempting or seeking— 

and some of these efforts are—to compromise our independence 

will make it harder for us to do our job. 

Senator MENENDEZ. Now, let me ask all three of you, do any of 

you disagree—and if so, please explain to me why—that in essence 

here at Wells Fargo what we had was a pressure cooker environment with perverse incentives and a culture that ultimately led to 

the type of wrongdoing that took place? Does anybody disagree 

with that view? 

Mr. CORDRAY. Not at all. 

Mr. CURRY. No. 

Mr. CLARK. No. 

Mr. CORDRAY. In fact, they sent mixed messages at best if they 

countervailed that culture at all. 

Senator MENENDEZ. Now, Mr. Curry, let me ask you, do you believe that you—meaning the Comptroller’s office—should have been 

notified earlier than what you were notified by Wells Fargo? 

Mr. CURRY. It is critically important that there be open and 

frank disclosure of relevant information by a bank with our examiners. It is not entirely clear at what point that occurred here, 

and—— 

Senator MENENDEZ. Is it fair to say that this is a material—what 

happened here is a material event as it relates to—— 

Mr. CURRY. I think there is always difficulty when you try to define a term like ‘‘material,’’ depending on the context. I would say 

from the OCC’s standpoint and the facts of this particular case, the 

fact that 5,300 employees were terminated was material, and that 

there were 2 million accounts involved, that would be material. 

Senator MENENDEZ. Let me ask you, did you—go ahead, Director 

Cordray. 

Mr. CORDRAY. There was something in the earlier testimony that 

bothered me, which was an acknowledgment that the bank alerted 

the OCC in 2013 but did not alert the CFPB until 2015. We had 

known about these types of problems from our own sources, but if 

any institution feels that they can divide and conquer among the 

regulators, they should know that that is a mistake. 

Senator MENENDEZ. Let me ask you this: How widespread is the 

issue of cross-selling, at least in the perverse way that it took place 

at Wells Fargo? Do you have any sense whether this is a one-off, 

or is this an industry-wide concern? 

Mr. CURRY. Our view is—and I mentioned this in my testimony—we generally look at incentive compensation at an institution. With what we have seen here at Wells Fargo, I have directed 

that we do a horizontal review, so we will be looking specifically 

at sales practices at our largest banks and mid-sized banks. 

Senator MENENDEZ. I look forward to you informing us on that. 

Mr. CORDRAY. I agree with the Comptroller on that. We will be 

doing joint action on that. I would say the incentive compensation 

has been a problem we have seen across a number of different markets, so it is a broader issue. As to cross-selling, Wells Fargo Bank 

65 

no doubt was the industry leader in aggressively cross-selling products, which led in part to the extreme circumstances we find here. 

But to the extent others are engaged in it, you should be focused 

on customer satisfaction not on bare numbers, and there are monitoring systems that can be put in place. 

I agree with something the Comptroller said earlier, which is we 

are all going to look back on this and think more about what we 

can do to make sure that the cultures are changing at these banks. 

We need to do some rethinking ourselves and, as always, learn 

from new events. 

Senator MENENDEZ. Last, to Mr. Curry and then Mr. Clark, in 

reading the OCC’s consent order, I am struck by the group of 

orders attempting to remedy what appears to be a longstanding 

gross deficiency in the bank’s risk management governance structure and oversight protocols. For an institution with $1.85 trillion 

in total consolidated assets, I am incredibly concerned about the 

bank’s ability to identify and manage risk across its various lines 

of business. 

At what point do you think Wells Fargo executives should have 

been aware of these deficiencies? And how far back do you think 

these risk management deficiencies go? And then separately for 

you, Mr. Clark—and I would like to hear both your answers, and 

I will rest there—I read with interest the complaint that your office 

filed where you said—the complaint says, ‘‘Managers consistently 

hound, berate, demean, and threaten employees to meet these 

unreachable quotas.’’ And where you talked about Wells Fargo 

gaming the practice of targeting individuals holding Mexican consular cards, I assume that when you made those assertions, they 

were based upon the factual evidence that you discovered in the 

course of your investigation. 

Mr. Curry, could you speak to what I asked you? And, Mr. Clark, 

to you. 

Mr. CURRY. Our testimony, which discusses our supervisory history, demonstrates that there has been a significant period where 

we have identified weaknesses in their operational risk and compliance risk management. What we have attempted to do with Wells 

Fargo is to address those weaknesses that have been identified 

through our matters requiring attention that was escalated after 

we conducted our heightened standards review to be Part 30 of the 

Compliance Plan, which is an enforceable requirement under our 

safety and soundness guidelines. Ultimately the weaknesses that 

we saw in their safety and soundness program resulted in the enforcement action that we had. And that is a significant and major 

tool at our disposal for institutional weaknesses in their programs. 

Mr. CLARK. Senator Menendez, let me answer your second question first, and that is, we based our allegations on 16 months’ 

worth of work. It was public documents, witness interviews, former 

employees, every source we could come to—again, lacking pre-filing 

subpoena power. 

As to how they could have known, some of the documents we 

looked at were wrongful termination lawsuits. They described this 

kind of conduct, for example, in St. Helena, which is part of our 

Napa Valley wine country, as early as 2009. 

Senator MENENDEZ. Thank you. 

66 

Chairman SHELBY. Senator Warren. 

Senator WARREN. Thank you, Mr. Chairman. 

So buried in the fine print of Wells Fargo’s checking and credit 

card contracts is a forced arbitration clause. It says that if a customer has any dispute with the bank about anything related to 

that checking account or that credit card, then they have to—they 

cannot go to court, and they cannot join with other customers who 

have the same problem. Instead, they have to go one by one 

through arbitration. 

Now, a feature of arbitration that the banks particularly love is 

that it is nearly always all secret. Filings and documents are not 

available, and even if the customer wins, there is no public record 

of it like there would be if we were in a court case. 

Director Cordray, do you think forced arbitration clauses make 

it easier for big banks to cover up patterns of abusive conduct, including the years of misconduct by Wells Fargo in this case? 

Mr. CORDRAY. I do think so, yes. 

Senator WARREN. So, in other words, these forced arbitration 

clauses make it easier for Wells to get away with scamming their 

customers, which is why it is good news for customers that the 

CFPB has proposed strong new rules that would ban forced arbitration clauses that prevent customers from joining together to 

bring a public action in court. And I think this is just one more 

way. We are talking here about the CFPB’s Enforcement Division, 

which I am very glad that we are doing, and that is powerfully 

important. But you get better rules in place, and this kind of fraud 

gets exposed much earlier. If we had had class actions on this back 

in 2010, 2009, 2008, then the problem never would have gotten so 

out of hand. So I think that is really important. Please. 

Mr. CORDRAY. There is another sort of somewhat related indicator here that shows you the focus on these things. One of the 

first things that Wells Fargo did in the LA City action that was 

brought was aggressively seek a protective order to keep the proceedings, as much as possible, from public view. 

Senator WARREN. That is right, trying to keep it all secret, and 

that is what the arbitration clause does that they put in these contracts: everything out of public view for as long as humanly 

possible. 

I also want to hit another point about how you make structural 

change, because I think that is so important here. Mr. Clark, I 

want to thank you for your testimony today and for the great work 

that your office has undertaken in this case. 

Mr. CLARK. Thank you, Senator. 

Senator WARREN. One of the really powerful things that the 

CFPB has done is to create a new complaint hotline which allows 

customers to register complaints against any financial product. We 

will just put it in the record. You can go to CFPB.gov and file a 

complaint online, right? Anyone can do this. And since its inception, the agency has fielded nearly a million complaints. Is that 

right, Director Cordray? 

Mr. CORDRAY. It is going to be a million later this week. 

Senator WARREN. All right. We are almost there. We will have 

to mark the occasion. 

Mr. CORDRAY. I think Thursday. 

67 

Senator WARREN. And one of the best parts about this is not just 

that you fielded the complaints, it is that you made them public, 

and you made them searchable online. And that allows everyone 

from researchers and academics to law enforcement authorities to 

the banks themselves to be able to spot growing problems and then 

to address them. 

So, Mr. Clark, I wanted to ask, in the process of conducting your 

investigation into Wells Fargo, did you use the CFPB’s complaint 

database? 

Mr. CLARK. Yes, we did. 

Senator WARREN. Good. And it was helpful to you? 

Mr. CLARK. Very helpful, as was the FTC’s Sentinel database. 

Senator WARREN. Excellent. I am very glad to hear that. You 

know, this is yet another way that the consumer agency is protecting customers and holding banks accountable. It is bringing a 

lot more transparency to the market, which helps identify banks 

that are consistently harming their customers. And just as important, it rewards the banks that are doing a good job for their customers. You know, there must be a lot of community bank presidents who are standing by watching this hearing saying, ‘‘We do 

not engage in this kind of behavior. You will not find those kind 

of complaints against us in the CFPB database. Move your accounts over where you can actually trust your banker.’’ 

In light of all of the great CFPB work in investigating this case 

and everyone working together on this, from the arbitration rule to 

the complaint database to stop this kind of scam from happening 

again, because that is the part we really want to make sure we 

focus on, I think you are sending a very loud message to the banks 

that—and a loud message to my Republican colleagues who continue to attack the agency. You know, Wells Fargo may wish that 

the CFPB would disappear, and some Republicans may keep trying 

to leash up this watchdog. But that is not going to happen. Thank 

you. 

Thank you, Mr. Chairman. 

Chairman SHELBY. Thank you. 

Senator Merkley. 

Senator MERKLEY. Thank you. Earlier I mentioned several of the 

features that came out of interviews with employees of the highpressure environment, employees who were given daily quotas for 

‘‘daily solutions,’’ that is, sales of accounts, that they had to stay 

late or come in on weekends if they did not meet them, high-pressure sales meetings, bonuses that were tied to meeting those 

threats of being put on probation or being fired because they did 

not meet those quotas, in some cases managers conducting coaching sessions on how to meet the quotas through creating these accounts, regional sales meetings conducted on an hourly basis to 

keep checking in. 

In this whole structure that was established in the Wells Fargo 

culture of how to do intensive cross-sales, was this a high-pressure 

sales culture for the people who were the personal bankers and the 

tellers? Just each of you, your opinion on that. 

Mr. CURRY. Yes, that is really what we were addressing in our 

supervisory letter from June of 2015. Those were all deficiencies. 

Senator MERKLEY. Thank you. Do both of you agree with that? 

68 

Mr. CORDRAY. Yes. If I could just elaborate? It was excruciatingly 

high pressure in various settings. When you first start to hear 

about something like this, it takes some time to untangle conflicting accounts, and there are different pieces of this. There were 

some different angles on it. 

One issue was whether employees themselves were being abused, 

and that was part of the complaints that people were seeing. 

Another issue was whether they were pressuring consumers to 

open accounts, ultimately getting their consent but pressuring 

them into improper or not suitable accounts. 

And then the third, which sort of emerged a little later, was potentially they were just opening accounts without consumers even 

knowing about it. It is the third thing we are focusing on here, but 

it takes some time to bring this into focus as you conduct an investigation. 

Senator MERKLEY. Thank you. 

Mr. Clark, Director Cordray described it as ‘‘excruciatingly high 

pressure.’’ Does that fit your impression? 

Mr. CLARK. It does, Senator. Let me tell you a quick anecdote. 

I am a Wells Fargo customer. I was in my bank on Friday doing 

a transaction. The senior person there recognized me, asked me 

about this, and said, ‘‘You cannot believe, Jim, what the pressure 

was like. It was excruciating. I am so glad I am out of that now 

because I am in a different kind of bank.’’ This was on Friday, and 

he told me this. I found that extraordinary, Senator. 

Senator MERKLEY. So just a few moments ago, when I was asking the CEO of Wells Fargo about the establishment of this highpressure situation that left bank tellers and personal bankers in a 

no-win, between a rock and a hard place position, he denied that 

there was any such structure. Is that completely inconsistent with 

your complete understanding of the situation? 

Mr. CURRY. Senator, again, I would go back to our June 2015 supervisory letter in which we found that the program was deficient. 

Senator MERKLEY. And, Mr. Curry, that is a nice way of saying 

‘‘yes.’’ Yes, OK. 

Mr. CORDRAY. It does differ from my understanding of the situation that we found in our investigation. 

Senator MERKLEY. So why after this extensive public review of 

the establishment of this high-pressure culture, why would the 

CEO, after working with you all and having these various letters 

and so forth, after paying a fine, come in here and say, ‘‘No such 

thing existed. These were just individual employees who had ethical lapses’’? Why possibly did we hear that testimony today? 

Mr. CORDRAY. I do not know. 

Mr. CLARK. I do not either, Senator. 

Senator MERKLEY. Any insight, Mr. Curry 

Mr. CURRY. No. It is inconsistent with our findings. 

Senator MERKLEY. OK. It is inconsistent with everything. Is it 

because the bank is trying to insulate itself from lawsuits? 

Mr. CURRY. I would not speculate. I do not know. 

Senator MERKLEY. Is it possibly because the top executives who 

were in charge during this whole period want to have kind of no 

responsibility, claim no responsibility, and instead it is just those 

69 

5,000 low-level people who had nothing to do with the system they 

set up to sell? 

Mr. CLARK. I think there is responsibility here, that we have a 

consent order with the OCC, with the CFPB, and with the city of 

Los Angeles. 

Senator MERKLEY. I would like to enter into the record, ‘‘Banking 

on the Hard Sell,’’ an article from the National Employment Law 

Project. 

Chairman SHELBY. Without objection, so ordered. 

Senator MERKLEY. It lays out these high-pressure cultures that 

have happened in many financial retail banking groups. And I 

think when the question was asked earlier, Mr. Curry, you noted 

that that is something you will horizontally be looking into. But do 

any of you have some impression based on what you have seen so 

far that these practices, at least maybe not to the same degree, but 

these high-sale practices, high-pressure practices, did result in 

similar creation of fake accounts or adding things to customers 

they did not ask for? 

Mr. CURRY. That really will be the focus on our horizontal review. Banks are under enormous margin pressure, and that could 

be—— 

Senator MERKLEY. That could be the case. 

Mr. CORDRAY. I would just say that, for example, we started with 

our first deceptive marketing of credit card add-on enforcement action, many of which we took jointly with the OCC. That eventually 

mushroomed into 12 enforcement actions across the industry. The 

practice was worth billions of dollars. We will certainly follow up 

aggressively here. 

Senator MERKLEY. I have had the experience of opening an account in partnership with—going to the bank with my daughter, 

and it was very clearly—we went through it: ‘‘This is a no-fee account for a student, right?’’ ‘‘Yes, right, right, right.’’ Then the paperwork comes, and it is a fee account. 

And I had another case where I opened an account, and I said, 

‘‘I do not want the overdraft protection or the fee that goes with 

that. I want the free account.’’ ‘‘Yes, yes, absolutely.’’ Got the paperwork. Funny thing, I had the fee account. 

And I just thought it was sloppy paperwork. I had no idea until 

now that there was a hard-sell system of quotas that was causing 

folks to basically slam me with stuff that I had explicitly said I did 

not want. And that was not at Wells Fargo, so I will just say that 

I suspect that you will find lots of this activity elsewhere. 

Turning to Sarbanes-Oxley, where a CEO must sign off on the 

sufficiency of internal audits, clearly from this hearing the conduct 

was relevant to a bank’s reputation and, therefore, to its—certainly 

of material interest to its investors. Should the SEC launch an investigation of this in terms of those Sarbanes-Oxley reports? 

Mr. CORDRAY. I will leave that to the SEC. 

Senator MERKLEY. OK. And, finally, in the settlement, Wells 

Fargo was allowed to neither admit nor deny wrongdoing, and we 

heard today the result. The head of the bank comes in here and 

says, ‘‘We did not do anything. It is just a bunch of bad apples who 

were ethically misguided.’’ And it bothers me. Was that debated 

70 

and wrestled with? And why was Wells Fargo allowed to not admit 

wrongdoing? 

Mr. CORDRAY. So here is my point of view on that, Senator. The 

order speaks for itself. It is very detailed. It tells the facts as we 

established them through our investigation. That is the story. People can quibble with it if they want, but that is the story. It is the 

story that is forming vigorous public scrutiny going forward and potentially other investigations by other public officials, which we will 

be welcoming and assisting in any way we can. 

Senator MERKLEY. Does it not make it harder, though, to hold 

the managers accountable to the board of directors of a company 

when they have not admitted any wrongdoing? 

Mr. CORDRAY. I think actions speak louder than words. The notion that nothing happened here but they fired 5,300 people, those 

things cannot possibly be squared. 

Mr. CLARK. I also think, Senator, that we wanted to get relief to 

consumers as quickly as we could. It is very typical—I practiced 

law at a big law firm for 35 years—for these non-admissions to be 

part of an agreement. It would have taken years to litigate this 

case, at least from our perspective. And we would not have gotten 

relief for consumers. We thought the consumers needed to get relief 

now, and the practices had to stop. And so that is one reason from 

our perspective it went that way. 

Senator MERKLEY. I do applaud all of that, but I have got to say 

from the men and women on the street perspective, it is enormously frustrating to see the people at the bottom be fired from 

their jobs, be threatened with firing, forced into an untenable situation, and see the managers take no responsibility. They take their 

bonuses. They are not clawed back. They keep their jobs. 

Let me take—and I will just close with this, Mr. Chairman. The 

manager of this unit who worked to establish this very successful— 

I say ‘‘successful’’ from the cross-selling profitability—system that 

produced these fraudulent activities is walking away—you can call 

it a bonus or you can call it a platinum parachute or you can call 

it money she has already earned, which is what we have heard, but 

more than $100 million, not counting what came previously. It 

would take a bank worker earning $25,000 a year—and that is 

roughly in the ball park because a lot of these workers were paid 

$11 to $12 an hour. At $25,000 a year, it would take them 4,000 

years to earn that $100 million. Four thousand years. Or to put it 

differently, 100 lifetimes working 40 years. It is a phenomenal distinction, and that managers are taking home those kinds of profits 

from developing a system that destroyed so many consumers and 

affected so many of their own employees by putting them in an impossible situation, it is wrong, it is ugly, it is criminal. There 

should be accountability for the managers. 

Thank you. 

Chairman SHELBY. Thank you, Senator Merkley. 

We appreciate your appearance today. It has been a lengthy 

hearing. Maybe this is the beginning of a lot of things, but a lot 

of us are worried about that perhaps there are similar doings going 

on in other banks. We hope not. As I have said from the beginning, 

banking should be based on integrity, on trust. I think you would 

agree with me on that. 

71 

Mr. CURRY. We do. 

Chairman SHELBY. And most banks have that, but some do not. 

Thank you. The hearing is adjourned. 

[Whereupon, at 1:49 p.m., the hearing was adjourned.] 

[Prepared statements, responses to written questions, and additional material supplied for the record follow:] 

72 

PREPARED STATEMENT OF JOHN STUMPF 

CHAIRMAN AND CHIEF EXECUTIVE OFFICER, WELLS FARGO & CO. 

SEPTEMBER 20, 2016 

Chairman Shelby, Ranking Member Brown, and Members of the Committee, 

thank you for inviting me to be with you today. 

I am the Chairman and Chief Executive Officer of Wells Fargo, where I have 

worked for nearly 35 years. It is my privilege to lead the company, which was founded 164 years ago and has played a vital role in the financial history and development of our country. Today, we are part of so many people’s lives. We employ more 

than 268,000 team members, 95 percent of whom are in the United States. One in 

every 600 working adults is a member of the Wells Fargo team, and we have a presence in all 50 States. 

I am deeply sorry that we failed to fulfill our responsibility to our customers, to 

our team members, and to the American public. I have been with Wells Fargo 

through many challenges, none that pains me more than the one we will discuss 

this morning. I am here to discuss how accounts were opened and products were 

provided to customers that they did not authorize or want. I am going to explain 

this morning what happened and what we have done about it. But first, I want to 

apologize to all Wells Fargo customers. I want to apologize for violating the trust 

our customers have invested in Wells Fargo. And I want to apologize for not doing 

more sooner to address the causes of this unacceptable activity. 

I do want to make very clear that there was no orchestrated effort, or scheme as 

some have called it, by the company. We never directed nor wanted our employees, 

whom we refer to as team members, to provide products and services to customers 

they did not want or need. It is important to understand that when an employee 

provides a customer with a product or service that she did not request or authorize, 

that employee has done something flat wrong. It costs us satisfied customers, and 

we lose money on these accounts. Wrongful sales practice behavior goes entirely 

against our values, ethics, and culture and runs counter to our business strategy 

of helping our customers succeed financially and deepening our relationship with 

those customers. 

That said, I accept full responsibility for all unethical sales practices in our retail 

banking business, and I am fully committed to doing everything possible to fix this 

issue, strengthen our culture, and take the necessary actions to restore our customers’ trust. 

Let me assure you and our customers that Wells Fargo takes allegations of sales 

practice violations extremely seriously and that we will not rest until the problem 

is fixed. As I will explain shortly, we are moving to demonstrate once again that 

Wells Fargo remains the dependable, principled partner that it has been throughout 

its 164-year history. 

I will first provide some context around our business strategy of serving customers; discuss some of the changes we have made to address the problems we uncovered; discuss the terminations about which you have read; and describe further 

efforts to strengthen our controls and make things right for customers. 

Cross Selling Means Deepening Relationships With Customers 

A typical American household has multiple financial services and products, and 

our goal is to have as deep a relationship as we can with those households. Our 

cross-sell strategy is simply another way of saying that we provide our customers 

a wide variety of products that can satisfy their financial needs. The more products 

a customer uses, the deeper the relationship of trust and value. Deep relationships 

with products that are wanted and used are what furthers our business strategy 

and truly helps our customers to succeed financially. 

Retail Banking Has Made Progressive Changes To Detect and Deter Unethical 

Behavior 

Our efforts to detect and deter unethical conduct have progressively evolved over 

the last 5 years. They were put in place out of concerns that some employees were 

not doing what was right for customers and were providing products to customers 

they did not want. For example, in 2011, we piloted our Quality-of-Sale Report Card 

in California, and it was implemented in 2012 across retail banking. The Qualityof-Sale Report Card was designed to, among other things, deter and detect misconduct through monitoring of sales patterns that may correlate with unethical 

behavior. 

In 2011, a dedicated team (now called the Sales and Service Conduct Oversight 

Team) began to engage in proactive monitoring of data analytics, specifically for the 

purpose of rooting out sales practice violations. 

73 

In addition, during 2012, Wells Fargo began to reduce the number of sales that 

team members would need to meet to qualify for incentive compensation. Between 

2012 and 2015, we steadily reduced sales goals by up to 30 percent for branch-based 

team members. 

Along with the reduction in sales goals in 2013, we introduced an expanded set 

of training materials for our managers, which managers use to train bankers on ethical practices and prohibited conduct. Further, in the first quarter of 2013, we incorporated the Quality-of-Sale Report Card into the incentive compensation plan for 

our retail banking district managers. 

Starting in 2013, we further strengthened our oversight of potential sales integrity issues and revised our performance evaluation system to put less emphasis on 

sales goals. These revisions were made to enable bankers to earn acceptable ratings 

on their performance evaluations, even if they did not meet their sales goals. 

In 2013, the Sales and Service Conduct Oversight Team began its first proactive 

analysis of ‘‘simulated funding’’ across the retail banking business, reviewing employee-level data around account openings. Let me explain: ‘‘simulated funding’’ is 

a prohibited practice whereby an employee creates an account for a customer and 

then funds it in order to make it look as if the customer had funded the account. 

Based on the original proactive monitoring, our Internal Investigations team began 

an intensive investigation into simulated funding activity in the Los Angeles and 

Orange County markets. As a result of these investigations, we terminated team 

members for sales integrity issues. 

Retail Banking, In Conjunction With Enterprise Risk, Expanded Oversight From 

2013 to 2015 

Further improvements in our sales practice oversight continued in 2013–2015, following the terminations in California that occurred and were reported by the media. 

In 2013, we created a new cross-functional oversight team for retail banking sales 

integrity issues comprised of representatives from our Sales and Services Conduct 

Oversight Team, Corporate Investigations, Human Resources, Employee Relations, 

and the Law Department. The purpose of this team was to identify trends around 

sales integrity issues, and to identify any additional improvements in the process 

that would enhance our oversight of sales integrity issues, with a goal of preventing 

future violations. 

In 2013 and 2014, we made several changes to our incentive compensation plans 

to better align incentive pay with ethical performance, and we further restructured 

how we went about setting goals in our bank branches. 

In 2014, the Sales and Service Conduct Oversight Team expanded the simulated 

funding review to a national scope. 

In 2015, we continued to enhance our training materials and practices, continued 

to make changes to incentive plans, and substantially lowered incentive compensation goals for new team members. 

Sales-Related Terminations Took Place Over the Course of 2011–2015 

I want to pause for a moment to discuss the issue of terminations. We do not have 

tolerance for dishonest conduct or behavior inconsistent with our Code of Ethics. It 

has been reported in the media that Wells Fargo terminated approximately 5,300 

individuals after the CFPB’s enforcement investigation. Instead, individuals were 

terminated over time for sales-related misconduct as a result of investigations 

opened from January 1, 2011 through March 7, 2016. In any given year, approximately 100,000 individuals work in our retail bank branches, and we have terminated approximately 1 percent of that workforce annually for sales practice 

violations. 

Wells Fargo Is Working To Make it Right for Our Customers 

Despite all of these efforts, we did not get it right. We should have done more 

sooner to eliminate unethical conduct and unintended incentives for that conduct to 

occur. Even one unauthorized account is one too many. We should have addressed 

earlier the possibility that customers could be charged fees in connection with accounts opened without their authorization. Because deposit accounts that are not 

used are automatically closed, we assumed this could not happen. We were wrong. 

In August 2015, we began working with a third-party consulting firm, 

PricewaterhouseCoopers (‘‘PwC’’), and asked them to evaluate deposit products, 

unsecured credit cards, and other services from 2011–2015 to determine whether 

customers may have incurred financial harm (specifically, fees, other bank charges, 

and interest) from having been provided an account or service they may not have 

requested. Our charge to PwC was clear—using our account records for our products 

and services, employ data analytics to determine who may have suffered financial 

74 

harm as a result of an account that may not have been authorized, and to quantify 

what that financial harm might have been. 

I want to highlight that our direction to PwC was to err on the side of the customer and to be over-inclusive in attempting to identify a population of customers 

that may have suffered financial harm. In other words, if it could not be ruled out 

that a deposit account or credit card was unauthorized, we designated those accounts for further analysis. We made available to PwC any records they needed. 

Beginning in September 2015 and continuing well into 2016, PwC conducted extensive large-scale data analysis of the more than 82 million deposit accounts and nearly 11 million credit card accounts that we opened during that timeframe. 

With respect to deposit accounts, PwC focused on identifying transaction patterns 

that might be consistent with improper conduct. Out of the 82 million deposit accounts, it identified approximately 1.5 million such accounts (or 1.9 percent) that 

could have been unauthorized. To be clear, PwC did not find that each of these accounts was unauthorized. Among these accounts, PwC calculated that approximately 100,000 incurred fees in the amount of about $2.2 million. 

With respect to credit cards, PwC identified a population of credit cards that had 

never been activated by the customer nor had other customer transaction activity. 

By itself, the lack of activation and use by a customer does not mean that the customer had not authorized the card to begin with. We know that some customers will 

request a credit card for many reasons, including for emergencies and other reasons, 

but then they may not activate the card. However, because we could not confirm, 

based on account activity, that the customer authorized the account in the first 

place, we elected to consider these accounts for potential remediation. PwC calculated that approximately 565,000 consumer cards, or 5.8 percent of all credit 

cards opened, had not been activated nor had other customer transaction activity, 

and approximately 14,000 of these cards had incurred a fee. These fees totaled approximately $400,000. PwC did not find that these cards were unauthorized. 

In February 2016, we began the process of remediating the deposit and credit card 

customers identified above. For existing customers, we credited their accounts. For 

former customers, we sent a check. All customers received a letter informing them 

that they were receiving a refund as a result of fees that may have arisen from an 

account they may not have authorized. We were transparent with our customers 

and provided them contact information to discuss the matter further with us. 

Wells Fargo Is Engaged in Multiple Efforts To Take Responsibility for, and Rectify, 

Our Mistakes 

We decided that product sales goals do not belong in our retail banking business. 

Specifically, as announced last week, we are eliminating all product sales goals for 

retail banking team members and leaders, including those in branches and retail 

banking call centers, effective January 1, 2017. We are doing this in order to better 

align with the additional training, controls, and oversight implemented since 2011 

and focus on rewarding excellent customer service rather than product sales. 

We have taken, and continue to take, other significant and meaningful steps to 

prevent unauthorized accounts from being created. These steps include: 

• Working closely with our primary regulator, the Office of the Comptroller of the 

Currency (‘‘OCC’’), to strengthen our enterprise oversight of sales conduct risk. 

We have established an enterprise Sales Conduct Risk Oversight Office, reporting into the Chief Risk Officer, and have regularly responded to numerous inquiries and provided regular briefings to our regulators; 

• Creating a new enhanced branch compliance program that will be dedicated to 

monitoring for sales practice violations by conducting data analytics and frequent branch visits. Results will be reported to the enterprise Sales Conduct 

Risk Oversight Office; 

• Implementing a process whereby, within 1 hour of opening an account, a customer will receive an email that confirms the opening of the account; 

• Revising procedures for credit cards, to require each applicant’s documented 

consent before a credit report is pulled. Consent is manifested by a physical signature or, if the applicant is unable to sign on the PIN pad, by a dual attestation of the banker and the manager or branch designee; and 

• To further address possible customer harm, we are contacting all customers 

with open, inactive credit cards to confirm whether the customer authorized the 

account. If the customer indicates they did not authorize the card, we will offer 

to close it (if it is still active) and suppress any bureau inquiry. 

I will close by saying, again, how deeply sorry I am that we failed to live up to 

our expectations and yours. I also want to take this opportunity to thank our 

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268,000 team members who come to work every day to serve our customers. Today, 

I am making a personal commitment to rebuild our customers’ and investors’ trust, 

the faith of our team members, and the confidence of the American people. 

PREPARED STATEMENT OF MICHAEL N. FEUER 

LOS ANGELES CITY ATTORNEY

SEPTEMBER 20, 2016 

Chairman Shelby, Ranking Member Brown, esteemed Members of the Committee, 

thank you for the opportunity to provide testimony on this critical matter. 

On a Sunday morning in December, 2013, I was appalled when I opened the Los 

Angeles Times and read an investigative story by Scott Reckard regarding Wells 

Fargo Bank’s sales culture. The story read in part, ‘‘To meet quotas, employees 

have opened unneeded accounts for customers, ordered credit cards without 

customers’ permission and forged client signatures on paperwork. Some employees begged family members to open ghost accounts.’’ 

I immediately instructed my staff to investigate to determine if the facts warranted our Office filing an action pursuant to California laws that protect consumers 

against, and provide relief for, unfair business practices. 

Because these laws do not afford my Office pre-litigation subpoena power, our investigation consisted of good old-fashioned detective work. We conducted numerous 

interviews with former Wells Fargo employees and Wells Fargo consumers, pored 

over public records, including voluminous court records from wrongful termination 

lawsuits former employees filed against Wells Fargo, and made use of the consumer 

complaint databases of the Consumer Financial Protection Bureau and the Federal 

Trade Commission. 

We found that the Bank victimized consumers by opening customer accounts, and 

issuing credit cards and other products, without authorization. Further, we found 

that the Bank failed to notify customers that these accounts had been opened without their consent and failed to refund fees incurred by those customers for these unwanted products and services. We found instances in which the Bank made it difficult, if not impossible, for customers to receive accurate and clear information as 

to how this happened. Many were told that the unauthorized accounts would be 

closed, only to find later that they were not. 

We found that Wells Fargo’s business model imposed unrealistic sales quotas 

that, among other things, incentivized employees to engage in highly aggressive 

sales practices, creating the conditions for unlawful activity, including opening feegenerating customer accounts, and adding unwanted secondary accounts and products, without customer permission. 

Underlying all of this egregious conduct, we found a fundamental breach of trust 

by the Bank through its misuse of consumers’ personal information. We sought to 

enforce the Bank’s obligation to inform its customers that their personal and private 

information had been accessed by Wells Fargo in order to open unauthorized 

accounts. 

Our 16-month investigation culminated in our May 4, 2015, filing of a civil enforcement action in the name of the People of the State of California, an action that 

both sought relief for consumers harmed by Wells Fargo’s conduct and to end the 

illegal practices Wells Fargo employed. 

In the days following the filing of our lawsuit, my Office received calls, letters, 

and emails from over 1,000 current and former Wells Fargo customers and employees. Customers described their experiences, including having money withdrawn from 

their authorized accounts to pay fees assessed by Wells Fargo on unauthorized 

accounts. They also complained that their unauthorized accounts were sent to debt 

collection agencies, and derogatory notes were placed on their credit reports. 

Let’s be clear what’s at stake: 

• It’s outrageous for a bank to use a customer’s private information for any unauthorized purpose, but especially to enhance the bank’s bottom line to the detriment of those with whom it holds a position of trust. 

• It’s outrageous for a bank to open unwanted accounts, and then to transfer 

funds, without consent, from that customer’s existing account to fund an unauthorized account. 

• And it’s outrageous for a customer to incur unexpected fees or other negative 

consequences from the bank’s conduct. 

Earlier this month, we reached a settlement with Wells Fargo, which, in concert 

with the settlements reached by the Federal regulatory agencies, provides for 

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* Statement Required by 12 U.S.C. § 250: 

The views expressed herein are those of the Office of the Comptroller of the Currency and 

do not necessarily represent the views of the President. 

comprehensive retrospective and prospective remediation and corrective actions, and 

sends a strong message by imposing a $50 million penalty. Our agreement contains 

important protections for consumers. It establishes a complaint and mediation system for California consumers harmed by the Bank’s practices, and requires Wells 

Fargo to continue a restitution program for affected customers. Wells Fargo must 

also alert all its California customers who have consumer or small business checking or savings accounts, credit cards, or unsecured lines of credit, that they should 

visit their local bank, or call Wells Fargo, to review their accounts, close accounts 

or discontinue services they do not recognize or want, and resolve any remaining 

problems. Additionally, every 6 months for the next 2 years, Wells Fargo must provide my Office an audit report assessing the Bank’s compliance with our agreement, 

verified under penalty of perjury by an officer or director of the Bank. 

We coordinated our settlement with the enforcement efforts of our Federal partners, the Consumer Financial Protection Bureau and the Office of the Comptroller 

of the Currency. As a result of this collaboration, remediation and corrective actions 

extend nationwide. I would like to thank both agencies for their incredible work. 

Robust government oversight is key to protecting consumers and it is important to 

maintain laws that are protective of consumers and support collaboration between 

Federal, State, and local enforcement agencies. 

There is a sacred trust that consumers put in their financial institutions—a faith 

that their hard-earned money will be safe and secure, and that their banks’ actions 

will be in the best interests of customers like themselves. Wells Fargo broke that 

trust. We should all work to assure it never happens again. 

PREPARED STATEMENT OF THOMAS J. CURRY 

COMPTROLLER, COMPTROLLER OF THE CURRENCY * 

SEPTEMBER 20, 2016 

I. Introduction 

Chairman Shelby, Ranking Member Brown, and Members of the Committee, 

thank you for the opportunity to testify today as the Committee reviews matters relating to certain sales practices at Wells Fargo Bank, N.A. (Bank or Wells Fargo). 

As described below, the Office of the Comptroller of the Currency (OCC) recently 

took public enforcement actions against Wells Fargo, finding that the Bank engaged 

in reckless unsafe or unsound banking practices and directing it to take comprehensive corrective action with regard to risk management of its sales practices, reimburse harmed customers, and pay $35 million in civil money penalties (CMPs). The 

OCC’s actions focused on safety and soundness issues, and we worked in close coordination with the Consumer Financial Protection Bureau (CFPB) and the Los Angeles City Attorney. I want to express my appreciation to Director Cordray of the 

CFPB and LA City Attorney Mike Feuer. 

While the OCC continues to review our supervision and actions related to this 

case, my testimony provides additional detail, known today, regarding our supervisory response and the steps the OCC is taking to review our actions in this matter, as we continuously work to enhance our supervision of national banks and Federal savings associations. 

Before discussing the details of our supervisory response, I want to make clear 

that the unsafe and unsound sales practices at the Bank, including the opening and 

manipulation of fee-generating customer accounts without the customer’s authorization, are completely unacceptable and have no place in the Federal banking system. 

They reflect a lack of effective risk management, a breakdown in controls, and an 

inappropriate incentive structure. The actions announced on September 8, 2016, are 

intended to remediate and deter such practices and underscore the importance of 

robust risk management throughout the Federal banking system. The coordinated 

and complementary efforts by the OCC and the CFPB make clear to regulated institutions that compliance and safety and soundness go hand in hand. 

The actions against the institution hold it accountable, and consistent with our 

practice in such enforcement matters, the OCC has also initiated a review of individual misconduct and culpability. The OCC may take formal enforcement actions 

against institution-affiliated parties, including directors, officers, and employees, 

who violate any law or regulation, engage in unsafe or unsound practices, or breach 

fiduciary duty. These actions include personal cease and desist orders and CMPs. 

77 

1MRAs describe practices that deviate from sound governance, internal control, and risk management principles, and have the potential to adversely affect the bank’s condition, including 

its financial performance or risk profile, if not addressed; or result in substantive noncompliance 

with laws and regulations, enforcement actions, supervisory guidance, or conditions imposed in 

writing in connection with the approval of any application by the bank. The OCC clarified its 

use of MRAs in 2014 (http://www.occ.gov/news-issuances/bulletins/2014/bulletin-2014- 

52.html). 2See ‘‘Wells Fargo’s Pressure-Cooker Sales Culture Comes at a Cost.’’ Los Angeles Times, Dec. 

22, 2013 (http://www.latimes.com/business/la-fi-wells-fargo-sale-pressure-20131222-story.html). 

In addition, the OCC has the authority to remove and prohibit individuals from 

serving as directors, officers, or employees of federally insured depository institutions if the legal standards for such action are met. Removal and prohibition 

amount to a lifetime ban on the culpable individual working in the banking 

industry. 

While I believe we have made progress since the financial crisis in fostering 

healthier cultures at the largest institutions, meaning a commitment to compliance 

with applicable laws, effective risk management, good governance, and fair treatment of customers, there is clearly more work to do. Regulators and the institutions 

themselves must be especially vigilant when it comes to practices that can undermine the trust and confidence in financial institutions. 

II. OCC Supervision of the Bank’s Sales Practices 

The OCC charters, regulates, and supervises national banks, Federal savings associations, and the Federal branches and agencies of foreign banks. Our mission is 

to ensure these institutions operate in a safe and sound manner, provide fair access 

to financial services, treat customers fairly, and comply with applicable laws and 

regulations. Compliance with consumer protection laws is dependent upon a bank’s 

ability to manage operational risk and conduct its business in a safe and sound 

manner, and the opposite is also true: You cannot manage operational risk without 

an effective compliance program. 

OCC-regulated institutions are subject to comprehensive, ongoing supervision designed to enable examiners to identify problems and obtain corrective action. Such 

supervision permits most bank problems to be resolved through the supervisory 

process without formal enforcement action. Relevant examples of written supervisory actions include comprehensive Reports of Examination, Supervisory Letters, 

and Matters Requiring Attention (MRAs) tailored to the specific weaknesses existing 

at a bank.1 MRAs focus the bank management’s and board’s attention on supervisory concerns that require the board’s immediate acknowledgment and oversight 

to ensure timely corrective action. In financial institutions with more than $10 billion in assets, such as Wells Fargo, the OCC’s supervisory responsibilities are related to, and sometimes overlap with, the supervisory responsibilities of the CFPB 

for financial institution activities subject to certain consumer financial laws and regulations, including retail sales practices. Pursuant to a 2012 interagency memorandum of understanding (MOU) on supervisory coordination, the OCC’s regular 

practice in these areas is to provide the CFPB with copies of Reports of Examination 

and formal supervisory correspondence. The OCC also shares other material supervisory information with the CFPB pursuant to that MOU and a subsequent statement of principles between the two agencies. 

In March 2012, the OCC received a small number of complaints from consumers 

and Bank employees alleging improper sales practices at Wells Fargo, which were 

forwarded to OCC supervision staff assigned to the Bank, consistent with agency 

practice at the time. Following these inquiries and a Los Angeles Times article 2 in 

December 2013 regarding the Bank’s aggressive sales practices, the examiners initiated a series of meetings with various levels of Bank management, including executive leadership, to evaluate the Bank’s activities and actions. The Bank stated that 

it terminated employees as a result of consumer and internal ethics complaints, and 

that it was investigating such reports and re-evaluating its oversight of sales practices at the Bank. During this time, the OCC examiners were also reviewing, and 

meeting with the Bank to discuss, the Bank’s development of a corporate risk strategy, risk framework, and implementation plan that included its sales practices. 

Between January 2012 and July 2016, the OCC conducted multiple supervisory 

activities related to Wells Fargo, which included ongoing supervision and targeted 

examinations through which examiners assessed the Bank’s governance and risk 

management practices related to compliance and operational risk. These activities 

included assessments of compliance with the OCC’s heightened standards requirements that I discuss further below, as well as other regulatory expectations for compliance risk management. These activities also included components that involved 

78 

3 A Supervisory Letter to a large bank such as Wells Fargo is an official OCC communication 

that formally conveys supervisory findings and conclusions, including any supervisory concerns, 

from the OCC’s ongoing supervision of the institution. 4See OCC Bulletin 2014–45, ‘‘Heightened Standards for Large Banks; Integration of 12 CFR 

30 and 12 CFR 170.’’ Sept. 25, 2014 (http://www.occ.gov/news-issuances/bulletins/2014/bulletin-2014-45.html). 

assessment of risk management related to sales practices. The supervisory conclusions associated with these activities are summarized below. 

2011–2014 Examination Activity 

Consumer Compliance Risk Management Assessment 

Following earlier examination work relating to consumer practices at the Bank 

that began in late 2011, the OCC took further supervisory actions related to compliance risk management at the Bank in early 2013 and 2014. In February 2013, the 

OCC issued a Supervisory Letter 3 requiring the Bank to develop its operational risk 

compliance program. In early 2014, the agency directed the Bank to address weaknesses in compliance risk through the establishment of a comprehensive compliance 

risk management program related to unfair and deceptive practices. Further, the 

OCC identified the need to assess cross-selling and sales practices as part of its upcoming examination of the Bank’s governance processes. Examiner planning for that 

examination included meetings with Bank management throughout 2014, as well as 

the review of the Bank’s management information systems, internal audit findings, 

and documents describing the Bank’s efforts to improve its capabilities to manage 

and monitor the quality of compliance oversight. OCC examiners continued their 

dialogue with Bank management to supervise and monitor these efforts. 

2015 Examination Activity 

Compliance Management Reviewed Under Heightened Standards 

The OCC’s ongoing review and supervisory response to the matters discussed 

above continued into 2015, and included periodic meetings with Bank management 

and review of extensive documentation, including internal reports, board packages, 

and internal audit findings. In March 2015, OCC examiners completed a multi-year 

assessment of the Bank’s compliance management systems, applying the OCC’s rule 

on heightened standards for large banks that took effect in November 2014,4 and 

identified the need for the Bank to improve its risk management and governance 

related to operational and compliance risk. 

Community Bank Operational Risk Management Reviewed 

The OCC conducted an examination of the Bank’s Community Bank Operational 

Risk Management in February 2015. The review focused on governance of operational risk, use of risk tools, implementation of strategic plans and new products, 

internal loss oversight, complaints management processes, and sufficiency and quality of staff. The examiners also evaluated the Community Bank division’s sales practices oversight. The examiners’ conclusions noted that the Bank lacked a formalized 

governance framework to oversee sales practices and thus, the OCC issued a Supervisory Letter in April 2015 that included an MRA requiring the Bank to address 

the governance of sales practices within its Community Bank division. 

Enterprise Sales Practices Reviewed 

The OCC issued an additional Supervisory Letter to the Chairman and Chief Executive Officer in June 2015 identifying matters related to the Bank’s enterprisewide risk management and oversight of its sales practices that required corrective 

action by the Bank. The OCC letter included five MRAs that required the Bank to 

take significant action to address the inappropriate tone at the top, that included 

the lack of an appropriate control or oversight structure given corporate emphasis 

on product sales and cross-selling; the lack of an enterprise-wide sales practices 

oversight program; the lack of an effective enterprise-wide customer complaint process; the lack of a formalized governance process to oversee sales practices and effectively oversee and test branch sales practices; and the failure of the Bank’s audit 

services to identify the above issues or to aggregate sales practice issues into an 

enterprise view. 

The June 2015 Supervisory Letter also instructed the Bank to take certain corrective actions to address the practices at issue, including improving processes to manage sales practices risk; re-evaluating compensation and incentive plans to ensure 

they did not provide an incentive for inappropriate behavior; improving processes 

to independently oversee sales practices risk at an enterprise-wide level; 

accelerating the implementation of a fully effective customer complaint process and 

79 

5See NR 2016–106. ‘‘OCC Assesses Penalty Against Wells Fargo, Orders Restitution for Unsafe or Unsound Sales Practices.’’ Sept. 8, 2016 (http://www.occ.gov/news-issuances/news-releases/2016/nr-occ-2016-106.html). 

establishing policy and processes for evaluating complaints related to protected 

classes; having management of the Bank’s Community Bank division establish effective oversight, as well as a testing and quality assurance function, to review branch 

sales practices; and having the Bank’s audit services develop an enterprise-wide risk 

management process for sales practices. The OCC also instructed the Bank to remediate any consumer harm that resulted from the sales practices at issue. 

As part of the corrective actions required by the June 2015 Supervisory Letter, 

the OCC also ordered the Bank to retain an independent consultant to conduct a 

thorough review of the Bank’s approach to enterprise-wide sales practices and to assess consumer harm. The Bank retained two consultants—one to review the practices and another to assess consumer harm. The consultants issued their findings 

in October 2015, February 2016, and May 2016. The consultants’ work and findings 

further informed OCC’s ongoing supervision and consideration of the matter. 

2015 Report of Examination Issued 

The OCC issued its annual Report of Examination in July 2015 and noted the 

Bank needed to act more proactively to control compliance and operational risk. The 

July Report of Examination was followed by a Notice of Deficiency on July 28 citing 

the Bank’s failure to comply with the safety and soundness expectations in the 

OCC’s heightened standards rule. The OCC issued this notice to help ensure that 

Bank management adhered on a timely basis to its plan to implement an effective 

enterprise-wide compliance risk management program. 

2016 Examination Activity 

2016 Report of Examination Issued and Supervisory Letter Finding Unsafe or Unsound Practices 

The OCC continued its ongoing review of these matters into 2016, holding monthly meetings with Bank management in order to monitor and follow up on the Bank’s 

progress in addressing the corrective actions required by the OCC. The OCC concluded its 2016 examination work in July, and issued its Report of Examination 

findings and a letter to the board. The Report of Examination communicated the 

findings and conclusions that the Bank’s sales practices were unethical; the Bank’s 

actions caused harm to consumers; and Bank management had not responded 

promptly to address these issues. A Supervisory Letter to the Bank’s Chairman on 

July 18, 2016, also stated the Bank engaged in unsafe or unsound banking practices 

and shortly thereafter, the OCC’s Major Matters Supervision Review Committee approved recommendations to issue the Consent Order and assess CMPs against the 

Bank for reckless unsafe or unsound sales practices and the Bank’s risk management and oversight of those practices. 

Enforcement Actions 

The OCC’s enforcement actions were coordinated closely with the CFPB and the 

LA City Attorney and issued on September 8, 2016.5 Many of the elements of the 

cease and desist order reflect requirements included in the various OCC supervisory 

communications discussed above, which were issued as part of the OCC’s ongoing 

supervision prior to issuance of the order. 

The September 2016 OCC enforcement actions included the assessment of $35 

million in CMPs, and required the Bank to make restitution to customers who were 

harmed by the Bank’s unsafe or unsound sales practices and to develop a comprehensive enterprise-wide action plan to address the underlying causes of the 

harm. The Bank was also required to conduct a comprehensive assessment of any 

new or materially revised incentive compensation structure in its sales practices 

prior to implementation. Such an assessment is intended to ensure that the risks 

related to the Bank’s incentive compensation structure are well managed, controlled, and adhere to policies, procedures, and processes designed to prevent potentially unsafe or unsound sales practices. 

Restitution payments made by the Bank to customers pursuant to the OCC’s 

order will also satisfy identical obligations required by the CFPB and the LA City 

Attorney. 

III. Next Steps 

While the OCC has made many improvements to our supervisory program in recent years, the actions against Wells Fargo highlight that we must continue our efforts to improve and refine the agency’s supervisory program, to sharpen our early 

80 

warning processes, and to enhance our supervisory capabilities, particularly with respect to our largest, most complex banks. And while the examination and investigation needed to bring comprehensive and coordinated enforcement action against 

Wells Fargo required deliberation and care, it is critically important that the OCC 

identify issues and act more quickly. To that end, I have asked the Senior Deputy 

Comptroller for Enterprise Governance to conduct a review of our actions taken in 

this matter in order to identify gaps in our supervision and assess any lessons the 

agency can learn from it. 

At the same time, I have directed our examiners to review the sales practices of 

all the large and midsize banks the OCC supervises and assess the sufficiency of 

controls with respect to these practices. 

IV. Enhancements to the OCC’s Supervisory Programs 

Since I began my term as Comptroller in April 2012, I have sought to strengthen 

the OCC’s supervisory programs. The enhancements described below have put the 

agency on track to act in a more timely and effective manner to address unsafe and 

unsound practices and violations of law. 

Heightened Standards 

The financial crisis showed that supervisory expectations for front line units, risk 

management, internal audit, and corporate governance in our largest and most complex banks needed to be substantially higher, especially for the most systemically 

important institutions. To achieve that goal, the OCC developed a set of ‘‘heightened 

expectations.’’ Starting in 2010, the agency introduced these expectations to the 

large banks we supervise. By 2012, the OCC began assessing compliance with the 

expectations, and incorporated our findings into our risk assessments of those institutions. We found that progress was too slow and that a more robust approach, providing for the possibility of an enforceable response, was needed. Thus, in January 

2014, the OCC proposed enforceable guidelines and, in September 2014, issued final 

enforceable guidelines. Under this approach, if a bank fails to satisfy a standard in 

the guidelines, the OCC may require it to submit a compliance plan detailing how 

it will correct the deficiencies and the applicable timeline. The OCC can issue an 

enforceable order if the bank fails to submit an acceptable compliance plan or fails 

in any material way to comply with an OCC-approved plan. 

The heightened standards guidelines have two major components. The first sets 

forth the minimum standards for the design and implementation of a covered bank’s 

risk governance framework, stipulating that it should be based on what the industry 

commonly refers to as the three lines of defense: front line units, independent risk 

management, and internal audit. The risk governance framework and the three 

lines of defense are intended to ensure that the bank has an effective system to 

identify, measure, monitor, and control risk-taking and standards of behavior. Those 

units must ensure that boards of directors have enough information on their bank’s 

risk profiles and risk management practices so that the bank operates within the 

risk appetite established by management and the board. 

The second component of our heightened standards guidelines pertains to the responsibilities of boards of directors. The guidelines establish criteria to ensure that 

bank boards have a minimum number of independent directors and that all board 

members have the information they need to provide effective oversight, including 

the ability to pose a credible challenge to management. The guidelines also require 

each bank to establish and maintain an ongoing training program for all board 

members and to conduct an annual self-assessment of the board’s effectiveness in 

meeting the standards in the guidelines. The date for the largest banks to comply 

with these standards was in November 2014. 

Major Matters Supervision Review Committee 

As Comptroller, I established a committee comprised of my most senior and expert 

executives to review major supervisory matters. The committee operates independently of the supervision function and replaces a less robust review and decisionmaking process previously in place for significant enforcement cases, thereby 

strengthening and enhancing the governance over decisionmaking. 

The Committee’s role is to ensure OCC bank supervision and enforcement policies 

are applied fairly, effectively, and consistently. The Committee considers all major 

enforcement cases, and its charter recently was expanded as the Committee has 

added value to the OCC’s supervisory program. The matters that must be brought 

before the Committee include all enforcement actions against large banks (informal 

and formal) based on safety and soundness; all large bank enforcement actions that 

include articles addressing the Bank Secrecy Act (BSA); all enforcement actions 

against any bank based in whole or in part on unfair or deceptive acts or practices 

in violation of section 5 of the Federal Trade Commission Act; and certain fair 

81 

lending referrals and actions. The Committee’s charter also requires vetting by senior executives on the Committee of decisions made outside of the Committee not to 

pursue enforcement actions that would otherwise come before the Committee. 

Compliance and Community Affairs (CCA) 

Earlier this year, I established Compliance and Community Affairs (CCA), a new 

business unit within the OCC’s organizational structure. CCA, led by a Senior Deputy Comptroller, is separate from the existing supervisory units and is charged with 

addressing all aspects of compliance and community affairs. The assignment of 

these responsibilities to one unit avoids the risk of a fragmented approach to these 

issues and inconsistent outcomes among different OCC supervisory lines of business. The establishment of the CCA unit reflects the significance of consumer and 

BSA/anti-money laundering compliance issues within the OCC and the banking industry, and the extent to which compliance risk management deficiencies may pose 

the risk of great harm to consumers and the safety and soundness of banks. The 

need for ongoing communication and effective collaboration with a wide range of 

other regulatory agencies in these areas also contributed to my decision to establish 

the CCA unit. By establishing this unit with both supervision and policy functions, 

I recognized the need for a change in the OCC’s organizational structure to provide 

the best possible platform and support for this work throughout the agency. Fairness and compliance are critical aspects of the OCC’s mission and are interconnected with, and as important as, safety and soundness. As I noted earlier, compliance and safety and soundness go hand in hand. The compliance discipline, like 

its safety and soundness sibling, requires dedicated staff and strong infrastructure 

to ensure the OCC takes timely and appropriate actions with respect to compliance 

and related safety and soundness issues. 

Coordination Principles 

The enforcement action against Wells Fargo follows other coordinated enforcement actions we have issued with the CFPB since 2012. The actions have included 

significant consumer restitution as well as penalties assessed by the OCC and the 

CFPB against institutions that were found to have engaged in unfair billing practices and deceptive sales and marketing practices, among other issues. However, our 

coordination is not limited to enforcement actions. In June of this year, the OCC 

and the CFPB jointly issued a set of 10 coordination principles to guide how the 

staffs of the two agencies collaborate and share information. The principles build on 

the 2012 interagency MOU on supervisory coordination that I noted earlier and a 

2012 interagency MOU on information sharing, and reflect how closely the two 

agencies work together to ensure that our country’s financial services industry 

meets the needs of consumers, communities, and businesses. Key to the principles 

and the underlying coordination is that OCC and CFPB employees should be responsive and share information; communicate openly with each other; consult with 

each other especially when working on a joint project; elevate to management issues 

of importance; coordinate on approaches to their work; and respect the goals and 

mission of each agency. 

V. Additional Actions Required 

It is clear from our work and the actions announced on September 8 against the 

Bank that the misaligned priorities and unacceptable behavior at Wells Fargo 

resulted in unsafe and unsound practices that led to widespread consumer harm. 

Issues of incentive compensation are relevant to ensuring behavior aligns with acceptable corporate practice. For those reasons, the OCC strongly supports issuing 

a final rule on incentive compensation that would address some of the issues I am 

raising today. 

The OCC, along with the Federal Reserve, Federal Deposit Insurance Corporation, 

the Securities and Exchange Commission, the Federal Housing Finance Agency, and 

the National Credit Union Administration, issued a proposed rule on incentivebased compensation earlier this year that would apply to financial institutions with 

total consolidated assets of $1 billion or more. The proposed rule would prohibit incentive-based compensation arrangements that provide excessive compensation and 

that could lead to material financial loss to a financial institution. A financial institution covered by the proposed rule would not be permitted to provide an incentivebased compensation arrangement unless the arrangement appropriately balanced 

risk and reward, was compatible with effective risk management and controls, and 

was supported by effective governance. 

The proposed rule also includes specific requirements for incentive-based compensation arrangements at the largest financial institutions, like Wells Fargo, with 

total consolidated assets of $50 billion or more. The most notable of these is the requirement that larger financial institutions defer a certain percentage (40–60 

82 

6See NR 2016–46, ‘‘Comptroller Statement Regarding the Proposed Incentive-Based Compensation Rule.’’ Apr. 26, 2016 (http://www.occ.gov/news-issuances/news-releases/2016/nr-occ2016-49.html). 

percent) of the incentive-based compensation they pay to certain senior executive officers and significant risk-takers for a minimum period of time (1 to 4 years). Those 

deferred amounts would be subject to a forfeiture review by the financial institution 

if certain triggering events, such as a material risk management or control failure, 

occurred. Incentive-based compensation paid to these employees would also be subject to claw back for 7 years. Additionally, the proposed rule would prohibit larger 

financial institutions from providing incentive-based compensation based solely on 

transaction volume or revenue, without regard to transaction quality or compliance 

with sound risk management. 

Further, the proposed rule includes risk management requirements, including an 

independent compliance program and independent monitoring of incentive-based 

compensation plans and programs. The comment period for the proposed rule closed 

on July 22, 2016. The agencies are carefully reviewing the comments that we received and are working toward completion of a final rule. I strongly supported the 

proposed rule,6 and while the content of the final rule will not be determined until 

it is considered by the agencies’ principals, I also strongly support completing the 

work as quickly as practical. 

VI. Conclusion 

I remain committed to ensuring the OCC completes its review of this matter and 

takes additional actions to hold the bank and individuals accountable as warranted. 

Moreover, I will work to foster continuous improvements at the OCC to fulfill our 

mission. I want to close by expressing my appreciation again for my colleagues at 

the CFPB and in the LA City Attorney’s office. Our Nation’s financial services industry is complex and dynamic. Effective supervision and enforcement requires regulators to work together to achieve a safe and sound banking system that treats 

customers fairly. I look forward to continued collaboration with my fellow 

regulators. 

PREPARED STATEMENT OF RICHARD CORDRAY 

DIRECTOR, CONSUMER FINANCIAL PROTECTION BUREAU

SEPTEMBER 20, 2016 

Chairman Shelby, Ranking Member Brown, and Members of the Committee, 

thank you for the opportunity to speak with you today. In these brief remarks, I 

will discuss: (1) what our investigation found about the sales practices at Wells 

Fargo; (2) what we are seeking to achieve by our Order; and (3) some initial 

thoughts about what further steps need to be taken to improve the culture and practices of the banking industry. On September 8, 2016, the Consumer Bureau, together with our partners at the Los Angeles City Attorney’s office and the Office 

of the Comptroller of the Currency, took an enforcement action against Wells Fargo 

Bank. Our investigations found that, in order to meet sales goals and collect financial bonuses for themselves, employees of the bank created unauthorized deposit 

and credit card accounts, enrolled consumers in online banking services, and ordered debit cards for consumers, all without their consent or even their knowledge. 

Some of these practices involved fake email accounts and phony PIN numbers. 

The fraudulent conduct occurred on a massive scale. As detailed in our Order, 

Wells Fargo opened 1,534,280 deposit accounts that may not have been authorized, 

including transferring funds from some customer accounts without their knowledge 

or consent. Wells Fargo also initiated applications for 565,443 credit card accounts 

that may not have been authorized, by using consumers’ information without their 

knowledge or consent. These activities caused some consumers to incur fees. Even 

apart from that, they represent a staggering breach of trust and conduct that should 

never occur at any bank. Wells Fargo has demonstrated the epic scope of its failures 

by terminating at least 5,300 people thus far, including branch managers and managers of managers. 

The gravity and breadth of the fraud that occurred at Wells Fargo cannot be 

pushed aside as the stray misconduct of just a few bad apples. As one former Federal prosecutor has aptly noted, the stunning nature and scale of these practices reflects instead the consequences of a diseased orchard. As our Order describes, Wells 

Fargo built and refined an incentive compensation program and implemented sales 

goals to boost the cross-selling of products, but did so in a way that made it possible 

for its employees to pursue unfair and abusive sales practices. It appears that the 

83 

bank did not monitor the program carefully, allowing thousands of employees to 

game the system and inflate their sales figures to meet their sales targets and claim 

higher bonuses. Rather than put its customers first, Wells Fargo built and sustained 

a program where the bank and many of its employees served themselves instead, 

violating the basic ethics of a banking institution, including the key norm of trust. 

Our Order accomplishes several things. First, the kind of detail that we always 

make it a point to provide in our enforcement orders exposes Wells Fargo’s illegal 

misconduct, including its scale, for all to see for themselves. It has spawned vigorous public scrutiny over the past 2 weeks that no doubt will continue. 

Second, the Order helps answer one question that many of you have asked me 

from time to time: what does the term ‘‘abusive’’ mean in our governing statute? 

Although we have been careful in analyzing all the ramifications of that new term, 

we did not hesitate for one minute to apply it emphatically to what we found here. 

In this matter, Wells Fargo engaged in abusive conduct toward its customers and 

consumers. We have said so, and executives, shareholders, and investors throughout 

the financial system will now have to consider what that means in their efforts to 

address their own cultures and practices going forward. 

Third, we have ensured that all consumers who suffered financial harm as a result of these practices will be fully compensated for that harm. Wells Fargo is required to set aside $5 million to cover all of that, and if it turns out to exceed $5 

million, the bank will cover that as well. 

Fourth, we levied upon Wells Fargo a fine of $100 million, the largest fine by far 

that the Consumer Bureau has imposed on any financial company to date. Some 

have said it should have been higher, others have said it should have been lower. 

All told, the bank will pay $185 million in fines for the illegal actions of these 

employees. That is a dramatic amount as compared to the actual financial harm to 

consumers, but it is justified here by the outrageous and abusive nature of these 

fraudulent practices on such an enormous scale. As for whether we have done 

enough here, it is notable that the Order is generating considerable consequences, 

including market effects, shareholder activity, further potential lawsuits, and followup investigations by other public officials that may be either civil or criminal in 

nature. 

Fifth, the Order requires independent consultants to be installed at Wells Fargo 

to complete all further work on this matter, to ensure that all consumers are fully 

compensated, and to ensure that changes in the bank’s sales practices are fully implemented to ensure that these types of misconduct do not recur. Both the top executives at Wells Fargo and its board of directors will be directly engaged in this 

work. If the independent consultants identify any further issues or concerns, we will 

address those as well. 

Let me conclude with some more general concerns. As one of the biggest and best 

known banks in the United States, Wells Fargo is in a position to lead by example 

in terms of how every bank should treat its customers. In the wake of this Order, 

it now must do so. Much bank growth these days occurs by cross-selling customers 

on more products and services. This approach should lead banks to focus on strong 

customer service that produces high levels of customer satisfaction, which in turn 

should generate repeat business from existing customers and positive word of mouth 

to others. 

As we have seen here, however, unchecked incentives and an unrealistic and 

uncaring culture of high-pressure sales targets can lead to serious consumer harm. 

Incentive compensation structures are common in businesses and they can motivate 

positive behavior. Yet companies need to pay close attention to their compliance 

monitoring systems in order to prevent violations of the law and abusive practices. 

This action should serve notice to the entire industry. If sales targets and incentive compensation schemes are implemented in ways that threaten harm to consumers and lead to violations of the law, then banks and other financial companies 

will be held accountable. We have seen the risk that such programs pose to consumers across the entire financial sector—in debt collection, mortgage origination, 

credit card add-on products, overdraft products, and now in this action. Any such 

initiatives should be carefully monitored as a basic element in a company’s compliance program. 

Thank you again to our partners here at this table who worked with us on this 

important enforcement action. And thank you for this opportunity to testify. I will 

be happy to answer your questions. 

(85) 

RESPONSES TO WRITTEN QUESTIONS OF SENATORS BROWN, 

REED, SCHUMER, MENENDEZ, TESTER, WARNER, MERKLEY, 

WARREN, HEITKAMP AND DONNELLY FROM JOHN G. 

STUMPF 

Q.1. As was requested of you at the hearing, what is the precise 

date in 2013 when you became aware of these issues in the Community Banking Division? How was this information conveyed to 

you, and by whom? 

A.1. It is our understanding that, from time to time, because of Mr. 

Stumpf’s position, individuals would contact him directly and complain about issues and that Mr. Stumpf did receive complaints 

about sales-practice issues over the years. When Mr. Stumpf received such complaints, our understanding is that his practice was 

to forward them to the appropriate internal team, such as Human 

Resources, to address. 

Mr. Stumpf has said that he recalls learning of the increase in 

the number of reports of sales-practice issues in late 2013. 

Please note that the Independent Directors of Wells Fargo’s 

Board of Directors have launched an investigation into sales-practice issues, and that investigation is ongoing. 

Q.2. As was asked at the hearing, what is the precise date when 

the board of directors became aware? How was this information 

conveyed to the board, and by whom? Please provide a list of the 

dates of the board meetings when this matter was discussed, as 

well as which board members were in attendance at these meetings. 

Q.3. At the hearing, you were asked whether any board members 

or executives had fraudulent accounts opened in their names. 

Please provide any names and titles. 

A.2.–A.3. From at least 2011 forward, the board’s Audit and Examination Committee received periodic reports on the activities of 

Wells Fargo’s Internal Investigations group (which investigates 

issues involving team members), as well as information on 

EthicsLine and suspicious activity reporting. Among other things, 

several of those reports discussed increases in sales integrity issues 

or in notifications to law enforcement in part relating to the uptick 

in sales integrity issues. Some reporting discussed reasons for increases in sales integrity investigations and reporting, which 

included improved controls, tightening existing controls, and enhancements to better facilitate referrals of potential sales integrity 

violations to Internal Investigations. 

Later, the Risk Committee began to receive reports from management of noteworthy risk issues, which included, among other 

risks, sales conduct and practice issues affecting customers and 

management’s efforts to address those risks. The board’s Human 

Resources Committee also received reports from management that 

86 

it was monitoring sales integrity in Community Banking. Sales integrity issues also were discussed periodically with the board. 

Q.4. At the hearing, you stated that you did not learn of the 

systemic fraud occurring at Wells Fargo until late 2013, after interventions at lower levels of the company had failed to stem the creation of fraudulent accounts. Please provide a detailed timeline, 

from 2007 to 2015, of when different segments of Wells Fargo 

learned that employees were creating fraudulent accounts and 

what actions those segments took to address the problem, including 

which Wells Fargo employees (such as senior executives) and Federal and State regulators they informed of the problem. 

A.4. Prior to the summer of 2011, it was Wells Fargo’s practice to 

address individual instances of alleged unauthorized accounts as 

they were brought to its attention by customers or bank team 

members. In 2012, the task of dealing with such complaints was 

assigned to the risk management function within Community 

Banking, which initiated a number of efforts to proactively monitor 

sales-integrity issues—which might include unauthorized accounts, 

but might also involve opening accounts that are a poor fit for the 

customer. This monitoring included tracking metrics such as how 

many accounts were funded within the first 30 days, how many accounts were closed within the first 30 days after opening, and how 

frequently accounts were downgraded from a higher value account 

type to a lower value account type. In April 2012, a report called 

the Quality of Sales Report Card was created to assist managers 

to monitor how their bankers were performing on these measures. 

In 2013, Wells Fargo conducted its first data analysis intended 

to identify bankers who were opening accounts in which money was 

initially deposited, but then removed and no further account activity occurred. This analysis was conducted out of concern that bankers might be trying to manipulate the sales-integrity metrics—particularly the rate of accounts funded within the first 30 days, by 

‘‘simulating’’ funding of the accounts through transfers of funds. 

Based on the findings from this analysis, Wells Fargo’s Corporate 

Investigations conducted an intensive investigation in the Los 

Angeles/Orange County region, resulting ultimately in the termination of several team members. The fact of this investigation, and 

some of the terminations, were what was publicized in the Los Angeles Times article on October 3, 2013. Wells Fargo’s investigation 

continued into 2014 and resulted in further terminations. 

Based on the information learned from this initial proactive analysis, Wells Fargo began to implement changes to its policies and 

procedures in 2014 to attempt to mitigate the occurrence of salespractices violations. Wells Fargo’s efforts to further refine its policies and procedures and to investigate instances of sales-practices 

violations continued up until, and after, the Los Angeles City Attorney lawsuit was filed in May 2015. A third-party consulting 

firm, PricewaterhouseCoopers (PwC), was engaged in September 

2015 to conduct a massive data-driven analysis of deposit and credit card accounts going back to May 2011. The results of this analysis for checking and savings accounts and credit cards were 

available in 2016. 

87 

1Wells Fargo, ‘‘Wells Fargo Chairman and CEO John Stumpf Outlines a Series of New Actions to Strengthen Culture and Rebuild Trust of Customers and Team Members at Senate 

Banking Committee Hearing (press release)’’ (September 20, 2016) (online at https:// 

www.wellsfargo.com/about/press/2016/new-actions-strengthen-culturel0920.content). 

Q.5. Does Wells Fargo have any information indicating that company employees created bank accounts or credit card accounts 

without customer consent prior to 2009? If so, how did the company 

obtain this information? When was the first reported case, and how 

many cases that occurred prior to 2009 have been discovered? Have 

you reported those cases to Federal financial regulators? 

Q.6. At the hearing, Wells Fargo announced that it would expand 

its ‘‘remediation review’’ to bank accounts and credit card accounts 

created in 2009 and 2010.1 As was asked at the hearing, we have 

received reports of company employees creating false accounts before 2009, why have you limited your remediation review to 2009– 

2015? What steps will Wells Fargo take to ensure that customers 

with fraudulent accounts created before 2009 are compensated? 

A.5.–A.6. As is the case with any large organization involved in 

sales, Wells Fargo has never been immune to issues of sales-practice violations or related incidents of unethical behavior on the part 

of some of our team members. 

We appreciate and share your concern that any and all 

customers who may have been impacted should be identified. 

Therefore, we are continuing to examine whether there are ways 

to identify unauthorized accounts opened prior to 2009. As an important initial step, we are notifying all of our consumer and small 

business Community Banking customers with a checking, savings, 

credit card, or line of credit account of this issue; we are also inviting and encouraging them to speak with a Wells Fargo representative if they have any questions or concerns about their accounts. 

Please also note that the Independent Directors of Wells Fargo’s 

Board of Directors have launched an investigation into these 

issues, and that investigation is ongoing. 

Last, we would note again that pursuant to the CFPB and the 

OCC Consent Orders, Wells Fargo will retain the services of an 

independent consultant and develop redress and reimbursement 

plans to identify the population of consumers who may have been 

affected by improper sales practices. We fully expect that, once approved by our regulators, the redress and reimbursement plans will 

encompass various forms of harm, including harm related to credit 

bureau inquiries, and that Wells Fargo will issue and track reimbursement payments. 

Q.7. As was asked at the hearing, are you confident that this type 

of fraudulent activity does not exist in other Wells business lines? 

Have you discovered other types of misconduct involving other 

products aside from credit cards or basic banking (such as misconduct related to applications for mortgages or personal or other 

loans, or lines of credit, insurance, or other investment areas)? If 

so, how did the company obtain this information? When was the 

first reported case, how many cases have been discovered, and 

what is the nature of these cases? Have you reported those cases 

to Federal financial regulators? 

88 

A.7. We believe that the activity at issue here was limited to certain team members within the Community Banking Division. 

Q.8. Have you discovered misconduct relating to additional criminal or other misbehavior with the false accounts (such as bank employees using improperly created credit cards accounts for illegal 

purchases)? If so, how did the company obtain this information? 

When was the first reported case, how many cases have been discovered, and what is the nature of these cases? Have you reported 

those cases to Federal financial regulators? 

A.8. Although Wells Fargo can never be fully certain that it has 

identified all team member misconduct, the Company has increased its monitoring and compliance efforts to identify further 

misconduct. In addition, Wells Fargo has made significant changes 

to its policies and practices to prevent misconduct, enhance oversight, expand customer transparency, and improve the customer 

experience. We would like to highlight the following points: 

• We have named a new head of our retail banking business. 

• We have also changed the retail banking business’s risk management processes. This is consistent with the reorganization 

of enterprise functions we have conducted across the Company 

to create a stronger risk and control foundation that allows 

senior team members across the Company to provide more 

independent, credible challenges to how we operate. 

• To this end, we are transitioning a number of control functions out of the lines of business, which includes Community 

Banking, and centralizing them within Wells Fargo’s independent corporate Risk function, which will be responsible 

for sales-practice oversight, as well as establishing an independent Sales Practices Office. 

• We have eliminated product sales goals for all Regional Bank 

team members who serve customers in our retail branches. 

• We have made system and process enhancements, including 

sending automated confirmation emails to our customers every 

time a new personal or small business checking account or a 

savings account is opened; and acknowledgements are also 

sent for credit card applications. We are also working to improve multi-factor authentication to protect our customers’ information, and signatures are captured electronically approximately 99 percent of the time for new checking, savings, and 

credit card applications. In addition, we are closing automatically inactive new deposit accounts that, after 62 days, have a 

zero balance, without assessing a monthly fee. 

• This year alone, we have committed more than $50 million to 

enhanced quality assurance monitoring. 

• We have expanded an independent third-party mystery shopper program, adding risk professionals to provide greater oversight, and expanding our customer complaint servicing and 

resolution process. 

• We are surveying team members to understand their views on 

our Company’s approach to ethics and integrity. 

89 

• We also have commenced the process with our regulators to 

engage an independent consultant to review sales practices in 

Community Banking. In addition, we will be engaging external 

consultants to review sales practices across the Company. 

• And we will be engaging outside independent culture experts 

to help us understand where we have cultural weaknesses that 

need to be strengthened or fixed. 

Q.9. At the hearing you indicated that you met with Ms. Tolstedt 

weekly, but you did not answer how often you talked with her. 

How often did you have conversations with Ms. Toldstedt? At any 

point in your regular conversations or meetings did she raise concerns with you about the firms’ cross-selling focus, sales goals, 

firings related to unauthorized accounts, or other related matters? 

When did she first raise these concerns with you? 

Q.10. You testified that it was in 2013 that the discussion with Ms. 

Tolstedt on this topic made an impression upon you. Does this 

mean that she raised this with you earlier and it did not make an 

impression? Please explain. 

Q.11. Did you ask Ms. Tolstedt when she first learned about this 

wrongdoing? If so, when did you ask her? If you asked her, what 

information did Ms. Tolstedt provide you to when you asked? Did 

you ever ask her why she waited so long before bringing this to the 

attention of other members of senior management? What did she 

say? 

A.9.–A.11. It is our understanding that, from time to time, because 

of Mr. Stumpf’s position, individuals would contact him directly 

and complain about issues and that Mr. Stumpf did receive complaints about sales-practice issues over the years. When Mr. 

Stumpf received such complaints, our understanding is that his 

practice was to forward them to the appropriate internal team, 

such as Human Resources, to address. 

Mr. Stumpf has said that he recalls learning of the increase in 

the number of reports of sales-practice issues in late 2013. 

Additionally, Wells Fargo cannot determine for certain the first 

time Ms. Tolstedt was told that a team member’s employment was 

terminated for committing a sales violation. Like any large employer, Wells Fargo monitors sales-integrity and integrity issues so 

that, as issues came up that needed to be addressed, Ms. Tolstedt 

would be informed about those issues. The ongoing investigation by 

the Independent Directors of the board of directors and others is 

looking carefully at this question. 

Again, please note that the Independent Directors of Wells Fargo’s Board of Directors have launched an investigation into salespractice issues, and that investigation is ongoing. 

Q.12. Please provide the Committee with all communication between you and Ms. Tolstedt on this topic for which a record exists 

from 2007 forward. By way of illustration, this should include communication regarding gaming, pinning, bundling, simulated funding, employee terminations, internal complaints, lawsuits, etc. 

Q.13. As was requested in the hearing, please provide a timeline 

of Wells’ first contact, and subsequent interactions, with the CFPB, 

OCC, and Los Angeles City Attorney’s office. Please provide copies 

90 

of the documents Wells Fargo produced to the CFPB, OCC, the Los 

Angeles prosecutor, and PwC in connection with this matter. 

A.12.–A.13. As Comptroller Curry testified before the Senate Banking Committee on September 20, 2016, Wells Fargo management 

meets regularly with the Office of the Comptroller of the Currency 

(OCC), our prudential regulator, about a variety of issues. Wells 

Fargo immediately cooperated with the OCC upon its first contact 

with the bank concerning these issues. Ultimately that involved addressing Matters Requiring Attention (MRAs) the OCC imposed as 

well as providing relevant documents in 2015. 

Wells Fargo’s General Counsel notified the CFPB of the Los Angeles City Attorney’s lawsuit at or about the time it was filed in 

May of 2015. The CFPB requested information shortly after Wells 

Fargo notified the Bureau of the lawsuit. In June and July 2015, 

Wells Fargo provided information to the CFPB. 

The City Attorney filed its complaint in May 2015. Wells Fargo 

did not have substantive conversations with the City Attorney’s office prior to that time. 

Q.14. Please provide the Committee with all reports prepared internally or by third parties to evaluate policies and practices that 

led to these activities, the extent of these activities, as well as any 

reports to understand and address customer harm, including the 

PwC, Accenture and Skadden studies. 

Q.15. Please provide the Committee with all minutes and all materials related to these activities (including, but not limited to any report prepared by the investigations, compliance, bank secrecy/antimoney laundering, audit or human resources functions) provided to 

members of the Compensation, Risk, and Audit and Exam Committees, as well as the full board, for all meetings for the period 2007 

to the present. 

Q.16. Please provide the Committee with any communication that 

the board of directors, any committee of the board or any individual 

board member had with any government enforcement agency, any 

institution personnel or other board member, regarding any matter 

relating to the activities. 

Q.17. Please identify the positions held by the personnel in the corporate General Counsel’s office and other senior management 

offices that are involved with complaints by employees, former employees and customers that are filed in court and are subject to 

negotiation or arbitration and that allege or refer to the activities 

associated with the misuse of customer personal information or the 

opening of unauthorized accounts as well as any other practices 

used to further those activities, including but not limited to sales 

incentives and those practices described as pinning, sandbagging, 

bundling, gaming, or like actions. 

Q.18. Please describe the role and level of involvement that such 

personnel (and the General Counsel’s office and other senior management offices to which they belong) have in monitoring, hiring 

outside counsel, directing, negotiating or the decisionmaking in 

those matters, and how such matters are reported up to the General Counsel, senior management, and board members. 

91 

A.14.–A.18. The issues described above would be handled by a 

range of Wells Fargo team members depending on the nature of 

the allegations raised. Wells Fargo’s Office of General Counsel 

monitors all legal claims against the bank and makes appropriate 

staffing decisions, including the use of outside counsel, when 

required. 

Q.19. When asked whether you have referred any of your personnel 

to law enforcement between when you learned about this issue 

until the present, you said that you did when it was required. Can 

you please specify the number of employees that you have referred, 

their names and titles, the agencies to which they have been referred, and the violations for which they were referred? 

Q.20. Please provide the number of Suspicious Activity Reports 

(SARs) related to these activities that were filed for each year from 

2007 to the present. 

A.19.–A.20. Wells Fargo has policies, procedures, and internal controls that are reasonably designed to comply with its legal obligations to monitor, detect, and report suspicious activities. Under 

Federal law, Suspicious Activity Reports (‘‘SARs’’), and any information that would reveal the existence of a SAR, are confidential, 

31 U.S.C. § 5318(g)(2)(A)(i) and 12 C.F.R. § 21.11(k). 

Q.21. As was requested at that hearing, when did you begin to disclose in SEC filings that you had this potentially material adverse 

set of circumstances that could damage your reputational value? 

A.21. Each quarter, we look at the relevant and appropriate facts 

available to us to determine whether a legal matter is material and 

should be disclosed in our public filings. Discerning materiality is 

not a mechanical exercise but rather is a determination based on 

judgments informed by the facts and circumstances known at the 

time the determination is made. 

Based on the facts and circumstances as we knew them at the 

time, we concluded that the sales-practices investigations by the 

Consumer Financial Protection Bureau (CFPB), the Office of the 

Comptroller of the Currency (OCC), and the Los Angeles City Attorney were not material. This was a considered determination 

based upon what we understood at the time these investigations 

were occurring. 

As part of our ongoing review process, we continued to evaluate 

the ongoing developments since the announcement of the settlements to determine whether any filings or disclosures should be 

made. In conjunction with our Form 8–K filing on September 28, 

2016, announcing our former CEO John Stumpf’s and our former 

Community Banking head Carrie Tolstedt’s forfeiture of their 

unvested equity awards, we determined that it was appropriate to 

disclose the relevant legal developments that had occurred since 

the announcement of the settlements. As noted in our Form 8–K, 

these included ‘‘formal or informal inquiries, investigations or examinations’’ from ‘‘[F]ederal, State, and local government agencies, 

including the United States Department of Justice, and State attorneys general and prosecutors’ offices, as well as Congressional 

92 

2See Wells Fargo, September 28, 2016, Form 8–K (available online at https://www.sec.gov/ 

Archives/edgar/data/72971/000119312516722259/d266244d8k.htm). 3See Wells Fargo, November 3, 2016, Form 10–Q at 67 (available online at https:// 

www.sec.gov/Archives/edgar/data/72971/000007297116001340/wfc-9302016x10q.htm). 

committees . . . ’’2 Furthermore, our Form 10–Q filing on November 3, 2016, contained additional disclosures concerning sales practices matters, including an update to our legal actions disclosures 

and the addition of a new risk factor summarizing the legal developments and related events that had occurred since the announcement of the settlements and noting the potential that ‘‘negative 

publicity or public opinion resulting from these matters may increase the risk of reputational harm to our business . . . ’’3 We will 

continue to review developments related to sales practices matters 

and make additional disclosures as the facts and circumstances 

warrant. 

Employees 

Q.22. Please provide the Committee with information on the 

following items for each year from 2007 to the present for the Community Banking Group and all of Wells Fargo, broken out by position (e.g., tellers, bankers, branch managers, district managers, 

regional managers, and senior management): 

a. the number of employees terminated for engaging in, encouraging or tolerating such activities; 

b. the number of employees who were terminated because they 

did not meet sales quotas; 

c. the number of employees who resigned or retired or were 

asked or instructed to resign or retire for engaging in, encouraging or tolerating such activities; 

d. the number of employees who were subject to internal disciplinary measures for engaging in, encouraging or tolerating 

such activities; and 

A.22.a.–d. From 2011 to 2015, approximately 5,300 team members 

were terminated for certain sales-integrity violations. The majority 

of the terminated team members held banker, management, or 

other functionally similar positions. Approximately 1,000 were terminated each year. For example, investigations by the Corporate 

Investigations group in 2013 resulted in the termination of 1,245 

Community Banking team members. That is approximately 1 percent of Wells Fargo’s total population of Community Banking 

employees. 

Approximately 65 percent of the terminated team members were 

in Personal Banker positions or functionally similar roles and 7 

percent were in Teller positions. In addition, we terminated the 

employment of over 480 team members in supervisory positions, including store managers and persons up to three levels above bankers and tellers, when investigations have found that those team 

members engaged in or directed improper sales practices or exhibited excessive pressure and did not respond promptly and decisively to change their behavior. All of these team members were 

terminated for sales-integrity violations, not for failing to meet 

product sales quotas. 

93 

Wells Fargo cannot quantify with any degree of confidence how 

many team members were disciplined solely for not meeting sales 

goals. Wells Fargo has safeguards in place to help ensure that 

managers remain focused on assessing team members’ overall performance in helping customers succeed financially, not just whether they meet an individual sales goal. This includes a strong performance management program, which provides for coaching and 

feedback to help team members succeed and involvement of Human 

Resources in disciplinary decisions. 

Wells Fargo team members who believe they were disciplined for 

not meeting sales goals can raise those concerns through a number 

of different channels, including through their management chain, 

Human Resources, or the EthicsLine. Moreover, Wells Fargo has 

established a process to enable former team members who contact 

the Company today to request a review of their termination, even 

if they did not utilize the Company’s termination appeal and review processes at the time of their departure. Former team members who did utilize the Company’s appeal processes in the past 

will be provided with an additional review. Former team members 

who express interest in reemployment and are deemed to be eligible for reemployment through this review process will be able to 

work with a special recruiting team to assist in exploring opportunities at Wells Fargo. 

Q.22.e. Please provide the Committee with information on the median pay by position for each year from 2007 to the present for the 

Community Banking Group and all of Wells Fargo, broken out by 

position (e.g., tellers, bankers, branch managers, district managers, 

regional managers, and senior management). 

A.22.e. Below is a table that provides the median Full Time Equivalent (FTE) base pay for positions within the Regional Bank from 

2007 through September 1, 2016. In addition, all salaried and 

hourly team members classified as regular or part-time (i.e., those 

who are regularly scheduled to work 17.5 hours or more per week) 

are eligible for Wells Fargo-sponsored benefits, including tuition reimbursement, healthcare insurance, dental insurance, vision insurance, life insurance, short- and long-term disability, 401(k) plan, 

and paid parental leave. 

94 

Q.23. Please provide the Committee with any documentation related to sales quality metrics used by compliance, marketing, or 

any other unit within the Community Banking Division to evaluate 

employees’ performance. Please provide documentation of how 

these metrics changed between 2007 and the present. 

Q.24. Please also provide copies of written policies or procedures 

that outline how Wells Fargo disciplined employees that did not 

meet their sales quotas from 2007–2015. Finally, please provide 

your plans for making these employees whole. 

A.23.–A.24. From 2011 to 2015, approximately 5,300 team members were terminated for certain sales-integrity violations. The majority of the terminated team members held banker, management, 

or other functionally similar positions. Approximately 1,000 were 

terminated each year. For example, investigations by the Corporate 

Investigations group in 2013 resulted in the termination of 1,245 

Community Banking team members. That is approximately 1 percent of Wells Fargo’s total population of Community Banking employees. 

Approximately 65 percent of the terminated team members were 

in Personal Banker positions or functionally similar roles and 7 

percent were in Teller positions. In addition, we terminated the 

employment of over 480 team members in supervisory positions, including store managers and persons up to three levels above bankers and tellers, when investigations have found that those team 

members engaged in or directed improper sales practices or exhibited excessive pressure and did not respond promptly and 


23001001.eps
95 

decisively to change their behavior. All of these team members 

were terminated for sales-integrity violations, not for failing to 

meet product sales quotas. 

Wells Fargo cannot quantify with any degree of confidence how 

many team members were disciplined solely for not meeting sales 

goals. Wells Fargo has safeguards in place to help ensure that 

managers remain focused on assessing team members’ overall performance in helping customers succeed financially, not just whether they meet an individual sales goal. This includes a strong performance management program, which provides for coaching and 

feedback to help team members succeed and involvement of Human 

Resources in disciplinary decisions. 

Wells Fargo team members who believe they were disciplined for 

not meeting sales goals can raise those concerns through a number 

of different channels, including through their management chain, 

Human Resources, or the EthicsLine. Moreover, Wells Fargo has 

established a process to enable former team members who contact 

the Company today to request a review of their termination, even 

if they did not utilize the Company’s termination appeal and review processes at the time of their departure. Former team members who did utilize the Company’s appeal processes in the past 

will be provided with an additional review. Former team members 

who express interest in reemployment and are deemed to be eligible for reemployment through this review process will be able to 

work with a special recruiting team to assist in exploring opportunities at Wells Fargo. 

Q.25. Please provide the States and Zip Codes of the Wells Fargo 

branches where each of the 5,300 employees were terminated. 

A.25. Wells Fargo team members’ employments were terminated in 

the following States (and District of Columbia): 

Alabama 

Alaska 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

Florida 

Georgia 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

96 

Nebraska 

Nevada 

New Jersey 

New Mexico 

New York 

North Carolina 

North Dakota 

Ohio 

Oregon 

Pennsylvania 

South Carolina 

South Dakota 

Tennessee 

Texas 

Utah 

Virginia 

Washington 

Washington, DC 

Wisconsin 

Wyoming 

Please see Appendix I for the list of Zip Codes of the affected 

branches. 

Q.26. What was Wells Fargo’s policy on the employees who reported concerns to their managers, human resources division or 

used the hotline and were fired? Please share with the Banking 

Committee any internal memos, or pertinent exchanges, outlining 

the strategy for firing employees who raised concerns. 

Q.27. At the hearing, you indicated that employee ethics complaints were handled by an outside firm and to resolve an issue an 

employee would not be confronted by his or her supervisor. Please 

provide a detailed description of the ethics complaint process in 

2007, and any subsequent changes to it. 

A.26.–A.27. It has never been a policy or practice of Wells Fargo 

to terminate team members who voiced their concerns to managers, 

the human resources division, or through the ethics hotline. We are 

aware that certain former team members are making these allegations and we take them very seriously. We are currently investigating the issue. 

Wells Fargo has long had internal processes in place for team 

members to raise issues or concerns through multiple channels, including managers, HR, Compliance and/or the EthicsLine. We encourage team members to speak up if they experience or witness 

something that makes them feel uncomfortable and have measures 

in place to protect team members from retaliation. The EthicsLine 

provides team members with a confidential way to report possible 

violations of Wells Fargo’s Code of Ethics and Business Conduct or 

any laws, rules or regulations. Team members have the option to 

remain anonymous through the EthicsLine. It is available to all 

team members (U.S. and international) 24-hours a day, 7-days a 

week, via toll-free telephone or online Web reporting. The 

EthicsLine has been operated and staffed by a third-party vendor 

since its inception in 2004, and translation services are available. 

97 

This process helps ensure team member confidentiality and preserves anonymity when requested. 

All team members who call the EthicsLine are provided with an 

EthicsLine ID that is associated with their EthicsLine Report. 

Team members who elect to remain anonymous are asked to either 

call back to the EthicsLine or log into the EthicsLine Web Portal 

in 10 calendar days to provide additional information or answer 

any questions relating to their report. To further protect the integrity of the confidential hotline, the vendor does not record any data 

related to the incoming telephone calls or Web reports. Team members who self-identify are advised that since they provided their 

name and contact information, Wells Fargo now has the option to 

contact them directly if needed. They are also told they can call the 

EthicsLine at any time to provide additional information. 

Interview specialists with the EthicsLine vendor listen, ask clarifying questions if necessary, and then write a summary report of 

the call. The summary is then provided to Wells Fargo’s Office of 

Global Ethics and Integrity for assessment and referral to the appropriate review team. 

Wells Fargo takes measures to protect team members from retaliation, including maintaining confidentially during the review process. Specifically: 

• All reports of suspected unethical or illegal activities are taken 

seriously and measures are in place to ensure concerns are 

promptly evaluated and reviewed. 

• The review of concerns in many cases will require a fact-finding that may involve interviews with individuals the Company 

determines may have information relevant to the underlying 

issue or concern. However, management of any review and updates regarding facts, progress and outcomes are limited to 

only those who have a legitimate business need to know. 

• It may be possible in some cases for the researcher/investigator 

to determine the identity of the team member due to the nature of the issue reported and the information shared by the 

team member. However, the researcher/investigator would not 

ask the team member to self-identify as the person who made 

the EthicsLine Report. 

In no circumstances is the team member told the specifics about 

any corrective action taken against another team member as it is 

not Wells Fargo’s practice to discuss confidential information regarding one team member with another. Wells Fargo will only 

share information regarding the review, including any corrective 

action taken, with those who have a legitimate business need to 

know. 

Wells Fargo’s Nonretaliation Policy, which is available to all 

team members in the Team Member Handbook and reiterated in 

the Code of Ethics and Business Conduct, mandates that no team 

member may be retaliated against for providing information in 

good faith about suspected unethical or illegal activities, including 

fraud, securities law, or regulatory violations, or possible violations 

of any Wells Fargo policies. Retaliatory behavior has always been, 

and continues to be, grounds for corrective action, up to and including termination of employment. Team members who believe that 

98 

they or someone else has been retaliated against for reporting an 

issue are instructed to report it as soon as possible to their supervisor or manager, H.R. Advisor team, or Corporate Employee Relations, to ensure that a prompt review is conducted and, where 

appropriate, corrective action is taken. Team members can also report retaliation concerns via the EthicsLine. 

Wells Fargo has additional safeguards to prevent any form of 

retaliation, including the fact that Wells Fargo’s Human Resources 

personnel are typically consulted in every termination decision. Additionally, team members whose employments have been terminated may utilize Wells Fargo’s termination review process to request to have that decision reviewed by a Corporate Employee 

Relations professional who was not previously consulted in the termination decision. 

To further strengthen our program and foster an environment 

where all team members feel comfortable escalating matters without fear of retaliation, we are making improvements to the program, including: 

• Enhancing our Company-wide standards to ensure a consistent 

team member experience and safeguards, regardless of the 

type of issue reported or which group is conducting the 

research or investigation. 

• Reinforcing our standards and processes that protect team 

members from retaliation. This will include requiring that the 

appropriate review unit evaluating the underlying issues or 

concerns must provide a reminder of the Company’s Nonretaliation Policy to all individuals interviewed or contacted as 

part of the review, as well as all managers who may be part 

of any corrective action decisions arising out of the review. 

• Ensuring that reports of suspected unethical or illegal activities are evaluated, investigated, and appropriately escalated in 

a timely and confidential manner by continually monitoring 

and refining our EthicsLine research and investigative processes. This will include the adoption of Speak Up, Investigative, and Nonretaliation Standards to help guide the research 

and investigative process. 

• Creating additional training, communications, and resources to 

help team members understand their responsibilities under the 

Code of Ethics and Business Conduct and related policies, the 

importance of speaking up, and what to do when faced with an 

ethical dilemma. 

With respect to allegations from former team members who claim 

that their employment was terminated or they were demoted after 

refusing to open unauthorized accounts and/or after reporting concerns to the EthicsLine, we are reviewing each of the situations. As 

described above, team members have the option to raise concerns 

anonymously, so Wells Fargo likely will not have records identifying former team members who raised concerns anonymously 

through the EthicsLine. Nevertheless, Wells Fargo is taking steps 

to review such termination/demotion decisions where possible and 

has engaged outside consultants to help us with this review. Moreover, Wells Fargo has established a process to enable former team 

members who contact the Company today to request a review of 

99 

4 Hollywood, FL, Town Hall, February 5, 2014 (Transcript on file). 

their termination, even if they did not utilize the Company’s termination appeal and review processes at the time of their departure. 

Former team members who did utilize the Company’s appeal processes in the past will be provided with an additional review. 

Former team members who express interest in reemployment and 

are deemed to be eligible for reemployment through this review 

process will be able to work with a special recruiting team to assist 

in exploring opportunities at Wells Fargo. 

Q.28. During your testimony, you consistently cited your participation in ‘‘Town Hall’’ style meetings to explain how you communicated to employees that they should not, under any circumstances, create false accounts for customers in order to meet 

sales quotas. Please provide transcripts from all Town Hall-style 

meetings that you participated in from 2011 to 2015. Please demarcate all areas of those transcripts in which you clearly state that 

employees should not be defrauding customers. 

A.28. Mr. Stumpf addressed the unauthorized accounts issues during a townhall meeting following the December 2013 Los Angeles 

Times story. During that townhall, Mr. Stumpf informed team 

members he ‘‘want[ed] to address’’ the issues discussed in the article ‘‘head on.’’ Of note, he said: 

Our culture is about service. We want to help our customers succeed financially, and we’re not in the product pushing business. Think of . . . yourselves . . . no matter what business you’re in, whether you help those who 

service our external customers or if you serve them directly, I think of all 

of us as being financial physicians. We meet our customers . . . and we 

have a conversation with them. And we listen carefully for their needs. And 

once we discover a need, we then through our skill set, understanding, and 

experience, our value-add, we offer a product or a service or a series of 

products and services to help them. We don’t try to sell them something 

that they don’t need or don’t want . . . 

Here’s my ask of you and for everybody listening today. If you believe that 

your team, your boss, your boss’ boss somehow is putting pressure on you 

to sell things that your customers don’t want, don’t need, raise your hand 

. . . And if you’re not comfortable doing that, there’s an anonymous . . . 

EthicsLine, [or you can] talk to somebody in HR. We want to do the right 

thing. We’re in the long-term business.4

Q.29. Were fraudulent accounts created in one branch location 

from the account information of customers of another branch? Did 

employees establish accounts or claim to sell additional products to 

customers in another State? 

A.29. Wells Fargo customers frequently utilize multiple branches 

and will themselves open accounts at different locations at different 

times. Some potentially unauthorized accounts were opened at different locations than other accounts owned by the same customer, 

but we are not aware whether that is due to customer choice or 

banker conduct. We are not aware of unauthorized accounts being 

opened in States other than those where the customer banked, 

however, our internal review is ongoing. 

Q.30. Did employees establish accounts or claim to sell additional 

products for minor children? 

100 

A.30. Wells Fargo does not currently know the extent to which unauthorized accounts were opened in the name of minor children, 

however, our internal review is ongoing. 

We would note that the Consumer Financial Protection Bureau 

(CFPB) and Office of the Comptroller of the Currency (OCC) Consent Orders both require Wells Fargo to retain the services of an 

independent consultant and to develop redress and reimbursement 

plans that will identify the population of consumers who may have 

been affected by improper sales practices. 

Q.31. During your testimony, you denied that the Wells Fargo incentive structure was responsible for the widespread fraudulent activity at your bank. Further, you and your colleagues at the bank 

have stated that the 5,300 fired employees acted without guidance 

from management and were rogue employees. In comparison, little 

has been reported on the bonuses or incentive structures for regional and branch managers. What bonuses did Wells Fargo pay to 

regional and branch managers for successful (either meeting or exceeding their sales quotas) cross-selling numbers? 

A.31. Prior to our elimination of product sales goals, Regional Bank 

store managers in our retail branches earned incentive compensation based in part on the store’s performance relative to store goals. 

If a particular store met its sales goal, the store manager would 

have been eligible for bonus compensation. The store manager 

would have been eligible for additional bonus compensation for exceeding the goal at various levels. For the purposes of context, between 2011 and 2014, the median incentive payout as a percentage 

of total salary earned by store managers based on sales-related performance objectives (versus incentive opportunities provided for 

service and other performance objectives) declined from 8.5 percent 

in 2011 to 4.0 percent in 2014. The median payout earned by district managers, who supervise store managers, also declined between 2011 and 2014, from 13.1 percent to 3.0 percent. 

Consumer Harm 

Q.32. Please provide a State-by-State list of the number of Wells 

Fargo customers that you have determined may have been harmed 

by this misconduct. 

A.32. We asked PwC to analyze approximately 82 million deposit 

accounts for instances of potential simulated funding and approximately 11 million credit card accounts for instances of lack of authorization. The accounts reviewed were opened between 2011 and 

2015. Of the accounts reviewed, PwC found that approximately 

623,000 consumer and business credit card accounts could have 

been [emphasis added] unauthorized, and approximately 1.5 million deposit accounts could have [emphasis added] experienced 

simulated funding, that is, the unauthorized deposit and withdrawal of funds intended to create the false appearance that the 

account was being used by the customer. PwC did not [emphasis 

added] conclude that these accounts were unauthorized and/or experienced simulated funding; it just could not rule out these possibilities. 

Below is the State-by-State list of the number of deposit and 

credit card accounts that PwC identified, within the total of 

101 

approximately 2.1 million accounts identified. Although PwC 

identified accounts in all 50 states, for the reasons discussed it is 

not clear that unauthorized credit card accounts were actually 

opened and/or deposit accounts experienced simulated funding in 

all 50 States: 


23001002.eps
102 

Q.33. As requested at the hearing, please provide the proportion of 

customers who were harmed by Wells’ misconduct who are: elderly, 

racial/ethnic minorities, and military/veterans. 

Q.34. Please provide the number of customers identified by the 

PwC study as having had a fraudulent account opened by age cohort: 0–17; 18–30, 31–40, 41–50, 51–60, 61–70, 71–80, 81–90, 91+. 

A.33.–A.34. Wells Fargo collects date-of-birth data and our initial 

review indicates that elderly customers were not overrepresented 

among the population of customers who may have had an unauthorized deposit account opened in their name. 

Of the 2.1 million accounts that PwC identified, 5,089 accounts 

were associated with customers who are identified in the Defense 

Manpower Data Center (DMDC) as being active duty, reserve, or 

National Guard. In other words, less than 0.3 percent of the accounts identified by PwC were associated with customers who are 

identified in the DMDC. 

We do not collect data concerning race or ethnicity during the application process. 

Q.35. Please provide the Committee with a list of the written policies for 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, and 2015 

that Wells Fargo provided to consumers upon their opening of a 

bank account or credit card account that explain the fees associated 

with those accounts. 

Q.36. Will Wells Fargo be providing any nonmonetary compensation (such as free credit reporting, ID protection, or discounted or 

free Wells Fargo services) to customers? Please explain. 

Q.37. Does Wells Fargo have a policy for assisting customers who 

had their identification stolen and faced significant costs due to actions taken by Wells Fargo employees? Please explain. 

A.35.–A.37. Wells Fargo is working very hard to remediate harm 

that may have been caused to our customers. To that end, pursuant to the CFPB and OCC Consent Orders, Wells Fargo will retain 

the services of an independent consultant and develop redress and 

reimbursement plans to identify the population of consumers who 

may have been affected by improper sales practices. We fully expect that, once approved by our regulators, the redress and reimbursement plans will encompass various forms of harm, including 


23001003.eps
103 

harm related to credit bureau inquiries, and that Wells Fargo will 

issue and track reimbursement payments. 

Wells Fargo is contacting credit card customers for the purpose 

of determining whether they want their credit cards and to help us 

identify customers who may have an unauthorized credit card account. We are not using these calls to promote other products or 

services. Our script simply informs customers that we are calling 

them about an inactive account and asks whether they want the 

account. 

For those customers who want the credit card, the account will 

remain open. For any customer who does not want their credit 

card, Wells Fargo is closing the account and correcting credit bureau reporting. This means we are removing the account from the 

customers’ credit reports going forward and suppressing the existence of the inquiry so that it is not viewable to other lenders or 

requestors (the Fair Credit Reporting Act prohibits us removing 

the inquiry altogether and it will still be visible to customers pulling their own credit reports). 

Moreover, we are in the process of determining how many customers obtained a credit product, with Wells Fargo or another company, during the time period in which their credit score may have 

been impacted by an unauthorized credit inquiry or existence of the 

trade line. While it may be difficult to calculate the precise impact 

for every customer, our intent is to err on the side of the customer 

and compensate them for impacts to their other credit accounts. 

This could include impacts on pricing, line or loan size, or credit 

decision. We have allocated significant resources to this effort and 

are working with the credit bureaus to develop a plan for submission to our regulators. 

Going forward, Wells Fargo is voluntarily expanding its review 

of accounts to include 2009 and 2010. Wells Fargo also provides resources to help customers request free credit reports and is offering 

a no-cost mediation option to impacted customers to help identify 

and remediate any other forms of harm. 

Ultimately, if any customer has any questions or concerns regarding his or her accounts—regardless of when those accounts 

were opened—he or she is invited to contact us so that Wells Fargo 

can address those questions or concerns. 

Q.38. You indicated at the hearing that you would consult with 

your team as to any data limitations that would prevent you from 

identifying customers harmed earlier than 2009. What are the results of those conversations? How far back can Wells Fargo conduct 

an examination similar to the one conducted by PwC? 

A.38. We appreciate and share your concern that any and all customers who may have been impacted should be identified. Therefore, we are continuing to examine ways to discern if any unauthorized accounts were opened prior to 2009. As an important initial 

step, we are notifying all of our consumer and small business Community Banking customers with a checking, savings, credit card, or 

line of credit account of this issue; we are also inviting and 

encouraging them to speak with a Wells Fargo representative if 

they have any questions or concerns about their accounts. Please 

also note that the Independent Directors of Wells Fargo’s Board of 

104 

Directors have launched an investigation into these issues, and 

that investigation is ongoing. 

Further, we would note again that pursuant to the CFPB and 

the OCC Consent Orders, Wells Fargo will retain the services of an 

independent consultant and develop redress and reimbursement 

plans to identify the population of consumers who may have been 

affected by improper sales practices. We fully expect that, once approved by our regulators, the redress and reimbursement plans will 

encompass various forms of harm, including harm related to credit 

bureau inquiries, and that Wells Fargo will issue and track reimbursement payments. 

Q.39. As requested during the hearing, please provide specific information related to overdraft protection products, including sales 

goals related to overdraft, the number of consumers who overdrew 

their accounts, the number of overdraft protection products sold 

without customer knowledge, and dollar amount of overdraft fees 

charged to consumers related to this episode. 

A.39. Wells Fargo is committed to providing only those services 

that our customers need or want. Overdraft protection is one of 

those services. Customers are encouraged to contact us if they have 

any issues or concerns. 

Q.40. During the hearing you were asked how Wells Fargo’s cross 

selling and sales targets compare to its competitors. Please provide 

your understanding of this answer. 

A.40. Wells Fargo is not aware of the degree to which our competitors use cross-sell strategies. 

Restoring the Credit Scores of Wells Fargo Customers 

Q.41. Has Wells Fargo contacted and instructed Transunion, 

Equifax, and Experian, and any other credit bureaus, to determine 

and remediate any possible harm resulting from the opening of, 

and activity on, unauthorized credit cards? Please provide the 

date(s) of any outreach by Wells Fargo to these bureaus, the instructions and information provided to the bureaus, and the proposed remediation for those customers who may have suffered 

harm. 

Q.42. Your credit restoration plan provides Wells Fargo with the 

opportunity to push new products onto customers, urge them to 

hold on to credit cards they may or may not have wanted, and 

gather additional information from customers unrelated to closing 

fraudulent accounts—opportunities that benefit Wells Fargo, not 

affected customers. Please provide a copy of the scripts that your 

company will use to contact affected customers, highlighting any 

instance in which Wells Fargo attempts to convince customers to 

purchase new products or retain (potentially unwanted) accounts. 

Q.43. Senator Tester asked you how you planned to identify and 

provide restitution to customers whose credit ratings were negatively impacted because of Wells Fargo employees’ actions against 

its customers, including but not limited to transactions with other 

financial institutions. You stated that you would call each of Wells’ 

credit card customers to identify any who have been harmed and 

‘‘have [y]our team come back and report to you how we’re working 

105 

on it.’’ Please provide a detailed explanation of how Wells Fargo 

plans to identify and provide remediation to these customers, and 

to other customers who may not have had credit cards, but whose 

credit may have been harmed due to other products. 

Q.44. How will you confirm that inaccurate information on your 

customers’ credit files has been removed? It’s one thing to say 

they’re removing the inaccurate information, it’s another to ensure 

the bureaus go ahead and actually remove it. 

A.41.–A.44. Wells Fargo is working very hard to remediate harm 

that may have been caused to our customers. To that end, pursuant to the CFPB and OCC Consent Orders, Wells Fargo will retain 

the services of an independent consultant and develop redress and 

reimbursement plans to identify the population of consumers who 

may have been affected by improper sales practices. We fully expect that, once approved by our regulators, the redress and reimbursement plans will encompass various forms of harm, including 

harm related to credit bureau inquiries, and that Wells Fargo will 

issue and track reimbursement payments. 

Wells Fargo is contacting credit card customers for the purpose 

of determining whether they want their credit cards and to help us 

identify customers who may have unauthorized credit card accounts. We are not using these calls to promote other products or 

services. Our script simply informs customers that we are calling 

them about an inactive account and asks whether they want the 

account. 

For those customers who want the credit card, the account will 

remain open. For any customer who does not want their credit 

card, Wells Fargo is closing the account and correcting credit bureau reporting. This means we are removing the account from the 

customers’ credit reports going forward and suppressing the existence of the inquiry so that it is not viewable to other lenders or 

requestors (the Fair Credit Reporting Act prohibits us removing 

the inquiry altogether and it will still be visible to customers pulling their own credit reports). 

Moreover, we are in the process of determining how many customers obtained a credit product, with Wells Fargo or another company, during the time period in which their credit score may have 

been impacted by an unauthorized credit inquiry or existence of the 

trade line. While it may be difficult to calculate the precise impact 

for every customer, our intent is to err on the side of the customer 

and compensate them for impacts to their other credit accounts. 

This could include impacts on pricing, line or loan size, or credit 

decision. We have allocated significant resources to this effort and 

are working with the credit bureaus to develop a plan for submission to our regulators. 

Going forward, Wells Fargo is voluntarily expanding its review 

of accounts to include 2009 and 2010. Wells Fargo also provides resources to help customers request free credit reports and is offering 

a no-cost mediation option to impacted customers to help identify 

and remediate any other forms of harm. 

Ultimately, if any customer has any questions or concerns regarding his or her accounts—regardless of when those accounts 

were opened—he or she is invited to contact us so that Wells Fargo 

can address those questions or concerns. 

106 

5Wells Fargo, ‘‘Independent Directors of Wells Fargo Conducting Investigation of Retail Banking Sales Practices and Related Matters (press release)’’ (Sept. 27, 2016) (available online at 

https://www.wellsfargo.com/about/press/2016/independent-directors-investigationl0927/). 6Wells Fargo, September 27, 2016 Form 8–K, (available online at https://www.sec.gov/Archives/edgar/data/72971/000119312516722259/d266244d8k.htm). 

Senior Executive Compensation 

Q.45. Please provide any board or Compensation Committee minutes describing (1) discussion of the pending Wells Fargo settlement and any impact it had on Ms. Tolstedt’s decision to retire; (2) 

discussion of termination or any other penalty for Ms. Tolstedt in 

relation to her role in the Wells Fargo actions that resulted in the 

CFPB settlement; and (3) the impact of Ms. Tolstedt’s decision to 

retire on her final compensation. 

Q.46. Fortune magazine reported that the decision to allow Ms. 

Tolstedt to retire rather than terminating her resulted in her retaining an extra $45 million in compensation. Is this report accurate? If not, which portions are incorrect? How much did Ms. 

Tolstedt earn or retain as compensation because of her retirement 

that she would not have been allowed to earn or retain if she had 

been terminated? 

Q.47. What are the criteria that the board will use to determine 

all elements of Ms. Tolstedt’s 2016 compensation? 

A.45.–A.47. Ms. Tolstedt has left Wells Fargo. She has agreed to 

not exercise any outstanding stock options previously awarded by 

Wells Fargo until the completion of the board of directors’ investigation and that, at the conclusion of this investigation, the board 

(or the Independent Directors of the board or the Human Resources 

Committee, through board delegation) will have the authority to 

determine the extent to which such options will be forfeited.5

The board’s Independent Directors have determined that all of 

Ms. Tolstedt’s unvested equity compensation, valued at approximately $19 million, would be forfeited, and that she would not receive a bonus for 2016 or any retirement enhancements or severance package in connection with her separation from Wells Fargo. 

No incentive compensation was granted to Ms. Tolstedt as a result 

of her separation from the Company, and none of her equity 

awards will be ‘‘triggered’’ or otherwise increased or accelerated by 

her separation. Ms. Tolstedt could be subject to further compensation and other actions based upon the results of the Independent 

Directors’ investigation.6

Wells Fargo has multiple recoupment or clawback policies and 

provisions in place that are applicable to Wells Fargo’s current and 

former executive officers, including Ms. Tolstedt. 

107 

7 Adopted June 15, 2009 and extended February 2010. 


23001004.eps

Poliry/Pro\islon Trigger for Clawbark or Compensation Imparted 

Recoupment Subject to Rerowry Population 

Uneamed Misconduct by an executive Any bonus or incentive Executive 

Compensation that connibutes to !he compensation that was Officers 

Recoupment Company ha,~ug to restate all based ou achievement 

Policy or a significant portion of ifs of financial resuhs that 

fmancial statements. were restated 

downward. 

Extended Clawback Incentive compensation was Incentive compensation Execmive 

Policy based onmatetially inacclU'ate that was based on Officers and 

fmancial infommion or other matetially inaccmare cenain 01her 

matetially inaccurate financial infonuation or highly 

perf01mance menic ctiferia. other matetially compensated 

whether or not the executive inawu·ate petfonuance employees 

was responsible. menic ctitetia. 

Petfonuauce-Based • Misconduct whicb has or Resnicted Share Rights Executive 

Vesting Conditions migbt reasonably be ("RSR") awards and Officers 

expec!ed to have Perfom1ance Share awards 

repurational or other 2l<mted to named Other team 

batm to the Company or xecmives ru·e subject to members in 

any conduct tbat ancellation if the Boat·d receipt of 

constimtes "cause . 

.. ofDirec1ors · Human RSRs as pan 

• Misconduct or Resom·ces C01mninee ofatmual 

collllllission of a detenniues tllal a nigger incentive/ 

material error that causes event has occmred. bonus awards. 

or migbt be reasonably 

expected to cause 

significant financial or 

repma1ional bann to the 

Company or the 

execmive · s business 

group. 

• Improper or grossly 

negligem f.1ilure. including 

in a supe.tvisory capacity. to 

identify. escalate. monitor or 

manage. in a timely manner 

and as reasonably expected. 

tisks material to the 

Company or the executive· s 

business group. 

• An award was based on 

nmerially inaccurate 

petfonnance menics. 

whether or not the 

executive was 

responsible for rhe 

inaccm·acy. or 
108 

The board (or the Independent Directors or the Human Resources Committee, through board delegation) will assess the relevant facts and circumstances, the award terms, and Wells Fargo’s 

recoupment and clawback policies to determine whether to cancel 

or clawback any more of Ms. Tolstedt’s incentive compensation. 

Q.48. You stated at the hearing that you are ‘‘not an expert in compensation’’ and that you do not sit on the Wells Fargo Board’s Compensation Committee. To help us better understand your role, as 

Chairman of the Board, in contributing to compensation decisions, 

please provide a description of the process by which your board 

makes decisions related to compensation and supply any written 

policies or guidance on the role of board members and Chairman 

on these matters. Specifically, please comment on Wells Fargo’s 

most recent proxy statement which states on page 51 that part of 

Ms. Tolstedt’s incentive compensation award was determined based 

on your assessment of her 2015 performance. 

A.48. In deciding executive compensation, the Human Resources 

Committee of the Board of Directors (HRC) is guided by four compensation principles that have historically governed its pay decisions for named executives: 

1. Pay for Performance: Link compensation to Company, business line, and individual performance so that superior performance results in higher compensation and inferior performance results in lower compensation; 

2. Foster Risk Management Culture: Structure compensation to 

promote a culture of prudent risk management consistent 

with the Company’s Vision and Values; 

3. Attract and Retain Top Executive Talent: Offer competitive 

pay to attract, motivate, and retain industry executives with 

the skills and experience to drive superior long-term Company 

performance; and 

4. Encourage Creation of Long-Term Stockholder Value: Use performance-based long-term stock awards with meaningful and 


23001005.eps
109 

8Wells Fargo, 2016 Proxy Statement, at 38–39, 52 (available online at https://www.sec.gov/ 

Archives/edgar/data/72971/000119312516506771/d897049ddef14a.htm). 9Wells Fargo, 2016 Proxy Statement, at 53–54 (available online at https://www.sec.gov/Archives/edgar/data/72971/000119312516506771/d897049ddef14a.htm). 

lasting share retention requirements to encourage sustained 

stockholder value creation. 

In 2015, the HRC maintained the overarching compensation 

structure for named executives that it had used in the past, including the relative balance between annual fixed compensation and 

annual variable ‘‘at-risk’’ compensation. The HRC also continued to 

weight long-term over annual compensation, and equity over cash 

compensation. Within this framework, the HRC awarded the following primary elements of compensation to the Company’s named 

executive officers for 2015: base salary, annual incentive, and longterm equity-based incentive. 

In 2015, Ms. Tolstedt’s 2015 annual incentive award was determined by the HRC based on a broad set of factors, including the 

Company’s financial performance, the Company’s progress on key 

strategic priorities, compensation of similarly situated executives in 

the Labor Market Peer Group (where such information was available), success in achieving strategic objectives in the Community 

Banking division, Ms. Tolstedt’s ability to operate as a member of 

a team, Ms. Tolstedt’s success against her objectives for 2015, 

which included the financial performance of her respective business 

line and a risk and other qualitative assessment of how those results were achieved, as well as the recommendations of Mr. Stumpf 

based on his assessment of her 2015 performance.8

The HRC awarded Ms. Tolstedt long-term incentive compensation in the form of performance shares granted in February 2015 

and RSRs granted in July 2015. In granting the 2015 Performance 

Shares and establishing their terms, the HRC considered the appropriateness of this award structure in the context of multiple factors including applicable regulatory guidance, the quality of the 

Company’s performance from a risk management perspective, and 

the need for continued leadership over the 3-year performance period. The HRC determined the dollar value of the Performance 

Share grants, taking into account individual experience and responsibilities, to provide an opportunity to realize variable compensation commensurate with performance and with the intention 

that total compensation be competitive with total compensation for 

comparable positions and performance at peers. The HRC granted 

the July 2015 RSRs following a mid-year evaluation of the senior 

executives’ compensation and contributions to the Company’s 

strong performance as part of an overall, balanced mix of competitive pay and to provide an incentive for those executives to continue their strong and effective leadership, consistent with the 

Company’s compensation principles to pay for performance, to attract, retain, and motivate top executive talent, and to encourage 

the creation of long-term stockholder value.9

Q.49. A recent CNNMoney report indicated that you received millions of dollars in compensation for increasing the number of ‘‘primary consumer, small business, and banking checking consumers’’ 

and for ‘‘reinforcing a culture of risk management and 

110 

10http://money.cnn.com/2016/09/22/investing/wells-fargo-ceo-john-stumpf-200-million/ 

index.html?iid=hp-stack-dom. 11Wells Fargo, 2016 Proxy Statement, at 57 (available online https://www.sec.gov/Archives/ 

edgar/data/72971/000119312516506771/d897049ddef14a.htm). 12Mr. Stumpf agreed to forfeit this award. See Wells Fargo, ‘‘Independent Directors of Wells 

Fargo Conducting Investigation of Retail Banking Sales Practices and Related Matters (press 

release)’’ (Sept. 27, 2016) (available online at https://www.wellsfargo.com/about/press/2016/ 

independent-directors-investigationl0927/. 13Mr. Stumpf agreed to forfeit this award. See Id. 

accountability at the company.’’10 Please provide details on all bonuses or incentive pay that you have received, based on performance related to ‘‘cross-selling,’’ increasing the number of consumers 

or consumer accounts. For each year, provide the total value of all 

such incentives received, and the criteria that qualified you for 

such incentives. 

A.49. As part of their investigation, the Independent Directors and 

the Human Resources Committee will review the extent to which 

Mr. Stumpf’s compensation was based on performance related to 

cross-selling or upon metrics that included unauthorized accounts. 

Q.50. Please describe your full compensation package and benefits 

plan, including base salary, incentive compensation, and any retirement benefits such as a 10b5–1 plan, including the dollar values 

of such packages and benefits. 

A.50. In 2015, Mr. Stumpf received the following compensation:11

Mr. Stumpf participated in, and other Wells Fargo executives 

participate in the same benefit programs generally available to all 

team members, including health, disability, and other benefit programs, which include the Company 401(k) Plan (with a company 

match and potential discretionary profit sharing contribution) and, 

for team members hired prior to July 1, 2009, the Company’s qualified Cash Balance Plan (frozen in July 2009). The Company 

matched up to 6 percent of eligible participants’ certified compensation during 2015 and, in January 2016, the Human Resources 

Committee of the Board of Directors authorized a discretionary 

profit-sharing contribution of 1 percent of each eligible participant’s 


23001006.eps
111 

14Wells Fargo, 2016 Proxy Statement, at v, 55–56 (available online at https://www.sec.gov/ 

Archives/edgar/data/72971/000119312516506771/d897049ddef14a.htm). 15Wells Fargo, 2016 Proxy Statement, at v, 55–56, 59 (available online at https:// 

www.sec.gov/Archives/edgar/data/72971/000119312516506771/d897049ddef14a.htm). 

certified compensation under the Company 401(k) Plan based on 

the Company’s 2015 performance. 

Certain executives, together with team members whose covered 

compensation exceeds IRC limits for qualified plans, also participated in nonqualified Supplemental 401(k) and Supplemental Cash 

Balance Plans prior to those plans being frozen in July 2009. Following the freezing of the plans, the Company no longer makes 

additional contributions for participants in these plans, although 

additional investment income continues to accrue to participants’ 

individual accounts at the rates provided for in the plans. Certain 

executives and certain other highly compensated team members 

also can participate in our Deferred Compensation Plan. Effective 

January 1, 2011, the Company amended this plan to provide for 

supplemental Company matching contributions for any compensation deferred into the Deferred Compensation Plan by a plan participant, including Mr. Stumpf, that otherwise would have been eligible (up to certain IRS limits) for a matching contribution under 

the Company’s 401(k) Plan.14

The HRC has intentionally limited perquisites to executive officers. In 2015, for security or business purposes, the Company provided a car and driver to Mr. Stumpf and from time to time to certain other executives, primarily for business travel and occasionally 

for commuting. In addition, the HRC may from time to time approve security measures if determined to be in the business interests of our Company for the safety and security of our executives 

and other team members. In 2012, the HRC approved residential 

security measures for certain executives and, in 2015, the Company 

paid for the cost of regular maintenance for the previously installed 

home security systems for certain of our executives. From time to 

time the Company may pay the cost for a named executive’s spouse 

to attend a Wells Fargo business-related event where spousal 

attendance is expected. All perquisites for Mr. Stumpf during 2015 

did not exceed $10,000.15

The Company does not provide our executives with 10b5–1 plans, 

and none of our executive officers participate in a 10b5–1 plan related to Wells Fargo common stock. 

Q.51. As was requested of you at the hearing, please provide information on all senior executives at Wells Fargo who suffered any 

financial consequence as a result of the practices at issue here. 

A.51. The Independent Directors of the Board of Directors of Wells 

Fargo announced on September 27, 2016, that they have launched 

an independent investigation into the Company’s retail banking 

sales practices and related matters. A Special Committee of Independent Directors is leading the investigation, working with the 

board’s Human Resources Committee and independent counsel. 

The Independent Directors have taken a number of initial steps 

they believe are appropriate to promote accountability at the Company. They have agreed with Mr. Stumpf that he will forfeit all of 

112 

16Wells Fargo, ‘‘Independent Directors of Wells Fargo Conducting Investigation of Retail 

Banking Sales Practices and Related Matters (press release)’’ (Sept. 27, 2016) (available online 

at https://www.wellsfargo.com/about/press/2016/independent-directors-investigationl0927/). 

his outstanding unvested equity awards, valued at approximately 

$41 million. In addition, he will not receive a bonus for 2016. 

Ms. Tolstedt has left Wells Fargo. She has agreed to not exercise 

any outstanding stock options previously awarded by Wells Fargo 

until the completion of the board of directors’ investigation and 

that, at the conclusion of this investigation, the board (or the Independent Directors of the Board or the Human Resources Committee, through board delegation) will have the authority to determine the extent to which such options will be forfeited. 

On September 27, 2016, the board announced that the Independent Directors had determined that Ms. Tolstedt would forfeit 

all of her unvested equity awards, valued at approximately $19 

million, and that she will not receive a bonus for 2016 and will not 

receive any retirement enhancements or severance package in 

connection with her separation from Wells Fargo. No incentive 

compensation was granted as a result of Ms. Tolstedt’s separation, 

and none of her equity awards will be ‘‘triggered’’ or otherwise increased or accelerated by her separation.16

These initial actions will not preclude additional steps being 

taken with respect to Mr. Stumpf, Ms. Tolstedt or other employees 

as a consequence of the information developed in the investigation. 

Forced Arbitration and Secret Settlements 

Q.52. Please provide a copy of the current basic customer agreement and any other customer agreements that have been in place 

since 2007 for Wells Fargo customers that open credit cards or 

bank accounts. 

Q.53. Between 2007 and September 2016, how many customer 

complaints related to the allegations in the CFPB settlement were 

settled via the arbitration process? (i.e., how many total cases were 

heard?) In how many cases did the arbitrator rule for the customer 

and in how many did the arbitrator rule for Wells Fargo? 

Q.54. In cases where the arbitrator ruled for the customer, what 

remediation was made to customers? What was the average settlement amount? 

Q.55. In cases where customers took cases to arbitration, did secrecy clauses prevent them from making any information about 

their grievances public? 

Q.56. Did Wells Fargo disclose to investors or the public any cases 

where arbitrators ruled in favor of customers in these cases? How 

and when did the company do so? 

Q.57. Between 2007 and 2016, did Wells Fargo settle any cases related to the allegations in this settlement outside the arbitration 

system? If so, how many cases were settled in this fashion? Please 

explain. 

Q.58. As was requested at the hearing, will Wells Fargo commit to 

permitting customers bringing disputes related to these actions to 

bring their claims in court, rather than forcing them into 

arbitration? 

113 

A.52.–A.58. Wells Fargo believes that the use of arbitration is a 

fair and efficient process that serves the needs of both parties. Nevertheless, Wells Fargo is offering a no-cost mediation program to 

customers, in addition to arbitration. We believe these options provide a fair and efficient means of remediating any harm. 

114 


23001019.eps

Appendix I 

Please pro,·ide the states and zip codes of the WeUs Fargo brand1es where each of the 5,300 

employees were temlinated. 

1l1e zip codes of the affected branches are as follows: 

02116 07524 08520 11021 

06405 07601 08530 11514 

06451 07606 08534 11530 

06475 07624 08540 11572 

06492 07652 08619 11787 

06513 07663 08691 17033 

0651 4 07677 08721 17042 

06516 07701 08752 17067 

06525 07719 08755 17101 

06798 07724 08757 17566 

06830 07726 08759 17601 

06831 07733 08805 17901 

06880 07735 08809 18014 

06901 07738 08816 18018 

06905 07746 08817 18020 

07006 07747 08824 18034 

07010 07750 08854 18036 

07016 07753 08861 18041 

07041 07755 08873 18049 

07044 07760 08876 18106 

07052 07762 08884 18252 

07059 07840 08902 18344 

07065 07901 08904 18411 

07083 07920 10017 18643 

07087 07924 10026 18702 

07102 07950 10036 18902 

07110 08026 10520 18938 

07111 08028 10538 18940 

07202 08030 10549 18966 

07208 08052 10562 18969 

07302 08053 10566 18977 

07307 08066 10573 19004 

07410 08075 10594 19010 

07442 08077 10598 19020 

07456 08084 10704 19026 

07470 08096 10707 19044 

07501 08244 10710 19046 

07503 08401 10965 19047 

07522 08505 10970 19053 
115 


23001020.eps

19055 20852 23320 28078 

19067 20879 23434 28083 

19078 20902 23451 28216 

19087 20906 23462 28262 

19090 21030 23505 28270 

19103 21050 23606 28328 

19109 21090 23666 28387 

19116 21133 23692 28405 

19123 2Jl36 23803 28411 

19132 21146 23927 28412 

19134 21202 24011 28516 

19135 21212 24014 28557 

19148 21216 24019 28779 

19301 21222 24055 28792 

19341 21224 24179 28803 

19348 21228 24333 29033 

19355 2123 1 24517 29072 

19363 21234 24572 29201 

19380 21701 24588 29212 

19382 22030 27017 29226 

19422 2203 1 27101 29229 

19426 22042 27103 29303 

19428 22124 27106 29307 

19444 22180 27203 29401 

19446 22193 27215 29501 

19462 22201 27302 29512 

19477 22310 27320 29571 

1%04 22508 27511 29585 

1%07 22553 27513 2%15 

1%10 22603 27529 2%25 

19713 22801 27545 2%40 

20003 22812 27588 29715 

20004 22901 27603 30004 

20005 22902 27604 30022 

20006 22960 27605 30024 

20007 23005 27610 30024 

20024 23059 27613 30034 

20036 23060 27707 30040 

20151 23063 27804 30041 

20164 23112 27858 30064 

20171 23116 27948 30066 

20175 23185 28002 30067 

20646 23188 28012 30082 

20745 23224 28023 30084 

20817 23235 28034 30087 

20850 23236 28043 30088 
116 


23001021.eps

30092 32708 33319 33908 

30121 32714 33323 33913 

30189 32720 33324 33950 

30265 32725 33401 33966 

30274 32757 33406 33991 

30310 32789 33407 34104 

30316 32801 33408 34108 

30319 32803 33409 34110 

30326 32806 33410 34119 

30329 32818 33414 34135 

30338 32828 33417 34145 

30339 32901 33426 34207 

30342 32905 33431 34221 

30346 32920 33434 34232 

30605 32935 33436 34233 

30606 32960 33442 34236 

30721 32962 33444 34242 

30909 32963 33446 34243 

31047 32966 33458 34266 

31093 33004 33467 34453 

31201 33009 33483 34667 

31322 33012 33484 34685 

31401 33021 33511 34689 

31822 33023 33547 34698 

32082 33024 33607 34741 

32084 33027 33618 34744 

32114 33029 33701 34994 

32119 33056 33702 34997 

32127 33063 33703 35010 

32137 33069 33710 35022 

32168 33131 33712 35023 

32169 33133 33713 35071 

32174 33134 33759 35203 

32206 33139 33761 35209 

32207 33149 33764 35214 

32208 33150 33767 35216 

32210 33154 33770 35217 

3221 1 33155 33771 35235 

32216 33157 33772 35242 

32256 33162 33801 35243 

32259 33174 33812 35244 

32277 33180 33838 35501 

32303 33183 33844 35640 

32308 33184 33896 35801 

32408 33186 33904 35901 

32605 33308 33907 36081 
117 


23001022.eps

36117 55044 63146 77005 

36272 55105 68105 77008 

36301 55109 68114 77018 

36330 55112 68116 77019 

36m 55121 68127 77024 

36609 55303 68130 77025 

36830 55305 68135 77035 

36867 55306 68164 77036 

37027 55313 68504 77040 

37204 55330 68508 77056 

37215 55350 68510 77057 

37219 55369 68516 77060 

38119 55411 68801 77062 

38125 55417 68847 77065 

39201 55428 68901 77069 

39564 55429 71822 77070 

39565 5543 1 71854 77071 

40202 55436 72034 77077 

46804 55443 75001 77079 

46805 55448 75013 77081 

46825 55792 75023 77089 

47960 5581 I 75067 77301 

48009 55902 75075 77345 

49855 55987 75093 77346 

49935 56001 75094 77379 

50112 56013 75150 77382 

50125 56308 75154 77384 

50266 56502 75201 77388 

50310 57104 75205 77401 

50312 57106 75211 77429 

50315 57201 75219 77449 

51106 57252 75240 77450 

52501 57301 75247 77459 

52806 57350 76021 77471 

52807 57701 76031 77478 

53051 57747 76053 77479 

53151 59102 76063 77502 

53224 59401 76092 77504 

53406 59601 76110 77511 

53704 59701 76137 77534 

54313 60154 76179 77573 

54601 60202 76210 77598 

54650 60647 76234 77802 

5491 I 61254 76262 77840 

54956 63103 76308 77901 

55025 63103 76710 77904 
118 


23001023.eps

78028 80203 84003 85143 

78114 80206 84025 85194 

78130 80210 84041 85201 

78154 80211 84042 85202 

78155 80222 84044 85203 

78201 80224 84057 85205 

78212 80226 84058 85210 

78216 80227 84065 85248 

78227 80228 84070 85254 

78237 80229 84088 85255 

78238 80231 84104 85260 

78245 80241 84107 85281 

78251 80246 84108 85282 

78503 80274 84111 85296 

78504 80301 841 15 85297 

78520 80302 841 16 85301 

78666 80433 84119 85323 

78681 80501 84319 85338 

78731 80524 84341 85340 

78732 80631 84404 85351 

78741 80634 84405 85364 

78745 80751 84601 85377 

78746 80904 84651 85382 

78749 80907 84720 85635 

78750 80909 84770 85704 

79109 80920 85003 8571 I 

79407 81005 85008 85714 

79902 81008 85009 85718 

79912 81416 85012 85719 

79924 81501 85015 85737 

79925 81520 85016 86301 

79927 81623 85018 86326 

79936 82001 85022 86401 

80003 82414 85027 86442 

80015 82435 85028 87106 

80016 82609 85032 8711 1 

80020 82716 85033 87112 

80022 82718 85037 87124 

80033 82801 85040 87505 

80110 82901 85042 87506 

80112 83127 85044 87507 

80121 83202 85050 88001 

80124 83402 85051 88130 

80127 83686 85086 88252 

80129 83705 85139 88346 

80134 83709 85140 89014 
119 


23001024.eps

89015 90274 91730 92394 

89027 90275 91731 92404 

89030 90280 91740 92405 

89044 90292 91741 92408 

89052 90405 91745 92532 

89102 90501 91748 92543 

89103 90505 91762 92584 

89104 90602 91765 92591 

89108 90605 91789 92612 

89119 90620 91791 92618 

89121 90631 91801 92630 

89128 90640 91901 92653 

89139 90660 91911 92673 

89141 90701 91915 92677 

89146 90744 91942 92691 

89147 90745 91945 92692 

89149 90746 91950 92706 

89169 90755 92008 92806 

89406 90802 92021 92807 

89431 90803 92024 92841 

89436 91006 92025 92860 

89502 9101 1 92028 92883 

89509 91016 92037 93021 

89511 91101 92071 93030 

89519 91104 92084 93041 

89521 91108 92103 93065 

89523 91203 92104 93117 

89701 91303 92108 93215 

90001 91304 92109 93245 

90007 91307 92114 93277 

90008 91316 92119 93301 

90017 91324 92121 933 11 

90034 91335 92123 93312 

90039 91344 92126 93534 

90040 91355 92130 93535 

90041 91364 92173 93550 

90048 91367 92201 93635 

90049 91381 92211 93704 

90064 91402 92223 93720 

90069 91405 92231 93727 

90210 91504 92236 93933 

90212 91604 92264 93950 

90241 91606 92308 94002 

90245 91702 92346 94010 

90247 91706 92374 94015 

90266 91710 92376 94040 
120 


23001025.eps

94041 94582 95354 97203 

94063 94588 95401 97213 

94065 94599 95403 97214 

94066 94608 95453 97216 

94087 94610 95482 97225 

94104 94611 95603 97230 

94105 94612 95608 97301 

94108 94705 95610 97401 

941 11 94920 95621 97471 

94112 94928 95661 97501 

94114 94941 95678 98004 

94118 95003 95691 98075 

94121 95008 95695 98101 

94122 95010 95765 98102 

94127 95020 95815 98109 

94132 95032 95816 98121 

94401 95035 95824 98166 

94402 95037 95825 98258 

9440-1 95050 95932 98273 

94509 95060 959-15 98370 

94513 95113 96001 98373 

94520 9512-1 96080 98404 

94530 95126 96150 98407 

94556 95129 97005 98826 

94559 95133 97006 98908 

94560 95136 97015 99201 

94563 95202 97030 99206 

94564 95207 97045 9961 1 

94568 95242 97062 99801 

94577 95301 97086 

94580 95350 97202 

7 
121 

1Please note that we are responding to these Questions for the Record based on information 

we have available at this time. Investigations relating to these issues are ongoing, and we expect to learn more as they reach conclusions. 2Data reported based on 2015 annual headcount. 

3Data reported as of September 1, 2016. 

4Median FTE base pay calculated as hourly rate X 2080. 

5Data reported based on 2015 overtime. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM JOHN G. STUMPF 

Q.1.a. Please describe the personnel structure of the Community 

Banking division of Wells Fargo Bank, N.A., including: 

The name of each position, the description of each position’s responsibilities, and whether each position is salary or hourly;1

A.1.a. The improper sales practices at issue occurred in the 

Regional Bank, which is a line of business within Community 

Banking. Below is a table that identifies the primary positions in 

the Regional Bank and for each position provides (1) average 

headcount, (2) Fair Labor Standards Act (‘‘FLSA’’) overtime classification, (3) median hourly base pay, (4) median Full Time Equivalent (FTE) base pay, and (5) average annual overtime hours for 

nonexempt positions. The table is followed by a description of each 

position’s responsibilities. In addition, all salaried and hourly team 

members classified as regular or part-time (i.e., those who are regularly scheduled to work 17.5 hours or more per week) are eligible 

for Wells Fargo-sponsored benefits, including health insurance, life 

insurance, dental and vision insurance, short- and long-term disability, 401(k) plan, and paid parental leave. 


23001007.eps
122 

The job descriptions for these positions are as follows: 

Teller 

Tellers in the Regional Bank primarily perform the following 

functions: 

• Greeting customers; 

• Processing transactions for customers; 

• Finding ways to make financial services more convenient for 

customers; 

• Referring customers with more complex needs to Wells Fargo 

bankers and other internal partners; and 

• Accurately maintaining and balancing a cash drawer. 

Customer Sales and Service Representative (CSSR) 

CSSRs in the Regional Bank primarily perform the following 

functions: 

• Providing excellent and prompt service in all customer interactions to ensure satisfaction; 

• Following up with customers who are referred by tellers based 

on confirmed needs; 

• Completing teller job duties as necessary; and 

• Based on the specific branch needs, a CSSR may spend a portion of his or her time handling cash transactions. 

Personal Banker 

Personal Bankers in the Regional Bank primarily perform the 

following functions: 


23001008.eps
123 

• Having conversations with customers and conducting detailed 

financial reviews, offering products and services that meet 

their needs and help them succeed financially; 

• Contacting customers by phone to follow up to ensure customer 

satisfaction, build relationships, and address any additional financial needs based on the customers’ financial priorities; 

• Setting performance objectives and working with branch manager to increase effectiveness in serving customers and meeting their financial needs; 

• Building loyalty while helping customers with service requests; 

and 

• May handle cash transactions. 

Business Banking Specialist 

Business Banking Specialists in the Regional Bank primarily 

perform the following functions: 

• Proactively growing and deepening relationships with existing 

small business customers as well as actively prospecting for 

new Wells Fargo small business and retail customers; 

• Attempting to earn all of the business of a small business 

owner, including their consumer and small business needs, 

while ensuring retention and exercising excellent customer 

service in all customer interactions; 

• Championing for small business and bringing focus and attention to small business opportunities; 

• Offering deposit, lending, and other small business product solutions in order to serve as an expert to meet the customer’s 

needs and financial goals; 

• Providing product delivery and service support to retail customers; and 

• Reaching out into the community by visiting businesses, making outbound calls to customers, and conducting educational 

seminars in the community. 

Service Manager 

Service Managers in the Regional Bank primarily perform the 

following functions: 

• Assisting with hiring, training, coaching and developing a 

highly engaged service team; 

• Filling in for the Store Manager when necessary; 

• Observing, coaching, and providing feedback to ensure consistent service team performance and excellent customer satisfaction; 

• Managing complex customer concerns and transactions; 

• Ensuring compliance with all operational regulations, sales 

and service processes, policies and procedures, and completion 

of compliance requirements; and 

• Assisting with effective scheduling, managing the Teller line, 

lobby management, and delegating essential tasks to ensure 

124 

operational integrity while creating a positive customer experience. 

Store Manager 

Store Managers in the Regional Bank primarily perform the following functions: 

• Developing in-depth knowledge about products and systems; 

• Using initiative and good judgment to manage the branch’s expense budget and lead the store to achieve projected performance; 

• Supporting the Service Manager and observing, coaching, and 

providing feedback to the service team; 

• Hiring, coaching, training, scheduling, and developing all 

branch team members to achieve performance objectives; 

• Managing the store’s compliance requirements; and 

• Holding team members accountable for the delivery of exceptional customer service, performance expectations, and operational integrity. 

Private Banker 

Private Bankers in the Regional Bank primarily perform the following functions: 

• Providing full-service banking to high-value customers and 

overseeing a portfolio of simple and/or packaged-product account relationships; 

• Consulting with customers regarding financial needs, recommending product/solutions, and financial services to meet those 

needs; 

• Resolving inquiries, opening and servicing accounts such as 

checking, savings, credit/loan, and identifying investment 

opportunities; 

• Partnering and/or acting as a liaison to other business partners and working to deepen customer relationships by offering 

partner products and services to existing clients; and 

• Building a network of internal and external sources and 

resources to further enhance the customer experience and meet 

the customer’s needs. 

District Manager 

District Managers in the Regional Bank primarily perform the 

following functions: 

• Managing multiple Wells Fargo locations, each with one line of 

business that provide products and services to a designated 

marketplace; 

• Developing and implementing sales and service strategy, as 

well as the locations’ retail banking, marketing, and performance plans; 

• Working with staff to develop and implement individual performance objectives against established standards; 

125 

• Managing the relationship with various partner business entities to ensure the ability to deepen customer relationships 

along with managing service quality to ensure ongoing customer satisfaction; 

• Serving as the sales product and services manager and providing formal and informal training; 

• Implementing and maintaining prescribed security controls 

while managing within the framework of Wells Fargo standards, policies, and procedures; and 

• Actively participating and representing Wells Fargo in various 

community, civic, and professional organizations. 

Q.1.b. The number of employees in each position; 

A.1.b. Please see the response to the first bullet point of Question 

1 above for additional detail. Currently, approximately 75,000 team 

members work in the Regional Bank. 

Q.1.c. The median salary of each salaried position; 

A.1.c. Please see the response to the first bullet point of Question 

1 above. 

Q.1.d. The median hourly wage of each hourly position; 

A.1.d. Please see the response to the first bullet point of Question 

1 above. 

Wells Fargo has set its own minimum pay at $12.00/hour effective March 2016, which is significantly higher than the Federal 

minimum wage of $7.25. In addition, all salaried and hourly team 

members who are classified as regular or part-time (i.e., regularly 

scheduled to work 17.5 hours or more per week) are eligible for 

Wells Fargo-sponsored benefits, including tuition reimbursement, 

healthcare insurance, dental insurance, vision insurance, life insurance, short- and long-term disability, 401(k) plan, and paid parental leave. 

Q.1.e. Average overtime hours worked for each position; and 

A.1.e. Please see the response to the first bullet point of Question 

1 above. 

Wells Fargo’s policy states that non-exempt team members are 

compensated for all hours worked, including all overtime hours. 

Wells Fargo’s Team Member Handbook states: 

If you’re in a nonexempt position, you are entitled to pay for all hours actually worked, even those exceeding your regular schedule or those not authorized before working them. Therefore, you must report all hours worked 

in Time Tracker. Wells Fargo supports and enforces this policy and wage 

and hour compliance. 

Q.1.f. Whether each position is considered to be exempt or nonexempt for FLSA purposes and the justification for any exemptions. 

A.1.f. Please see the response to the first bullet point of Question 

1 above. 

At the time each new job is created, Wells Fargo completes an 

analysis of job duties to determine FLSA classification. The Wells 

Fargo Compensation Team also periodically reviews jobs or adjusts 

job classification as necessary in accordance with current regulations and court decisions. 

126 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED 

FROM JOHN G. STUMPF 

Q.1. Through the lens of my service on both this Committee and 

the Armed Services Committee, I have been focused on the wellbeing of our service members in the consumer finance marketplace 

because predatory lending and personal financial issues can have 

a real impact on military readiness. This is why I worked on a bipartisan basis to establish the Office of Service member Affairs at 

the CFPB. Can you please tell me how many of the harmed customers are service members or veterans? 

A.1. Wells Fargo is committed to serving our service member customers. We are grateful for their significant sacrifices to our country and are honored to serve their banking needs. 

We asked PricewaterhouseCoopers (PwC) to analyze approximately 82 million deposit accounts for instances of potential simulated funding and approximately 11 million credit card accounts for 

instances of lack of authorization. The accounts reviewed were 

opened between 2011 and 2015. Of the accounts reviewed, PwC 

found that approximately 623,000 consumer and business credit 

card accounts could have been [emphasis added] unauthorized, 

and approximately 1.5 million deposit accounts could have [emphasis added] experienced simulated funding, that is, the unauthorized deposit and withdrawal of funds intended to create the 

false appearance that the account was being used by the customer. 

PwC did not [emphasis added] conclude that any of these 

accounts were unauthorized and/or experienced simulated funding; 

it just could not rule out these possibilities. In that way, its analysis of credit card authorization and potential simulated funding in 

deposit accounts was designed to be over-inclusive. We took this intentionally expansive approach because we were willing to refund 

fees to customers who, in fact, approved account openings, but subsequently allowed the accounts to lapse, so that we did not exclude 

customers who may have suffered harm. 

We have found indications that the PwC number includes accounts where the customer authorized its opening. For example, 

Wells Fargo has worked to contact customers with open, inactive 

credit card accounts identified by PwC (i.e., the customers with accounts that could have been [emphasis added] unauthorized) to 

determine whether they want these credit cards. Approximately 25 

percent have informed the bank that they either did not apply, or 

did not recall whether or not they applied, for their card. 

Of the 2.1 million accounts that PwC identified, 5,089 accounts 

were associated with customers who are identified in the Defense 

Manpower Data Center (DMDC) as being active duty, reserve, or 

National Guard. In other words, less than 0.3 percent of the accounts identified by PwC were associated with customers who are 

identified in the DMDC. 

We are committed to making it right for all customers—including 

any customer who is a service member or veteran. This includes refunding any fees that were assessed on unauthorized accounts, correcting credit bureau reporting, and addressing any other forms of 

harm. 

127 

1Wells Fargo, 2016 Proxy Statement, at 57 (available online at https://www.sec.gov/Archives/edgar/data/72971/000119312516506771/d897049ddef14a.htm). 

Q.2. In the most recent proxy statement dated March 16, 2016, 

Wells Fargo discloses its intention to structure compensation packages so that they are tax deductible under Section 162(m) of the 

Internal Revenue Code. In Wells Fargo’s last tax filing, what was 

the value of these 162(m) deductions? What is the cumulative value 

of these 162(m) deductions taking into account the value of each 

and every 162(m) deduction Wells Fargo has ever taken? 

A.2. Wells Fargo is proud to be a valuable partner to the communities we serve and pays all required Federal, State, and local 

taxes. 

Wells Fargo reports executive compensation on its Federal income tax return according to the rules in the Internal Revenue 

Code, including the rules under Section 162(m). The amount of executive compensation paid by Wells Fargo is reported on its proxy 

statement filed annually pursuant to the Securities Exchange Act 

of 1934. For example, Wells Fargo’s 2015 proxy statement reports 

that the 2015 compensation paid to Wells Fargo’s executive leadership was as follows:1

128 

2Mr. Stumpf agreed to forfeit this award. See Wells Fargo, ‘‘Independent Directors of Wells 

Fargo Conducting Investigation of Retail Banking Sales Practices and Related Matters (press 

release)’’ (Sept. 27, 2016) (available online at https://www.wellsfargo.com/about/press/2016/ 

independent-directors-investigationl0927/). 3Mr. Stumpf agreed to forfeit this award. See Id. 


23001009.eps

Name and Salary($) Stock Awards ($) Non-Equity Cbange in All Total($) 

Principal Incenthe Pension Value Other 

Position Comp. and Comp. 

($) Nonqualitied ($) 

Deferred 

Compensation 

Earnings($) 

JobnG. 2,800,000 12,500,0541 4,000,000) N/A 18,550 19,318,604 

Stumpf 

Cl.airnmn & (dollar value on (833,333 of 

CEO date of grant of which was 

20 I 5 Performance pa id in 

Shares at "target"- Restricted 

actual will be Share Rights 

determined in the that vest over 

fU'St quarter of 2018 three years) 

and may range from 

zero to 150% of the 

target shares, 

depending on 

Company 

performance) 

John R. 1,700,000 6,500,036 850,000 3,395 18,550 9,071,981 

Shrewsberry 

Se11wr (approximately 

Executive 5,500,000 of this 

Vu:e amount consists of 

Presidelli Performance Shares, 

&CFO U1e actual value of 

which will be 

determined in the first 

quarter of2018 and 

may range from zero 

to 150% of this 

amount, depending on 

Company 

perfo1mance; 

approximately 

1,000,000 consists of 

Restricted Share 

Rights which will vest 

over four years 

beginning on the first 

anniversary of the 

grant date) 

Timotby J. 2,000,000 8,000,084 1,000,000 20,054 18,550 11,038,688 

Sloan 

Preside11t& (approximately 

coo 6,500,000 of this 

amount consists of 

Performance Shares, 
129 


23001010.eps

Name and Salary (S) Stock Awards (S) Non-Equity Change in All Total($) 

Principal Incentive Pension Value Other 

Position Comp. ($) and Nonqualilied Comp. 

Deferred ($) 

Compensation 

Earnin!!S ($) 

tl1e actual value of 

which will be 

determined in the first 

quaiterof2018 and 

may range from zero 

to 150% of this 

amoun~ depending on 

Company 

performance; 

approximately 

1,500,000 consists of 

Restricted Share 

Rights which will 

vest over four years 

beginning on the first 

anniversary of the 

grant date) 

Da1•idM. 1,700,000 6,500,036 850,000 25,620 18,550 9,094,206 

Carroll 

Senior (approximately 

Executive Vtce 5,500,000 of this 

President amount consists of 

(Wealtil antf Performance Shares, 

In l'esfmeni the actual value of 

Mmtagentellt} which will be 

determined in the first 

quarterof2018 and 

may range from zero 

to 1500/o of this 

am un~ depending on 

Company 

performance; 

approximately 

1,000,000 consists of 

Restricted Share 

Rights which will vest 

over four years 

beginning on the first 

anniversary of 

the grant date) 
130 

4The Independent Directors determined in September 2016 that Ms. Tolstedt would forfeit all 

outstanding equity awards. 


23001011.eps

Name and Salary($) Stock Awards($) Non-Equity Change in All Total (S) 

Principal Incentive Pension Value Other 

Position ~omp. ($) and Nonqualilied Comp. 

Deferred ($) 

Compensation 

Earnings (S) 

Avid 1,700,000 6,500,036 850,000 9,254 18,550 9,077,840 

Modtjabai 

Senior (approximately 

Executive Vice 5,500,000 of th.is 

President amount consists of 

(Consumer Perfo1mance Shares, 

Le11ding) the actual value of 

which will be 

determined in the first 

quarter of2018 and 

may range from zero 

to 150% of this 

amount, depending 

on Company 

performance; 

approximately 

1,000,000 consists of 

Restricted Share 

Rights which will ves 

over four years 

beginning on the first 

anniversary of 

the grant date) 

Carrie L. 1,700,000 6,500,0J64 850,000 23,095 18,550 9,091,681 

Tolstedt 

Senior (approximately 

Executi1•e Vice 5,500,000 of this 

President amount consists of 

(Dmm1unily Performance Shares, Banking) the actual va.lue of 

which will be 

determined in the first 

quarter of2018 and 

may range from zero 

to 150%oftl•is 

amount, depending on 

Company 

performance; 

approximately 

1,000,000 consists of 

Restricted Share 

Rights which will vest 

over four years 

beginning on tl1e first 

anniversary of the 

grant date) 
131 

5 Hollywood, FL, Town Hall, February 5, 2014 (Transcript on file). 

Q.3. In the Consent Order with the CFPB, Wells Fargo agreed not 

to take advantage of tax loopholes to write off portions of fines and 

civil penalties from its Federal taxes. But because loopholes in the 

tax code are so broad and unclear, Wells Fargo could still claim a 

business deduction for money it reimburses to its victims. Your 

company agreed to pay consumers for the harm it caused, and it 

should pay in full without help from American taxpayers. Will you 

commit now that Wells Fargo will not take any deduction for the 

amounts it pays under the Consent Order? 

A.3. Wells Fargo is currently reviewing these issues as they relate 

to various tax implications. As noted in our response to Question 

2 above, Wells Fargo pays all required Federal, State, and local 

taxes. 

Q.4. In light of the revelations of unauthorized accounts being 

opened, could you please describe how you are confident Wells 

Fargo is still in compliance with anti-money laundering rules and 

regulations? 

A.4. Wells Fargo has policies, procedures, and internal controls 

that are reasonably designed to comply with applicable anti-money 

laundering laws and regulations. 

Q.5. Did you or any member of the Wells Fargo Operating Committee specifically notify Wells Fargo employees in writing that 

using a customer’s identification information to open unauthorized 

accounts would not only be unethical, but also unlawful? If so, 

please provide this written material, indicating the date(s) on 

which this material was shared with employees. 

A.5. Language prohibiting the opening of unauthorized accounts 

has existed for several years in sales integrity and ethics training 

materials, and as part of essential learning paths, among other 

communications Wells Fargo makes to its team members. 

Additionally, business ethics are discussed in quarterly Company-wide townhalls. Specifically, Mr. Stumpf addressed the unauthorized accounts issues during a townhall meeting following the 

December 2013 Los Angeles Times story. During that townhall, Mr. 

Stumpf informed team members that he ‘‘want[ed] to address’’ the 

issues discussed in the article ‘‘head on.’’ Of note, he said: 

Our culture is about service. We want to help our customers succeed financially, and we’re not in the product pushing business. Think of . . . yourselves . . . no matter what business you’re in, whether you help those who 

service our external customers or if you serve them directly, I think of all 

of us as being financial physicians. We meet our customers . . . and we 

have a conversation with them. And we listen carefully for their needs. And 

once we discover a need, we then through our skill set, understanding, and 

experience, our value-add, we offer a product or a service or a series of 

products and services to help them. We don’t try to sell them something 

that they don’t need or don’t want[.]5

Here’s my ask of you and for everybody listening today. If you believe that 

your team, your boss, your boss’ boss somehow is putting pressure on you 

to sell things that your customers don’t want, don’t need, raise your hand 

. . . And if you’re not comfortable doing that, there’s an anonymous . . . 

EthicsLine, [or you can] talk to somebody in HR. We want to do the right 

thing. We’re in the long-term business. 

132 

Q.6. As of September 20, 2016, is it still possible that unauthorized 

customer accounts may be opened by Wells Fargo employees? 

Q.7. What changes have you made to better protect the identification information of your customers so that unauthorized accounts 

are never opened again? 

A.6.–A.7. Wells Fargo has made several recent changes to its policies and practices to enhance oversight, expand customer transparency, and improve the customer experience. We would like to 

highlight the following points: 

• We have named a new head of our retail banking business. 

• We have also changed the retail banking business’s risk management processes. This is consistent with the reorganization 

of enterprise functions we have conducted across the Company 

to create a stronger risk and control foundation that allows 

senior team members across the Company to provide more 

independent, credible challenges to how we operate. 

• To this end, we are transitioning a number of control functions 

out of the lines of business, which includes Community Banking, and centralizing them within Wells Fargo’s independent 

corporate Risk function, which will be responsible for salespractice oversight, as well as establishing an independent 

Sales Practices Office. 

• We have made system and process enhancements, including 

sending automated confirmation emails to our customers when 

a new personal or small business checking account or a savings 

account is opened; and acknowledgements are also sent for 

credit card applications. We are also working to improve multifactor authentication to protect our customers’ information, 

and signatures are captured electronically approximately 99 

percent of the time for new checking, savings, and credit card 

applications. In addition, we are closing automatically inactive 

new deposit accounts that, after 62 days, have a zero balance, 

without assessing a monthly fee. 

• This year alone, we have committed more than $50 million to 

enhanced quality assurance monitoring. 

• We have expanded an independent third-party mystery shopper program, adding risk professionals to provide greater oversight, and expanding our customer complaint servicing and 

resolution process. 

• We are surveying team members to understand their views on 

our Company’s approach to ethics and integrity. 

• We have also commenced the process with our regulators to 

engage an independent consultant to review sales practices in 

Community Banking. In addition, we will be engaging external 

consultants to review sales practices across the Company. 

• And we will be engaging outside independent culture experts 

to help us understand where we have cultural weaknesses that 

need to be strengthened or fixed. 

133 

1Wells Fargo, 1999 Annual Report, at 7 (available online at http://www.wellsfargo 

history.com/download/annualreports/1999annualreportlwf.pdf). 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR 

MENENDEZ FROM JOHN G. STUMPF 

Q.1. When did Wells Fargo first institute cross-selling strategies in 

the Community Banking Division? When did Wells Fargo first start 

encouraging employees to engage in strategies to boost sales, including but not limited to gaming, pinning, sandbagging, bundling, 

and simulated funding? Please provide copies of any company materials sent to retail banking employees regarding cross-selling 

strategies. 

A.1. ‘‘Cross-selling’’ is the term Wells Fargo uses to describe its 

strategy for deepening its relationships with its customers, and this 

strategy has been present in some form at Wells Fargo since at 

least 1999.1 Wells Fargo offers a variety of financial products and 

services. When an existing customer has a financial need that 

Wells Fargo can fulfill with a product or service that the customer 

does not have, Wells Fargo wants to ensure that the customer is 

made aware that the Company can fulfill that particular financial 

need. To do this, Wells Fargo trains our team members to listen 

to our customers, consider their financial needs, determine which 

Wells Fargo product or service can fulfill that need, and offer that 

product or service to the customer. 

This approach is called needs-based selling, and it is the essence 

of Wells Fargo’s cross-selling strategy. This strategy enables Wells 

Fargo to deepen its relationships with its customers because Wells 

Fargo is fulfilling more of our existing customers’ financial needs. 

Cross-sell numbers are therefore one metric for measuring relationship depth, and Wells Fargo has traditionally encouraged its team 

members to build and maintain strong customer relationships 

through needs-based selling. It does not benefit either Wells Fargo 

or its customers to open accounts that our customers do not need, 

use, or want. 

Q.2. When did Wells Fargo first institute product sales goals in the 

Community Banking Division? Please provide details on the structure of the sales goals and the specific thresholds employees were 

required to meet. 

A.2. Product sales goals have been present at Wells Fargo in some 

form since at least the early 2000s. The specific goals have varied 

across markets and years, and from 2012 to 2015, Wells Fargo 

steadily reduced sales goals for Regional Bank team members. 

Wells Fargo has now eliminated product sales goals entirely for Regional Bank team members who serve customers in our retail 

branches, effective October 1, 2016. 

Q.3. For the employees required to meet product sales goals in the 

Community Banking Division, on average, what percentage of their 

pay was based on meeting and/or exceeding sales thresholds? 

A.3. Please see question 7, below. 

Q.4. Has there been any attempt to quantify how many customers 

succumbed to pressure from bank employees to sign up for bank 

134 

products they did not need or want? Will Wells Fargo attempt to 

identify these customers? 

A.4. Wells Fargo has worked to contact holders of an open consumer or small business credit card account that the third-party 

consulting firm, PricewaterhouseCoopers (PwC) identified as never 

having been used and never having been ‘‘fraud activated’’ by the 

customer calling an 800 number after receiving the card, unless 

there were indications of customer consent, under the assumption 

that non-activation may indicate a customer’s lack of desire or need 

for the account. The purpose of contacting these inactive credit card 

account holders is to determine whether they want these credit 

cards. Approximately 25 percent have informed the bank that they 

either did not apply, or did not recall whether or not they applied, 

for their card. For those customers who want the credit card, the 

card will remain open. For those customers who want the credit 

card, the account will remain open. For any customer who does not 

want their credit card, Wells Fargo is closing the account and correcting credit bureau reporting. This means we are removing the 

account from the customers’ credit reports going forward and suppressing the existence of the inquiry so that it is not viewable to 

other lenders or requestors. (The Fair Credit Reporting Act prohibits us removing the inquiry altogether and it will still be visible 

to customers pulling their own credit reports.) These results demonstrate that PwC’s findings were over-inclusive, containing accounts where the customer authorized the opening of the account. 

Q.5. Does Wells Fargo utilize cross-selling strategies or other similar initiatives across any of its other divisions? If so, please describe the structure of the sales programs and any related 

incentives. 

A.5. Businesses may sometimes use the terms ‘‘referral program’’ 

and ‘‘cross-sell’’ interchangeably. These programs exist across the 

Company and might typically involve: 

• A line of business referring a customer to another group or line 

of business at Wells Fargo for a product or service offered by 

that separate group; or 

• A line of business that is unable to approve a customer’s request for a product, helping the customer pursue an alternative product or service from another line of business. 

Please refer to our answer to question 6, below, for additional information on this topic. 

Q.6. Does Wells Fargo provide compensation incentives based on 

meeting product sales goals in any of its other divisions? If so, 

please describe the structure of the programs and the specific 

thresholds employees are required to meet. 

A.6. Wells Fargo tailors its compensation structure to each line of 

business, the services our team members perform, compliance with 

applicable laws, and the best interests of our customers. Incentive 

compensation plans require ongoing compliance with Wells Fargo’s 

Code of Ethics and Business Conduct, Information Security Policy, 

Risk Management Accountability Policy, and other employment 

and compliance requirements applicable to the role. Violations may 

135 

subject the team member to disqualification from the plan or downward adjustments to the incentive award. 

None of our incentive plans currently have minimum productspecific sales goals as a condition of eligibility for an incentive; 

however, many of our plans have minimum revenue or volume production thresholds that must be met to qualify for an incentive. 

As Wells Fargo previously announced, product sales goals for our 

Regional Bank team members who serve customers in our retail 

branches have been eliminated. This means there are no minimum 

product-specific sales goals and no minimum revenue or volume 

production thresholds for this group of team members. However, 

two Community Banking business groups separate from the retail 

banking business—Practice Finance (which provides financial services to medical-related businesses) and Business Payroll Services— 

are eligible for compensation incentives. The incentive plans offered 

to team members in these two business groups do not involve product sales goals: Practice Finance incentives are based on funded 

volume goals, and Business Payroll Services incentives are based 

on revenue goals. 

Several business groups outside Community Banking—such as 

Consumer Lending, Wealth and Investment Management, Wholesale Bank, Insurance, and Capital Finance—also offer incentive 

compensation plans to some of their team members. Many of these 

team members are in business development or sales roles, offering 

customers home mortgages, commercial loans, wealth management 

advice, insurance plans, or other Wells Fargo products and services. While some of these plans use production thresholds, many 

are predominately commission-based and have no product, revenue, 

or volume goals or thresholds. 

Wells Fargo is currently reviewing all of its incentive compensation plans to ensure the structures and production thresholds are 

appropriate to the roles and do not inadvertently incent inappropriate sales practices. 

Q.7. How many Wells Fargo employees, across all divisions, are eligible to receive compensation based on meeting and/or exceeding 

product sales goals? For those employees, on average, what percentage of their pay is based on meeting and/or exceeding product 

sales goals? 

A.7. Please see our response to Question 6 above for information 

about Wells Fargo’s incentive plans across divisions that require 

minimum production thresholds (i.e., may be minimum revenue or 

minimum volume) as a condition of eligibility for incentive compensation. There are no minimum product-specific sales goals. 

With respect to the Regional Bank team members, as Wells 

Fargo previously announced, effective October 1, 2016, product 

sales goals for our Regional Bank team members in our bank 

branches have been eliminated. Leading up to the elimination of 

product sales goals, the actual incentive payouts based on sales-related performance objectives (distinct from service and other performance objectives) declined considerably: the median incentive 

paid as a percentage of total salary for sales-performance incentives for tellers, for example, declined from 4.6 percent in 2011 to 

0.9 percent in 2015. Historically, the target incentive payment for 

136 

overall performance objectives, not just sales-related objectives, was 

approximately 3 percent of base compensation for tellers and the 

target for the majority of personal bankers was approximately 10 

percent of base compensation. All incentive plans were capped. 

We are currently reviewing our compensation structures with respect to other Wells Fargo team members to ensure all incentive 

programs are properly aligned with the interests of our customers. 

Q.8. What does Wells Fargo plan to do to address the issue of the 

bank targeting individuals holding Mexican Matricula Consular 

Cards, as raised in the Los Angeles City Attorney’s May 5, 2015, 

complaint? 

A.8. Wells Fargo is committed to rectifying this situation for all 

customers, regardless of the type of identification used to open an 

account. This includes refunding any fees that were assessed on 

unauthorized accounts, correcting credit bureau reporting, and addressing any other forms of harm. 

Q.9. Please provide the proportion of the employees terminated 

who are: racial/ethnic minorities, military/veterans, and persons 

with disabilities. 

A.9. Of the 5,300 team members whose employments were terminated for sales-integrity violations from 2011 to 2015, 39 percent 

were white, 33 percent were Hispanic, 15 percent were black/African American, 1.9 percent self-identified as veteran, and 0.7 percent self-identified as having a disability. 

Q.10. How does Wells Fargo plan to address and remediate the 

multiple reports of former employees who were fired or demoted 

after refusing to open fake accounts, including those employees 

who called the bank’s ethics hotline about what they had witnessed? What steps will Wells Fargo take to reform its internal 

processes to ensure that employees have a mechanism to report 

fraudulent and illegal practices without facing retribution from 

their managers or the bank at large? How will Wells Fargo ensure 

the anonymity of employees who raise flags about questionable 

practices or behavior? 

A.10. Wells Fargo has long had internal processes in place for team 

members to raise issues or concerns through multiple channels, including managers, HR, Compliance, and/or the EthicsLine. We encourage team members to speak up if they experience or witness 

something that makes them feel uncomfortable and have measures 

in place to protect team members from retaliation. The EthicsLine 

provides team members with a confidential way to report possible 

violations of Wells Fargo’s Code of Ethics and Business Conduct or 

any laws, rules, or regulations. Team members have the option to 

remain anonymous through the EthicsLine. It is available to all 

team members (U.S. and international) 24-hours a day, 7-days a 

week, via toll-free telephone or online Web reporting. The 

EthicsLine has been operated and staffed by a third-party vendor 

since its inception in 2004, and translation services are available. 

This process helps ensure team member confidentiality and preserves anonymity when requested. 

All team members who call the EthicsLine are provided with an 

EthicsLine ID that is associated with their EthicsLine Report. 

137 

Team members who elect to remain anonymous are asked to either 

call back to the EthicsLine or log into the EthicsLine Web Portal 

in 10 calendar days to provide additional information or answer 

any questions relating to their report. To further protect the integrity of the confidential hotline, the vendor does not record any data 

related to the incoming telephone calls or Web reports. Team members who self-identify are advised that since they provided their 

name and contact information, Wells Fargo now has the option to 

contact them directly if needed. They are also told they can call the 

EthicsLine at any time to provide additional information. 

Interview specialists with the EthicsLine vendor listen, ask clarifying questions if necessary, and then write a summary report of 

the call. The summary is then provided to Wells Fargo’s Office of 

Global Ethics and Integrity for assessment and referral to the appropriate review team. 

Wells Fargo takes measures to protect team members from retaliation, including maintaining confidentially during the review process. Specifically: 

• All reports of suspected unethical or illegal activities are taken 

seriously and measures are in place to ensure concerns are 

promptly evaluated and reviewed. 

• The review of concerns in many cases will require a fact-finding that may involve interviews with individuals the Company 

determines may have information relevant to the underlying 

issue or concern. However, management of any review and updates regarding facts, progress, and outcomes are limited to 

only those who have a legitimate business need to know. 

• It may be possible in some cases for the researcher/investigator 

to determine the identity of the team member due to the nature of the issue reported and the information shared by the 

team member. However, the researcher/investigator would not 

ask the team member to self-identify as the person who made 

the EthicsLine Report. 

In no circumstances is the team member told the specifics about 

any corrective action taken against another team member as it is 

not Wells Fargo’s practice to discuss confidential information regarding one team member with another. Wells Fargo will only 

share information regarding the review, including any corrective 

action taken, with those who have a legitimate business need to 

know. 

Wells Fargo’s Nonretaliation Policy, which is available to all 

team members in the Team Member Handbook and reiterated in 

the Code of Ethics and Business Conduct, mandates that no team 

member may be retaliated against for providing information in 

good faith about suspected unethical or illegal activities, including 

fraud, securities law, or regulatory violations, or possible violations 

of any Wells Fargo policies. Retaliatory behavior has always been, 

and continues to be, grounds for corrective action, up to and including termination of employment. Team members who believe that 

they or someone else has been retaliated against for reporting an 

issue are instructed to report it as soon as possible to their supervisor or manager, H.R. Advisor team, or Corporate Employee Relations, to ensure that a prompt review is conducted and, where 

138 

appropriate, corrective action is taken. Team members can also report retaliation concerns via the EthicsLine. 

Wells Fargo has additional safeguards to prevent any form of 

retaliation, including the fact that Wells Fargo’s Human Resources 

personnel are typically consulted in every termination decision. 

Additionally, team members whose employments have been terminated may utilize Wells Fargo’s termination review process to request to have that decision reviewed by a Corporate Employee 

Relations professional who was not previously consulted in the termination decision. 

To further strengthen our program and foster an environment 

where all team members feel comfortable escalating matters without fear of retaliation, we are making improvements to the program, including: 

• Enhancing our Company-wide standards to ensure a consistent 

team member experience and safeguards, regardless of the 

type of issue reported or which group is conducting the research or investigation. 

• Reinforcing our standards and processes that protect team 

members from retaliation. This will include requiring that the 

appropriate review unit evaluating the underlying issues or 

concerns must provide a reminder of the Company’s Nonretaliation Policy to all individuals interviewed or contacted as 

part of the review, as well as all managers who may be part 

of any corrective action decisions arising out of the review. 

• Ensuring that reports of suspected unethical or illegal activities are evaluated, investigated, and appropriately escalated in 

a timely and confidential manner by continually monitoring 

and refining our EthicsLine research and investigative processes. This will include the adoption of Speak Up, Investigative, and Nonretaliation Standards to help guide the research 

and investigative process. 

• Creating additional training, communications, and resources to 

help team members understand their responsibilities under the 

Code of Ethics and Business Conduct and related policies, the 

importance of speaking up, and what to do when faced with an 

ethical dilemma. 

With respect to allegations from former team members who claim 

that their employment was terminated or they were demoted after 

refusing to open unauthorized accounts and/or after reporting concerns to the EthicsLine, we are reviewing each of the situations. As 

described above, team members have the option to raise concerns 

anonymously, so Wells Fargo likely will not have records identifying former team members who raised concerns anonymously 

through the EthicsLine. Nevertheless, Wells Fargo is taking steps 

to review such corrective action decisions where possible and has 

engaged outside consultants to help us with this review. Moreover, 

Wells Fargo has established a process to enable former team members who contact the Company today to request a review of their 

termination, even if they did not utilize the Company’s termination 

appeal and review processes at the time of their departure. Former 

team members who did utilize the Company’s appeal processes in 

the past will be provided with an additional review. Former team 

139 

members who express interest in reemployment and are deemed to 

be eligible for reemployment through this review process will be 

able to work with a special recruiting team to assist in exploring 

opportunities at Wells Fargo. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNER 

FROM JOHN G. STUMPF 

Q.1. One of the things that concerns me about this settlement is 

how your individual customers may have been impacted. I would 

like to know how many customers incurred overdraft fees or had 

missed payments as a result of accounts being opened without consent and, similarly, how FICO scores may have been impacted by 

new credit accounts being opened without consent? 

Q.2. You understand that new credit accounts and late payments 

impact a person’s FICO score. In Virginia, 22,000 fraudulent deposit accounts and 19,000 fraudulent credit accounts were opened 

by Wells Fargo employees. How many customers might have been 

downgraded from Prime to Sub Prime as a result of this? 

Q.3. If FICO scores were indeed affected due to Wells Fargo’s 

fraudulent behavior, resulting in denial of a loan in the future or 

a higher interest payment, how will you make this right for those 

customers? 

Q.4. I understand you have paid back $2.6 million to customers 

affected and the agreement is $5 million. Do you think that an average payment of $25 per customer is sufficient for the harm 

caused? Do you have any plans to expand customer compensation? 

A.1.–A.4. Wells Fargo is working very hard to remediate harm that 

may have been caused to our customers. To that end, pursuant to 

the Consumer Financial Protection Bureau (CFPB) and Office of 

the Comptroller of the Currency (OCC) Consent Orders, Wells 

Fargo will retain the services of an independent consultant and develop redress and reimbursement plans to identify the population 

of consumers who may have been affected by improper sales practices. We fully expect that, once approved by our regulators, the redress and reimbursement plans will encompass various forms of 

harm, including harm related to credit bureau inquiries, and that 

Wells Fargo will issue and track reimbursement payments. 

We asked PricewaterhouseCoopers (PwC) to analyze approximately 82 million deposit accounts for instances of potential simulated funding and approximately 11 million credit card accounts for 

instances of lack of authorization. The accounts reviewed were 

opened between 2011 and 2015. Of the accounts reviewed, PwC 

found that approximately 623,000 consumer and business credit 

card accounts could have been [emphasis added] unauthorized, 

and approximately 1.5 million deposit accounts could have [emphasis added] experienced simulated funding, that is, the unauthorized deposit and withdrawal of funds intended to create the 

false appearance that the account was being used by the customer. 

In other words, PwC did not [emphasis added] conclude that these 

accounts were unauthorized and/or experienced simulated funding; 

it just could not rule out these possibilities because its analysis of 

credit card authorization and potential simulated funding in 

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deposit accounts was intentionally designed to be overinclusive. For example, PwC flagged all credit card accounts that 

were not used and were not ‘‘fraud activated’’ by the customer calling an 800 number after receiving the card, unless there were indications of customer consent, even though there are many reasons 

why a customer may not activate their card. 

Therefore, it is important to note PwC did not determine that 

‘‘22,000 fraudulent deposit accounts and 19,000 fraudulent credit 

accounts’’ were opened in Virginia. Instead, PwC found that approximately 22,000 deposit accounts could have [emphasis added] 

experienced simulated funding and approximately 19,000 credit 

card accounts in Virginia could have been [emphasis added] unauthorized. 

Of the subset of accounts identified, nationwide PwC determined 

that approximately 115,000 accounts were charged a fee, averaging 

less than $25 per account and totaling $2.66 million in revenue to 

Wells Fargo. That figure is far surpassed by the costs associated 

with opening and closing the unused accounts. Wells Fargo has already made direct deposits and issued checks to refund these fees. 

We took this intentionally expansive approach because we were 

willing to refund fees to customers who, in fact, approved account 

openings, but subsequently allowed the accounts to lapse, so that 

we did not exclude customers who may have suffered harm. 

We have found indications that the PwC number includes accounts where the customer authorized its opening. For example, 

Wells Fargo has worked to contact customers with open, inactive 

credit card accounts identified by PwC (i.e., the customers with accounts that could have been [emphasis added] unauthorized) to 

determine whether they want these credit cards. Approximately 25 

percent have informed the bank that they either did not apply, or 

did not recall whether or not they applied, for their card. These results demonstrate that PwC’s findings as to the credit card accounts analyzed were over-inclusive, containing accounts where the 

customer authorized the opening of the account. 

For those customers who want the credit card, the account will 

remain open. For any customer who does not want their credit 

card, Wells Fargo is closing the account and correcting credit bureau reporting. This means we are removing the account from the 

customers’ credit reports going forward and suppressing the existence of the inquiry so that it is not viewable to other lenders or 

requestors (the Fair Credit Reporting Act prohibits us removing 

the inquiry altogether and it will still be visible to customers pulling their own credit reports). 

Moreover, we are in the process of determining how many customers obtained a credit product, with Wells Fargo or another company, during the time period in which their credit score may have 

been impacted by an unauthorized credit inquiry or existence of the 

trade line. While it may be difficult to calculate the precise impact 

for every customer, our intent is to err on the side of the customer 

and make them whole for negative repercussions that were tied to 

a drop in their credit score. This could include impacts on pricing, 

line or loan size, or credit decision. We have allocated significant 

resources to this effort and are working with the credit bureaus to 

develop a plan for submission to our regulators. 

141 

Going forward, Wells Fargo is voluntarily expanding its review 

of accounts to include 2009 and 2010. Moreover, Wells Fargo also 

provides resources to help customers request free credit reports and 

is offering a no-cost mediation option to impacted customers to help 

identify and remediate any other forms of harm. 

Ultimately, if any customer has any questions or concerns regarding his or her accounts—regardless of when those accounts 

were opened—he or she is invited to contact us so that Wells Fargo 

can address those questions or concerns. 

Q.5. Did you refer any of these individuals to law enforcement? If 

not, why not? 

A.5. Wells Fargo has policies, procedures, and internal controls 

that are reasonably designed to comply with its legal obligations to 

monitor, detect, and report suspicious activities. Under Federal 

law, Suspicious Activity Reports (‘‘SARs’’), and any information 

that would reveal the existence of a SAR, are confidential, 31 

U.S.C. § 5318(g)(2)(A)(i) and 12 C.F.R. § 21.11(k). 

Q.6. How did you miss this activity for such a long time? What 

have you changed about your internal controls to ensure this type 

of behavior does not happen again and, if it does, is caught at an 

earlier stage? 

A.6. This was a problem of focus. While information relating to 

sales-practice problems existed prior to 2013, it was believed that 

the problem was more isolated than it actually was. We were 

wrong. 

To ensure problems like this do not get missed again, Wells 

Fargo has made several recent changes to its policies and practices 

to enhance oversight, expand customer transparency, and improve 

the customer experience. We would like to highlight the following 

points: 

• We have named a new head of our retail banking business. 

• We have also changed the retail banking business’s risk management processes. This is consistent with the reorganization 

of enterprise functions we have conducted across the Company 

to create a stronger risk and control foundation that allows 

senior team members across the Company to provide more 

independent, credible challenges to how we operate. 

• To this end, we are transitioning a number of control functions out of the lines of business, which includes Community 

Banking, and centralizing them within Wells Fargo’s independent corporate Risk function, which will be responsible 

for sales-practice oversight, as well as establishing an independent Sales Practices Office. 

• We have eliminated product sales goals for all Regional Bank 

team members who serve customers in our retail branches. 

• We have made system and process enhancements, including 

sending automated confirmation emails to our customers every 

time a new personal or small business checking account or a 

savings account is opened; and acknowledgements are also 

sent for credit card applications. We are also working to improve multi-factor authentication to protect our customers’ 

information, and signatures are captured electronically 

142 

approximately 99 percent of the time for new checking, savings, and credit card applications. In addition, we are closing 

automatically inactive new deposit accounts that, after 62 

days, have a zero balance, without assessing a monthly fee. 

• This year alone, we have committed more than $50 million to 

enhanced quality assurance monitoring. 

• We have expanded an independent third-party mystery shopper program, adding risk professionals to provide greater oversight, and expanding our customer complaint servicing and 

resolution process. 

• We are surveying team members to understand their views on 

our Company’s approach to ethics and integrity. 

• We also have commenced the process with our regulators to 

engage an independent consultant to review sales practices in 

Community Banking. In addition, we will be engaging external 

consultants to review sales practices across the Company. 

• And we will be engaging outside independent culture experts 

to help us understand where we have cultural weaknesses that 

need to be strengthened or fixed. 

Q.7. It was only recently that you ended the incentives policy that 

apparently inspired the fraud. I have heard that Wells has had a 

culture of exercising pressure on employees to bring in accounts. 

Walk me through how you are going to change the overall culture 

at the retail bank. Have you hired independent auditors to suggest 

future changes to your compliance regime? 

A.7. Please see the response to Question 6 above for a detailed list 

of changes Wells Fargo is implementing to enhance oversight, expand customer transparency, and improve the customer experience. 

Senior management has recognized that there are issues that 

need to be fixed within our culture. There are weaknesses within 

it that we must change. Undue pressure on team members to do 

things inconsistent with our vision and values has no place in our 

culture. That is why the terminations over the last 5 years have 

included 483 managers, up to three levels above bankers and tellers, when investigations have found that managers engaged in or 

directed improper sales practices or exhibited excessive pressure 

and did not respond promptly and decisively to change their behavior. A team member has many avenues to escalate, including our 

anonymous EthicsLine. We take each matter seriously and enforce 

our Nonretaliation Policy. 

In addition to the steps outlined in Question 6 above, Wells 

Fargo has also increased training in many areas related to ethics 

and integrity. Currently, all team members in the retail banking 

business go through sales-integrity training as part of their Essential Learning Program when they begin at their positions, and are 

required to complete additional annual compliance training over 

the course of their careers. New training programs implemented in 

2015 are tailored to the respective positions, and include scenariobased modules to help prepare team members for situations that 

they are likely to encounter in the course of their work. Wells 

Fargo Regional Bank team members are also required to complete 

approximately two dozen different modules of annual compliance 

143 

training. Additionally, in 2012, Wells Fargo began requiring bankers to annually certify to having read the Sales and Service Quality 

Manual, which is updated every year to address emerging sales-integrity issues and specifically outlines proper and improper sales 

practices. Wells Fargo also began to implement an annual ‘‘Leadership Summit’’ in 2014 to provide additional training for all leadership personnel in the retail banking business (more than 850 District Managers, Area Presidents and Regional Presidents). This 

summit provides guidance on leading teams in a way that is consistent with sales ethics, including on incentivizing good behavior, 

and providing coaching to correct undesirable activities. 

Last, pursuant to the Consumer Financial Protection Bureau 

(CFPB) and Office of the Comptroller of the Currency (OCC) Consent Orders, Wells Fargo will retain the services of an independent 

consultant to review the Company’s policies and procedures to determine if they are reasonably designed to ensure that Wells Fargo’s sales practices comply with all applicable Federal consumer 

financial laws. 

Q.8. What percentage of compensation for the employees engaged 

in the wrongful behavior was derived from the cross-selling incentives? For example, if a banker earned $50,000 for the year, was 

50 percent derived from cross-selling? 

A.8. For the terminated team members, the average incentive compensation (sales and service) was 3.3 percent of base salary. Sales 

incentives included incentives for Regional Banking products and 

cross-sell partner referrals. There were no specific percentages or 

delineation between the products, as both were components of the 

sales-related incentive metrics. 

Q.9. It looks like Carrie Tolstedt, the executive responsible for the 

retail unit, conveniently announced plans to retire over the summer and is walking away with up to $125 million, at least $45 million of which would not have vested had she been fired instead of 

allowed to retire, according to Fortune. How do you explain this in 

light of the obvious misbehavior in her unit? Why was she allowed 

to ‘‘retire’’ in the middle of your negotiations with regulators? Put 

another way, she was in charge of the retail unit. Why did you not 

terminate her employment? 

Q.10. Do you understand that some might find it odd that the complaint was filed in 2015, but this summer you referred to Carrie 

Tolstedt as a ‘‘role model’’ and ‘‘standard-bearer for our culture?’’ 

Do you think that the way that Ms. Tolstedt ran her division exemplifies your culture? 

A.9.–A.10. In early 2016, Mr. Stumpf, in consultation with Wells 

Fargo’s Chief Operating Officer, decided that for various reasons 

the business would move in a different direction, meaning that Ms. 

Tolstedt would be removed from the leadership of the Community 

Bank, which took place effective July 31, 2016. After Ms. Tolstedt 

was told of that decision, she decided that she would retire at the 

end of 2016. In September 2016 the board’s Independent Directors 

determined that Ms. Tolstedt should immediately separate from 

Wells Fargo, that all of her unvested equity compensation, valued 

at approximately $19 million, would be forfeited, that she would 

not receive a bonus for 2016, and that she could be subject to 

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1Wells Fargo, September 27, 2016, Form 8–K, (available online at https://www.sec.gov/Archives/edgar/data/72971/000119312516722259/d266244d8k.htm). 2Wells Fargo, ‘‘Independent Directors of Wells Fargo Conducting Investigation of Retail Banking Sales Practices and Related Matters (press release)’’ (Sept. 27, 2016) (available online at 

https://www.wellsfargo.com/about/press/2016/independent-directors-investigationl0927/). 

further compensation and other actions based upon the results of 

the Independent Directors’ investigation. The Independent Directors also took steps to ensure that stock options awarded to Ms. 

Tolstedt in prior years would remain subject to forfeiture based 

upon the board’s determinations following its investigation.1Ms. 

Tolstedt has agreed to not exercise any outstanding stock options 

previously awarded by Wells Fargo until the completion of that 

investigation. 

Q.11. I supported claw backs for executives who commit fraud, misstate earnings, or otherwise engage in wrongful behavior in DoddFrank. Why shouldn’t aggressive claw backs, relating to the time 

period of this fraud (2011–2016), apply to all senior executives responsible for management of Wells Fargo? If you do not claw back 

a substantial amount of compensation, your shareholders will 

shoulder the burden of the $185 million in fines and restitution— 

do you think it is fair for your shareholders to shoulder that burden, as opposed to senior Wells Fargo management? 

A.11. The Independent Directors of the Board of Directors of Wells 

Fargo announced on September 27, 2016, that they have launched 

an independent investigation into the Company’s retail banking 

sales practices and related matters, including to determine whether 

compensation claw backs are appropriate. A special committee of 

Independent Directors will lead the investigation, working with the 

board’s Human Resources Committee and independent counsel. 

The Independent Directors have taken a number of initial steps 

they believe are appropriate to promote accountability at the Company. They have agreed with Mr. Stumpf that he will forfeit all of 

his outstanding unvested equity awards, valued at approximately 

$41 million. In addition, he will not receive a bonus for 2016. 

Carrie Tolstedt has left Wells Fargo, and the Independent Directors have determined that she will forfeit all of her outstanding 

unvested equity awards, valued at approximately $19 million. Ms. 

Tolstedt will not receive a bonus for 2016 and will not be paid severance or receive any retirement enhancements in connection with 

her separation from the Company. She has also agreed that she 

will not exercise her outstanding options during the pendency of 

the investigation. These initial actions will not preclude additional 

steps being taken with respect to Mr. Stumpf, Ms. Tolstedt, or 

other executives as a consequence of the information developed in 

the investigation.2

Q.12. In the settlement with regulators, Wells Fargo did not admit 

to any wrongdoing. Why not? Do you believe what Wells Fargo 

employees did was wrong? 

A.12. The particulars of the settlement were reached upon discussions with our regulators which are considered confidential supervisory information. However, Wells Fargo’s management team did 

not identify or address the problems early enough. And there is no 

145 

question that we view the actions of certain of our team members 

to be wholly unacceptable and wrong. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR MERKLEY 

FROM JOHN G. STUMPF 

Q.1. In the case of Gutierrez v. Wells Fargo, Judge William Alsup 

found Wells Fargo guilty of manipulating the order of its customers’ transactions from 2004 to 2008 in order to maximize overdraft fees. Judge Alsup found that Wells Fargo reordered transactions, charging the largest transaction first rather than charging 

the transaction in chronological order. By reordering the transactions, Wells Fargo ensured that the consumer’s bank account was 

depleted faster and the bank would be able to charge a higher 

number of overdraft fees. 

After the 2008 lawsuit, are you aware of any more instances and/ 

or cases where Wells Fargo was accused of engaging in reordering? 

Q.2. If so, please list the instances and/or cases. 

A.1.–A.2. Many banks, including Bank of America, Capital One, 

Citibank, Citizens Bank, HSBC Bank, JPMorgan Chase Bank, 

KeyBank, TD Bank, U.S. Bank, and Union Bank have confronted 

lawsuits alleging transaction reordering. Several of the lawsuits 

filed against Wells Fargo (and Wachovia, with which it merged in 

2008) have been dismissed, including Phillip Pena v. Wachovia 

Bank, N.A. (D.N.J., Case No. 1:08–5263); Vollmer v. Wachovia 

Bank, N.A. (N.D. Ga., Case No. 1:09–560); Poulin, et al. v. 

Wachovia Bank, N.A. (S.D. Fla., Case No. 09–cv–21863–JLK); Williams v. Wachovia Bank, N.A.(N.D. Cal., Case No. 3:09–5622); 

Green, Jr. v. Wachovia Bank, N.A. (N.D. Ga., Case No. 1 10–1176); 

Churchwell v. Wells Fargo Bank, N.A. (S.D. Fla., Case No. 1:09– 

cv–23153); McMillan v. Wells Fargo Bank, N.A. (N.D. Cal., Case 

No. 3:08–5739); Egan v. Wells Fargo Bank, N.A. (D. Col., Case No. 

1:09–253); Mortenson v. Wells Fargo Bank, N.A. (D. Nev., Case No. 

3:09–65); Ray v. Wells Fargo Bank, N.A. (N.D. Cal., Case No. 3:09– 

4700); Mitchell v. Wells Fargo Bank, N.A. (S.D. Tex., Case No. 

4:09–2578); Preston & Assoc. Int’l v. Wells Fargo Bank, N.A. (D. 

Col., Case No. 1:09–2940); Braden v. Wells Fargo Bank, N.A. (C.D. 

Cal., Case No. 2:10–3423); Townsend v. Wells Fargo Bank, N.A. 

(C.D. Cal., Case No. 2:10–550); and Kennedy v. Wells Fargo Bank, 

N.A. (N.D. Cal., Case No. 3:11–01222). 

The remaining cases brought against Wells Fargo and Wachovia 

have been consolidated in a multidistrict litigation proceeding in 

the United States District Court for the Southern District of Florida. These cases include Garcia, et al. v. Wachovia Bank, N.A. (S.D. 

Fla., Case No. 1:08–cv–22463–JLK); Spears-Haymond v. Wachovia 

Bank, N.A. (S.D. Fla., Case No. 1:09–cv–21680–JLK); Dolores 

Gutierrez v. Wells Fargo Bank, N.A. (S.D. Fla., Case No. 1:09–cv– 

23685–JLK); Martinez v. Wells Fargo Bank, N.A. (S.D. Fla., Case 

No. 1:09–cv–23834); and Zankich v. Wells Fargo Bank, N.A. (S.D. 

Fla., Case No. 1:09–cv–23186–JLK). The consolidated cases against 

Wells Fargo and Wachovia are currently on appeal to the Eleventh 

Circuit. 

146 

Q.3. Earlier this month Wells Fargo admitted to opening 2 million 

unauthorized bank accounts and credit cards. Given the recent 

revelations of unauthorized activity committed by Wells Fargo, 

along with a history of reordering transactions, your consumers deserve to know if they were unknowingly opted-in to overdraft protection. 

During your tenure, has Wells Fargo ever enrolled customers in 

overdraft protection without their knowledge or authorization? 

Q.4. If yes, how many customers were opted-in to overdraft protection without their authorization? 

A.3.–A.4. Wells Fargo is committed to providing only those services 

that our customers need or want, including overdraft services. The 

reviews to be undertaken will examine this issue. Customers are 

encouraged to contact us if they have any issues or concerns. 

Please note that Wells Fargo has not ‘‘admitted to opening 2 million unauthorized bank accounts and credit cards.’’ That figure 

refers to accounts that could have been [emphasis added] unauthorized. Please see our response to Senator Reed’s Question 1 for 

additional details. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR SASSE 

FROM JOHN G. STUMPF 

Q.1.a. I’d like to discuss how this scandal impacted Nebraska. 

Of the roughly 5,300 employees who were fired, how many of 

them worked in Nebraska? 

A.1.a. Of the approximately 5,300 Wells Fargo team members 

whose employments were terminated for sales-integrity violations 

from 2011 to 2015, 47 worked in Nebraska. 

Q.1.b. During the 2011 through 2015 period covered by the CFPB’s 

fine, were any Wells Fargo employees fired for failing to meet sales 

quotas? If so, how many? 

Q.1.c. Of those fired employees working in Nebraska, how many of 

them were at risk of being fired for failing to meet product sales 

quotas? 

A.1.b.–c. Wells Fargo cannot quantify with any degree of 

confidence how many team members’ employments, if any, were 

terminated, solely for not meeting sales goals. The bank tracks involuntary terminations for failure to perform job duties, which can 

include a range of issues. It is possible that team members’ employments were terminated solely for not meeting sales goals; however, 

Wells Fargo has safeguards in place to help ensure that managers 

remain focused on assessing team members’ overall performance in 

helping customers succeed financially, not just whether they meet 

an individual sales goal. This includes a strong performance management program, which provides for coaching and feedback to 

help team members succeed, involvement of Human Resources in 

disciplinary decisions, including termination decisions, and a termination review process undertaken by the Employee Relations function that is independent of the members of business management 

who made the termination decision. Additionally, Wells Fargo has 

established a process to enable former team members who contact 

the Company today to request a review of their termination, even 

147 

if they did not utilize the Company’s termination appeal and review processes at the time of their departure. Former team members who did utilize the Company’s appeal processes in the past 

will be provided with an additional review. Former team members 

who express interest in reemployment and are deemed to be eligible for reemployment through this review process will be able to 

work with a special recruiting team to assist in exploring 

opportunities at Wells Fargo. All of the team members referenced 

in Question 1(a) were terminated for sales-integrity violations, not 

for failing to meet product sales goals. 

Q.1.d. Of those fired employees working in Nebraska, please provide a percentage breakdown of the position held by each of the 

fired employees before they were fired. 

A.1.d. The majority held personal banker (51 percent) or teller (23 

percent) positions at the time of termination. The other team members who were terminated were employed in a variety of Regional 

Bank roles, including Customer Sales & Service Representative, 

Business Banking Specialist, Assistant Store Manager, Service 

Manager, and Store Manager. 

Q.1.e. How many of those accounts classified as potentially fraudulent were opened in Nebraska? 

Q.1.f. How many unauthorized fees and fines were levied on Nebraska consumers in relation to this scandal? What is the total cost 

of these fees and fines? 

A.1.e.–f. We asked PricewaterhouseCoopers (PwC) to analyze approximately 82 million deposit accounts for instances of potential 

simulated funding and approximately 11 million credit card accounts for instances of lack of authorization. The accounts reviewed 

were opened between 2011 and 2015. Of the accounts reviewed, 

PwC found that approximately 623,000 consumer and business 

credit card accounts could have been [emphasis added] unauthorized, and approximately 1.5 million deposit accounts could have 

[emphasis added] experienced simulated funding, that is, the unauthorized deposit and withdrawal of funds intended to create the 

false appearance that the account was being used by the customer. 

PwC did not [emphasis added] conclude that any of these accounts 

were unauthorized and/or experienced simulated funding; it just 

could not rule out these possibilities because its analysis of credit 

card authorization and potential simulated funding in deposit accounts was intentionally designed to be over-inclusive. For example, PwC flagged all credit card accounts that were not used and 

were not ‘‘fraud activated’’ by the customer calling an 800 number 

after receiving the card, unless there were indications of customer 

consent, even though there are many reasons why a customer may 

not activate their card. We took this intentionally expansive approach because we were willing to refund fees to customers who, 

in fact, approved account openings, but subsequently allowed the 

accounts to lapse, so that we did not exclude customers who may 

have suffered harm. 

We have found indications that the PwC number includes accounts where the customer authorized its opening. For example, 

Wells Fargo has worked to contact customers with open, inactive 

credit card accounts identified by PwC (i.e., the customers with 

148 

accounts that could have been [emphasis added] unauthorized) to 

determine whether they want these credit cards. Approximately 25 

percent have informed the bank that they either did not apply, or 

did not recall whether or not they applied, for their card. 

Of the approximately 2.1 million accounts that PwC identified, 

PwC identified approximately 12,000 Nebraska-based deposit and 

credit card accounts in its review for which it could not rule out 

the possibility that they were unauthorized and /or experienced 

simulated funding. For the reasons described, it is likely that not 

all of these accounts had simulated funding and/or were 

unauthorized. 

For the approximately 2.1 million deposit and credit card 

accounts that PwC identified, Wells Fargo refunded all potentially 

unauthorized charges. PwC’s review found that of the roughly 2.1 

million accounts identified, approximately 115,000 accounts were 

charged a fee, totaling $2.66 million in revenue to Wells Fargo. 

That figure, substantially all of which has been refunded to affected customers via check or direct deposit, is far surpassed by the 

costs associated with opening and closing the unused accounts. 

To Nebraska customers specifically, Wells Fargo paid approximately $14,000 to remediate potentially unauthorized charges. 

Again, for the reasons described, the remediation amount likely 

overstates the actual amount of unauthorized charges on these 

accounts. 

Q.2.a. I’d like to ask about Carrie Tolstedt’s role in the fraudulent 

accounts scandal. 

When was Ms. Tolstedt first informed about Wells Fargo employees who were fired for creating fraudulent accounts? Please provide 

a specific date. 

A.2.a. Wells Fargo cannot determine for certain the first time Ms. 

Tolstedt was told that a team member’s employment was terminated for committing a sales violation. Like any large employer, 

Wells Fargo constantly monitors sales-integrity issues so that, as 

issues came up that needed to be addressed, Ms. Tolstedt would be 

informed about those issues. It is our present understanding that 

these issues were likely raised with Ms. Tolstedt in or around 2011 

but the ongoing investigation by the Independent Directors of the 

Board of Directors and others is looking carefully at this question. 

Q.2.b. If Ms. Tolstedt was fired for her role in the scandal, would 

she have received less total lifetime compensation (in any form)? If 

so, how much less compensation? 

Q.2.c. How much of Ms. Tolstedt’s total, lifetime compensation (in 

any form), as of September 20, 2016, was eligible for clawback? 

Q.2.d. How much of Ms. Toldstedt’s total, lifetime compensation (in 

any form) was earned from 2011 through 2016? 

Q.2.e. What legal and/or contractual standard must Wells Fargo 

evaluate in order to determinate if any of Ms. Tolstedt’s compensation (in any form) should be clawed back? 

A.2.b.–e. Ms. Tolstedt has left Wells Fargo. She has agreed to not 

exercise any outstanding stock options previously awarded by Wells 

Fargo until the completion of the board of directors’ investigation 

and that, at the conclusion of this investigation, the board (or the 

149 

1Wells Fargo, September 27, 2016, Form 8–K (available online at https://www.sec.gov/Archives/edgar/data/72971/000119312516722259/d266244d8k.htm). 2Wells Fargo, ‘‘Independent Directors of Wells Fargo Conducting Investigation of Retail Banking Sales Practices and Related Matters (press release)’’ (Sept. 27, 2016) (available online at 

https://www.wellsfargo.com/about/press/2016/independent-directors-investigationl0927/). 3 2011–2013 compensation figures available in Wells Fargo, 2014 Proxy Statement, at 53 

(available online at https://www.sec.gov/Archives/edgar/data/72971/000119312514104276/ 

d663896ddef14a.htm); 2013–2015 compensation figures available in Wells Fargo, 2016 Proxy 

Statement, at 3 (available online at https://www.sec.gov/Archives/edgar/data/72971/ 

000119312516506771/d897049ddef14a.htm). 

Independent Directors of the Board or the Human Resources 

Committee, through board delegation) will have the authority to 

determine the extent to which such options will be forfeited.1

The board’s Independent Directors have determined that all of 

Ms. Tolstedt’s unvested equity compensation, valued at approximately $19 million, would be forfeited, and that she would not 

receive a bonus for 2016 or any retirement enhancements or severance package in connection with her separation from Wells Fargo. 

No incentive compensation was granted to Ms. Tolstedt as a result 

of her separation from the Company, and none of her equity 

awards will be ‘‘triggered’’ or otherwise increased or accelerated by 

her separation. Ms. Tolstedt could be subject to further compensation and other actions based upon the results of the Independent 

Directors’ investigation.2

Ms. Tolstedt’s total compensation from 2011 to 2015, as reported 

in accordance with SEC rules, is provided in the table below:3

Ms. Tolstedt’s stock holdings and outstanding compensation as of 

September 16, 2016, fell into three categories: (a) Wells Fargo 

shares that Ms. Tolstedt owned outright and acquired during her 

27-year career with the Company; (b) vested, but unexercised stock 

options granted in February 2008 and February 2009; and (c) 

unvested and unpaid restricted share rights and performance share 

awards granted between February 2014 and February 2016: 

(1) Ms. Tolstedt owned 960,175 shares of Wells Fargo stock that were worth approximately $43.6 million based on Wells Fargo’s September 16, 2016, closing stock price. 

(2) Ms. Tolstedt had vested, but unexercised stock options granted in February 2008 and February 2009 that were worth approximately $34.1 million pre-tax, based on Wells Fargo’s 


23001012.eps
150 

4Wells Fargo, ‘‘Independent Directors of Wells Fargo Conducting Investigation of Retail Banking Sales Practices and Related Matters (press release)’’ (Sept. 27, 2016) (available online at 

https://www.wellsfargo.com/about/press/2016/independent-directors-investigationl0927/). 5Wells Fargo, 2016 Proxy Statement, at 47–48 (available online at https://www.sec.gov/Archives/edgar/data/72971/000119312516506771/d897049ddef14a.htm). 

September 16, 2016, closing stock price and each award’s 

exercise price. 

(3) Ms. Tolstedt had unvested and unpaid equity awards in the 

form of restricted share rights and performance share 

awards, granted between February 2014 and February 2016, 

with a target value of approximately $18.9 million pre-tax 

based on Wells Fargo’s September 16, 2016, closing stock 

price. 

On September 27, 2016, the board announced that the Independent Directors had determined that Ms. Tolstedt would forfeit 

all of this last category, i.e., the outstanding unvested equity 

awards, valued at approximately $19 million.4 Ms. Tolstedt also 

agreed that she would not exercise her outstanding options during 

the pendency of the investigation undertaken by the Independent 

Directors. These initial actions do not preclude additional steps 

being taken with respect to Ms. Tolstedt as a consequence of the 

information developed in the investigation. 

For example, the board has the authority to evaluate previously 

paid incentive compensation, including prior annual incentive 

awards, under its Extended Clawback Policy. Wells Fargo’s Extended Clawback Policy applies to any bonus payment (such as previously paid annual incentive awards and vested equity awards) 

already made to Wells Fargo’s executive officers, if the bonus payment was based on materially inaccurate financial statements or 

any other materially inaccurate performance metric criteria. The 

board delegated to the Human Resources Committee the authority 

to make determinations with respect to the application of the 

Policy, including the value of the bonus payment, the amount of 

bonus payment (if any) that was based on materially inaccurate 

performance metric criteria, whether a performance metric criteria 

is material or materially inaccurate, and whether the inaccurate 

measurement of performance or application of performance to performance criteria is material. Under the Policy, the Company must 

exercise its rights to the fullest extent permitted, unless it would 

be unreasonable to do so. 

More generally, Wells Fargo has multiple recoupment or 

clawback policies and provisions in place that are applicable to current and former executive officers, including Ms. Tolstedt. The following table 5 describes these policies: 

151 

6 Adopted June 15, 2009, and extended February 2010. 


23001013.eps

Policy/Provision Trigger for Claw back or Compensation Impacted 

Recoupment Subject to Recovery Population 

Unearned lvlisconduct by an executive Any bonus or incentive Executive 

Compensation that contributes to the compensation that was Officers 

Recoupment Company having to restate all based on achievement 

Policy or a significant portion of its of financial results that 

financial statements were restated downward 

Extended Qawback Incentive compensation was Incentive compensation Executive 

Policy6 based on materially inaccurate that was based on Officers and 

financial infonnation or any materially inaccurate certain other 

other materially inaccurate fmancial infom1ation or Jughly 

perfom1ance metric criteria, any other materially compeosated 

whether or not the executive inaccurate perfonnance employees 

was responsible metric criteria 

Performance-Based Misconduct which has or might Restricted Share Rights Executive 

Vesting Conditions reasonably be expected to have ("RSR ') awards and Officers 

reputational or other hanu to Perfonmmce Share 

the Company or any conduct awards granted to Other team 

that constitutes "cause," named executives are members in 

Misconduct or commission of a subject to cancellation if receipt of 

material error that causes or the Board of Directors' RSRs as part 

might be reasonably expected Human Resources of ruumal 

to cause significant financial or Committee detennines incentive/ 

reputational harm to the that a trigger event has bonus 

Company or the executi ve's occurred awards 

business group, Improper or 

grossly negligent failure, 

including in a supervisory 

capacity, to identify, escalate, 

monitor or manage, in a timely 

manner and as reasonably 

expected, risks material to the 

Company or the executi ve's 

business group, 

An award was based on 

materially inaccurate 

perfom1ance metrics, whether 

or not tbe executive was 

responsible for the 

inaccuracy, or 

The Company or the 

executive's business group 

suffers a material downturn in 

financial performance or 

suffers a material failure of 

risk management. 
152 

The board (or the Independent Directors or the Human Resources Committee, through board delegation) will assess the relevant facts and circumstances, the award terms, and Wells Fargo’s 

recoupment and clawback policies to determine whether to cancel 

or clawback any more of Ms. Tolstedt’s incentive compensation. 

Q.2.f. On what specific date did Ms. Toldstedt (or any other Wells 

Fargo employee) first inform you of any item relating to the fraudulent accounts scandal? 

A.2.f. It is our understanding that, from time to time, because of 

Mr. Stumpf’s position, individuals would contact him directly and 

complain about issues and that Mr. Stumpf did receive complaints 

about sales-practice issues over the years. When Mr. Stumpf received such complaints, our understanding is that his practice was 

to forward them to the appropriate internal team, such as Human 

Resources, to address. 

Mr. Stumpf has said that he recalls learning of the increase in 

the number of reports of sales-practice issues in late 2013. 

Please note that the Independent Directors of Wells Fargo’s 

Board of Directors have launched an investigation into sales-practice issues, and that investigation is ongoing. 

Q.3.a. It has been reported that Wells Fargo is going to end sales 

goals for its retail products by the end of the year. 

Please describe the new system that will replace these sales 

goals. 

A.3.a. While our go-forward plan is still being developed under the 

leadership of Mary Mack, the new head of our Community Banking 

Division, we contemplate using customer service, growth, and risk 

management as criteria on which we will evaluate our teams and 

individual team members, focused on positive customer outcomes. 

Q.3.b. Will any employee compensation be contingent on this new 

system? 

A.3.b. Regional Bank team members who serve retail customers in 

bank branches will be eligible for bonus compensation based upon 

a combination of the factors enumerated in Question 3, subpart (a) 

above. 


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153 

Q.3.c. Will employees who fail to meet the criterion under this new 

system be fired? 

A.3.c. As has always been, and will remain, the case in the Community Banking Division, decisions to terminate a team member 

are made on a case-by-case basis upon consideration of all relevant 

facts and circumstances. 

Q.3.d. Will product sales be considered as a part of this new system? 

A.3.d. No. Regional Bank team members who serve retail customers in bank branches will not be evaluated on product sales 

goals going forward. 

Q.3.e. What steps will Wells Fargo take to ensure that the new 

system does not incentivize the creation of fraudulent accounts? 

A.3.e. While our go-forward plan is still being developed, we are 

confident that our customer service, growth, and risk management 

metrics will align our team member incentives with our customers’ 

interests. 

Q.4.a. I’d like to discuss the geographic distribution of the potentially fraudulent accounts. 

What percentage of the potentially fraudulent accounts were located in the city of Los Angeles? What about the percentage of employees fired for creating potentially fraudulent accounts? 

A.4.a. Approximately 9 percent of the deposit and credit card accounts identified by PwC were located in the city of Los Angeles. 

Please see the response to Question 1, subparts (e–f) above for 

more information about PwC’s process for identifying these accounts. 

Of the approximately 5,300 Wells Fargo team members whose 

employments were terminated from 2011 to 2015 for sales-integrity 

violations, approximately 5 percent worked in zip codes located in 

the city of Los Angeles. 

Q.4.b. What percentage of the potentially fraudulent accounts were 

located in the Southwest Region? What about the percentage of employees fired for creating potentially fraudulent accounts? 

A.4.b. Approximately 16 percent of the deposit and credit card accounts identified by PwC were located in the Southwest region, 

specifically the States of Texas, Oklahoma, Arizona, and New Mexico. Please see the response to Question 1, subparts (e–f) above for 

more information about PwC’s process for identifying these 

accounts. 

Of the approximately 5,300 Wells Fargo team members whose 

employments were terminated from 2011 to 2015 for sales-integrity 

violations, approximately 15 percent worked in the Southwest region. 

Q.4.c. What factors contributed to the geographic distribution of 

the fraud? 

A.4.c. Wells Fargo is working hard to address any Company-wide 

or region-specific processes that may have led certain team members to behave in a way contrary to Wells Fargo’s vision, values, 

and culture. That is one reason Wells Fargo has eliminated product 

154 

sales goals entirely for Regional Bank team members who serve 

customers in our retail branches. 

Q.4.d. Did Wells Fargo evaluate the potential for geographic diversity in terms of the ability to meet product sales goals? 

A.4.d. Yes. From 2011 to 2016, product sales goals varied by store 

year-to-year and across regions. 

Q.4.e. Did Wells Fargo adjust the product sales goals to match 

each region? 

A.4.e. Effective October 1, 2016, Wells Fargo no longer uses product sales goals for Regional Bank team members who serve customers in our retail branches. From 2009 to October 1, 2016, for 

the western markets and following the Wachovia/Wells Fargo conversion for the eastern markets, Wells Fargo centralized responsibility for setting store goals with its national leadership team 

working in conjunction with regional and local managers to determine appropriate goals for each store. A variety of factors were considered in determining the specific goals at the regional and store 

level, including customer demand and traffic, market demographics, and staffing levels. 

Q.5.a. I’d like to discuss the employees who were fired for creating 

fraudulent accounts. 

Starting in 2009, when was the first employee fired for creating 

fraudulent accounts? Please provide a specific date. 

Q.5.b. Starting in 2009, when were the first 100 employees fired 

for creating fraudulent accounts? Please provide a specific date. 

Q.5.c. Starting in 2009, when were the first 1,000 employees fired 

for creating fraudulent accounts? Please provide a specific date. 

A.5.a.–c. From 2011 to 2015, the employments of approximately 

5,300 team members were terminated for sales-integrity violations. 

Approximately 1,000 were terminated each year. For example, investigations by the Corporate Investigations group in 2013 resulted 

in the termination of 1,245 Community Banking team members. 

That is approximately 1 percent of Wells Fargo’s total population 

of Community Banking team members. 

Q.5.d. How many employees were fired for failing to meet sales 

quotas during the 2011 through 2015 period covered by the CFPB’s 

fine? 

Q.5.e. Were any of the employees who were fired for creating 

fraudulent accounts at risk of being fired for missing product sales 

goals? If so, what percentage of these employees were at risk? 

A.5.d.–e. Wells Fargo cannot quantify with any degree of confidence how many team members’ employments, if any, were at 

risk of being terminated for not meeting sales goals. The bank 

tracks involuntary terminations for failure to perform job duties, 

which can include a range of issues. It is possible that team members’ employments were terminated solely for not meeting sales 

goals; however, Wells Fargo has safeguards in place to help ensure 

that managers remain focused on assessing team members’ overall 

performance in helping customers succeed financially, not just 

whether they meet an individual sales goal. 

155 

Q.5.f. During the period covered by the CFPB’s fine, how much of 

an employee’s salary was contingent upon meeting product sales 

goals? Please provide a detailed breakdown, covering each category 

of employees who were fired for creating fraudulent accounts. 

A.5.f. Prior to our elimination of product sales goals, Regional 

Bank team members serving customers in our retail branches were 

eligible for earned incentive compensation based in part on sales 

performance. Leading up to the elimination of product sales goals, 

effective October 1, 2016, the actual incentive payouts based on 

sales-related performance objectives (distinct from service and 

other performance objectives) declined considerably: the median incentive paid as a percentage of total salary for sales-related objectives for tellers, for example, declined from 4.6 percent in 2011 to 

0.9 percent in 2015. Historically, the target incentive opportunity 

for overall performance objectives was approximately 3 percent of 

base compensation for tellers and the target for the majority of personal bankers was approximately 10 percent of base compensation. 

All incentive plans were capped. 

Q.5.g. What was the position of the highest ranking Wells Fargo 

employee who was fired in connection with this scandal? 

A.5.g. Of the approximately 5,300 team members whose employments were terminated for sales-integrity violations from 2011 to 

2015, the highest ranking Wells Fargo team member terminated 

held the position ‘‘Regional Banking Area President 2.’’ 

Q.5.h. Please provide a percentage breakdown of the position held 

by each of the fired employees before they were fired. 

A.5.h. Approximately 65 percent of the terminated team members 

were in Personal Banker positions or functionally similar roles and 

7 percent were in Teller positions. In addition, we terminated the 

employment of over 480 team members in supervisory positions, including store managers and persons up to three levels above bankers and tellers, when investigations have found that those team 

members engaged in or directed improper sales practices or exhibited excessive pressure and did not respond promptly and decisively to change their behavior. 

Q.6.a. I’d like to follow up on Senator Toomey’s questioning about 

Wells Fargo’s SEC filings. 

Did Wells Fargo ever disclose in its SEC filings that it had a materially adverse set of circumstances relating to false accounts that 

could result in a large fine from multiple regulators? If so, when? 

If not, why? 

Q.6.b. If Wells Fargo did not disclose this information, would Wells 

Fargo have disclosed it if Wells Fargo had known about the public 

and market reaction to the fraudulent accounts scandal, along with 

the size and the associated fines? 

Q.6.c. If not, what are the conditions under which Wells Fargo 

would disclose in its SEC filings that it is facing a significant regulatory or criminal risk? 

Q.6.d. In response to the fraudulent accounts scandal, has Wells 

Fargo changed its standards and process for evaluating if and how 

to disclose potential regulatory risk in SEC filings? 

156 

7See Wells Fargo, September 28, 2016, Form 8–K (available online at https://www.sec.gov/ 

Archives/edgar/data/72971/000119312516722259/d266244d8k.htm). 8See Wells Fargo, November 3, 2016, Form 10–Q at 67 (available online at https:// 

www.sec.gov/Archives/edgar/data/72971/000007297116001340/wfc-9302016x10q.htm). 

A.6.a.–d. Each quarter, we look at the relevant and appropriate 

facts available to us to determine whether a legal matter is material and should be disclosed in our public filings. Discerning materiality is not a mechanical exercise but rather is a determination 

based on judgments informed by the facts and circumstances 

known at the time the determination is made. 

Based on the facts and circumstances as we knew them at the 

time, we concluded that the sales-practices investigations by the 

Consumer Financial Protection Bureau (CFPB), the Office of the 

Comptroller of the Currency (OCC), and the Los Angeles City Attorney were not material. This was a considered determination 

based upon what we understood at the time these investigations 

were occurring. 

As part of our ongoing review process, we continued to evaluate 

the ongoing developments since the announcement of the settlements to determine whether any filings or disclosures should be 

made. In conjunction with our Form 8–K filing on September 28, 

2016, announcing our former CEO John Stumpf’s and our former 

Community Banking head Carrie Tolstedt’s forfeiture of their 

unvested equity awards, we determined that it was appropriate to 

disclose the relevant legal developments that had occurred since 

the announcement of the settlements. As noted in our Form 8–K, 

these included ‘‘formal or informal inquiries, investigations or examinations’’ from ‘‘[F]ederal, State, and local government agencies, 

including the United States Department of Justice, and State attorneys general and prosecutors’ offices, as well as Congressional committees . . . ’’7 Furthermore, our Form 10–Q filing on November 3, 

2016, contained additional disclosures concerning sales practices 

matters, including an update to our legal actions disclosures and 

the addition of a new risk factor summarizing the legal developments and related events that had occurred since the announcement of the settlements and noting the potential that ‘‘negative 

publicity or public opinion resulting from these matters may increase the risk of reputational harm to our business . . . ’’8 We will 

continue to review developments related to sales practices matters 

and make additional disclosures as the facts and circumstances 

warrant. 

Q.7.a. I’d like to discuss the compensation that Wells Fargo provided to its customers that were impacted by the fraudulent 

accounts scandal. 

When did Wells Fargo first learn that it had customers who were 

charged fraudulent fines and fees for fake accounts that were 

opened in their name? 

A.7.a. Because of the way that inactive accounts are automatically 

closed and the way that fees are assessed, Wells Fargo did not initially realize that certain customers may have paid fees on accounts that they did not authorize or use. In 2015, the Company 

realized that, in a small percentage of cases, fees had been paid. 

157 

9 Refunds were not made if the amount paid by the customer plus interest was less than 

$1.00. 

Q.7.b. How soon after learning about these inappropriate fines did 

Wells Fargo compensate their customers for this fraud? 

A.7.b. After realizing that fees were paid in a small percentage of 

cases, PwC analyzed deposit and credit card accounts. PwC’s analysis focused on potential simulated funding in deposit accounts, 

and the potential lack of customer authorization of credit card accounts. After PwC completed its analysis, Wells Fargo promptly 

made direct deposits and issued checks to refund substantially all 

fees, with interest, that were assessed on the approximately 2.1 

million accounts identified by PwC.9 These refunds were issued 

without determining that any particular account was unauthorized. 

Q.7.c. Does Wells Fargo plan on compensating its customers for all 

reasonable costs associated with this fraud, including any potential 

drop in their customer’s credit score? 

Q.7.d. If so, how does Wells Fargo plan on identifying and compensating every customer who may have suffered a drop in credit score 

in association with the fraudulent accounts scandal? 

A.7.c.–d. Wells Fargo is working very hard to remediate harm that 

may have been caused to our customers. To that end, pursuant to 

the CFPB and OCC Consent Orders, Wells Fargo will retain the 

services of an independent consultant and develop redress and reimbursement plans to identify the population of consumers who 

may have been affected by improper sales practices. We fully expect that, once approved by our regulators, the redress and reimbursement plans will encompass various forms of harm, including 

harm related to credit bureau inquiries, and that Wells Fargo will 

issue and track reimbursement payments. 

We asked PwC to analyze approximately 82 million deposit 

accounts for instances of potential simulated funding and approximately 11 million credit card accounts for instances of lack of authorization. The accounts reviewed were opened between 2011 and 

2015. Of the accounts reviewed, PwC found that approximately 

623,000 consumer and business credit card accounts could have 

been [emphasis added] unauthorized, and approximately 1.5 million deposit accounts could have [emphasis added] experienced 

simulated funding, that is, the unauthorized deposit and withdrawal of funds intended to create the false appearance that the 

account was being used by the customer. In other words, PwC did 

not [emphasis added] conclude that these accounts were unauthorized and/or experienced simulated funding; it just could not rule 

out these possibilities because its analysis of credit card authorization and potential simulated funding in deposit accounts was intentionally designed to be over-inclusive. For example, PwC flagged all 

credit card accounts that were not used and were not ‘‘fraud activated’’ by the customer calling an 800 number after receiving the 

card, unless there were indications of customer consent, even 

though there are many reasons why a customer may not activate 

their card. 

Of the subset of accounts identified, PwC determined that approximately 115,000 accounts were charged a fee, averaging less 

158 

than $25 per account and totaling $2.66 million in revenue to Wells 

Fargo. That figure is far surpassed by the costs associated with 

opening and closing the unused accounts. Wells Fargo has already 

made direct deposits and issued checks to refund these fees. We 

took this intentionally expansive approach because we were willing 

to refund fees to customers who, in fact, approved account openings, but subsequently allowed the accounts to lapse, so that we did 

not exclude customers who may have suffered harm. 

We have found indications that the PwC number includes accounts where the customer authorized its opening. For example, 

Wells Fargo has worked to contact customers with open, inactive 

credit card accounts identified by PwC (i.e., the customers with accounts that could have been [emphasis added] unauthorized) to 

determine whether they want these credit cards. Approximately 25 

percent have informed the bank that they either did not apply, or 

did not recall whether or not they applied, for their card. These results demonstrate that PwC’s findings as to credit card accounts 

were over-inclusive, containing accounts where the customer authorized the opening of the account. 

For those customers who want the credit card, the account will 

remain open. For any customer who does not want their credit 

card, Wells Fargo is closing the account and correcting credit bureau reporting. This means we are removing the account from the 

customers’ credit reports going forward and suppressing the existence of the inquiry so that it is not viewable to other lenders or 

requestors. 

(The Fair Credit Reporting Act prohibits us removing the inquiry 

altogether and it will still be visible to customers pulling their own 

credit reports.) 

Moreover, we are in the process of determining how many customers obtained a credit product, with Wells Fargo or another company, during the time period in which their credit score may have 

been impacted by an unauthorized credit inquiry or existence of the 

trade line. While it may be difficult to calculate the precise impact 

for every customer, our intent is to err on the side of the customer 

and make them whole for negative repercussions that were tied to 

a drop in their credit score. This could include impacts on pricing, 

line or loan size, or credit decision. We have allocated significant 

resources to this effort and are working with the credit bureaus to 

develop a plan for submission to our regulators. 

Going forward, Wells Fargo is voluntarily expanding its review 

of accounts to include 2009 and 2010. Wells Fargo also provides resources to help customers request free credit reports and is offering 

a no-cost mediation option to impacted customers to help identify 

and remediate any other forms of harm. 

Ultimately, if any customer has any questions or concerns regarding his or her accounts—regardless of when those accounts 

were opened—he or she is invited to contact us so that Wells Fargo 

can address those questions or concerns. 

Q.7.e. Is Wells Fargo aware of a material amount of fraudulent accounts created in the names of customers prior to 2009? 

159 

Q.7.f. What constraints would prevent Wells Fargo from compensating customers for losses associated with fraudulent accounts, 

from actions dating back prior to 2009? 

Q.7.g. Does Wells Fargo plan to reach back earlier than 2009 to 

refund customers for losses associated with their fraudulent accounts scandal? Why or why not? 

A.7.e.–g. We appreciate and share your concern that any and all 

customers who may have been impacted should be identified. 

Therefore, we are continuing to examine whether there are ways 

to identify unauthorized accounts opened prior to 2009. As an important initial step, we are notifying all of our consumer and small 

business Community Banking customers with a checking, savings, 

credit card, or line of credit account of this issue; we are also inviting and encouraging them to speak with a Wells Fargo representative if they have any questions or concerns about their accounts. 

Please also note that the Independent Directors of Wells Fargo’s 

Board of Directors have launched an investigation into these 

issues, and that investigation is ongoing. 

Further, we would note again that pursuant to the CFPB and 

the OCC Consent Orders, Wells Fargo will retain the services of an 

independent consultant and develop redress and reimbursement 

plans to identify the population of consumers who may have been 

affected by improper sales practices. We fully expect that, once approved by our regulators, the redress and reimbursement plans will 

encompass various forms of harm, including harm related to credit 

bureau inquiries, and that Wells Fargo will issue and track reimbursement payments. 

Q.8.a. I’d like to discuss Wells Fargo’s interactions with law enforcement officials and regulators. 

Please provide the specific date that Wells Fargo first discussed 

the fraudulent accounts scandal with the Consumer Financial Protection Bureau (CFPB). 

A.8.a. Wells Fargo’s General Counsel notified the CFPB of the Los 

Angeles City Attorney’s lawsuit at or about the time it was filed 

in May of 2015. The CFPB requested information shortly after 

Wells Fargo notified it of the lawsuit. In June and July 2015, Wells 

Fargo provided information to the CFPB. 

Q.8.b. Does the CFPB have any employees embedded in Wells 

Fargo? If so, how many? 

A.8.b. The CFPB has 4 employees who are resident onsite. In addition, additional CFPB employees may be onsite at Wells Fargo 

when they are engaged in conducting examinations of our consumer businesses. 

Q.8.c. When (if at all) did Wells Fargo first provide the CFPB with 

internal documents relating to the fraudulent accounts scandal? 

A.8.c. Wells Fargo’s General Counsel notified the CFPB of the Los 

Angeles City Attorney’s lawsuit at or about the time it was filed 

in May of 2015. The CFPB requested information shortly after 

Wells Fargo notified it of the lawsuit. In June and July 2015, Wells 

Fargo provided information to the CFPB. 

160 

Q.8.d. Please provide the specific date that Wells Fargo first discussed the fraudulent accounts scandal with the Office of the 

Comptroller of the Currency (OCC). 

A.8.d. As Comptroller Curry testified before the Senate Banking 

Committee on September 20, 2016, Wells Fargo management meets 

regularly with the Office of the Comptroller of the Currency (OCC), 

our prudential regulator, about a variety of issues. Wells Fargo immediately cooperated with the OCC upon its first contact with the 

bank concerning these issues. Ultimately that involved addressing 

Matters Requiring Attention (MRAs) the OCC imposed as well as 

providing relevant documents in 2015. 

Q.8.e. Does the OCC have any employees embedded in Wells 

Fargo? If so, how many? 

A.8.e. Several OCC employees are embedded at Wells Fargo. 

Q.8.f. When (if at all) did Wells Fargo first provide the OCC with 

internal documents relating to the fraudulent accounts scandal? 

A.8.f. As Comptroller Curry testified before the Senate Banking 

Committee on September 20, 2016, Wells Fargo management meets 

regularly with the Office of the Comptroller of the Currency (OCC), 

our prudential regulator, about a variety of issues. Wells Fargo immediately cooperated with the OCC upon its first contact with the 

bank concerning these issues. Ultimately that involved addressing 

Matters Requiring Attention (MRAs) the OCC imposed as well as 

providing relevant documents in 2015. 

Q.8.g. Please provide the specific date that Wells Fargo first discussed the fraudulent accounts scandal with the Office of the Los 

Angeles City Attorney. 

A.8.g. The City Attorney filed its complaint in May 2015. Wells 

Fargo did not have substantive conversations with the City Attorney’s office prior to that time. 

Q.8.h. When (if at all) did Wells Fargo first provide the OCC with 

internal documents relating to the fraudulent accounts scandal? 

A.8.h. As Comptroller Curry testified before the Senate Banking 

Committee on September 20, 2016, Wells Fargo management meets 

regularly with the Office of the Comptroller of the Currency (OCC), 

our prudential regulator, about a variety of issues. Wells Fargo immediately cooperated with the OCC upon its first contact with the 

bank concerning these issues. Ultimately that involved addressing 

Matters Requiring Attention (MRAs) the OCC imposed as well as 

providing relevant documents in 2015. 

Q.9.a. I’d like to discuss the fraudulent accounts that were created 

by Wells Fargo. 

What standards did the independent audit consult in identifying 

the fraudulent accounts? 

A.9.a. Please see the response to Question 7, subparts (c–d) above. 

Q.9.b. Could a fraudulent account had escaped notice of the independent audit if it had all of the characteristics of a fraudulent account, but it contained or was billed for more than $100? What 

about more than $1,000? 

A.9.b. PwC’s analysis looked at all consumer and small business 

checking, savings, and credit card accounts opened during the 

161 

relevant period—over 93 million accounts in total—to identify characteristics consistent with potential simulated funding in deposit 

accounts, and a potential lack of customer authorization in credit 

card accounts. Accounts were not excluded on the basis of how 

much they were charged in fees. The characteristics of deposits and 

withdrawals were factors considered by PwC in conducting its analysis and so the nature of the deposits made in an account would 

have affected whether the account was identified as possibly having simulated funding. 

Q.9.c. Of the fraudulent accounts, roughly what percentage of them 

were canceled within 3 days? 

Q.9.d. Of the fraudulent accounts, roughly what percentage of 

them were canceled within a week? 

Q.9.e. Of the fraudulent accounts, roughly what percentage of them 

were canceled after a month? 

A.9.c.–e. Deposit accounts that are not used by a customer are 

automatically closed pursuant to Wells Fargo’s policies and procedures. Under those policies and procedures, unused accounts typically would not automatically be closed within a 30-day period. 

Q.9.f. Did any of these fraudulent accounts ever contain or were 

billed for more than $1? If so, roughly, what percentage of 

accounts? 

Q.9.g. Did any of these fraudulent accounts ever contain or were 

any of them ever billed for more than $10? If so, roughly what percentage of accounts? 

Q.9.h. Did any of these fraudulent accounts ever contain or were 

billed for more than $100? If so, roughly what percentage of 

accounts? 

Q.9.i. Did any of these fraudulent accounts ever contain or were 

billed for more than $1,000? If so, roughly what percentage of 

accounts? 

Q.9.j. Did any of these fraudulent accounts ever transfer money to 

other accounts, other than those that were held by the named customer of the account? If so, roughly what percentage of accounts? 

A.9.f.–j. Please see the response to Question 7, subparts (c–d) 

above. In some instances, Wells Fargo team members temporarily 

funded unauthorized accounts with their own deposits. After a certain time period, those funds were removed by the team member. 

Q.9.k. Did Wells Fargo ever file suspicious activity reports in association with the accounts that were identified by the independent 

audit as potentially fraudulent? If so, how many? 

A.9.k. Wells Fargo has policies, procedures, and internal controls 

that are reasonably designed to comply with its legal obligations to 

monitor, detect, and report suspicious activities. Under Federal 

law, Suspicious Activity Reports (‘‘SARs’’), and any information 

that would reveal the existence of a SAR, are confidential, 31 

U.S.C. § 5318(g)(2)(A)(i) and 12 C.F.R. § 21.11(k). 

162 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARREN 

FROM JOHN G. STUMPF 

Fees Charged as a Result of the Creation of Fraudulent 

Accounts 

Q.1.a. Working with PwC, Wells Fargo identified 1.5 million deposit accounts and 565,000 credit card accounts that ‘‘may have 

been unauthorized.’’ However, ‘‘PwC did not find these accounts 

had been unauthorized’’—it simply ‘‘could not rule out the possibility.’’ Please provide a detailed explanation of why PwC was 

unable to identify whether all of the 565,000 accounts were 

unauthorized. 

Q.1.b. What records does Wells Fargo have of the number and 

amount of fees charged on unused accounts between 2011 and 

2015? 

A.1.a.–b. We asked PricewaterhouseCoopers (PwC) to analyze 

approximately 82 million deposit accounts for instances of potential 

simulated funding and approximately 11 million credit card accounts for instances of lack of authorization. For example, PwC 

flagged all credit card accounts that were not used and were not 

‘‘fraud activated’’ by the customer calling an 800 number after receiving the card, unless there were indications of customer consent, 

even though there are many reasons why a customer may not activate their card. By itself, the lack of activation and use by a customer does not mean that the customer had not authorized the 

card to begin with. We know that some customers will request a 

credit card for many reasons, including for emergencies and other 

reasons, but then they may not activate the card. However, because 

we could not confirm, based on account activity, that the customer 

authorized the account in the first place, we elected to consider 

these accounts for potential remediation. Similarly, for checking 

and savings accounts, the fact that the accounts have certain characteristics consistent with potential simulated funding does not 

mean that those accounts experienced simulated funding. 

Of the approximately 2.1 million accounts identified, PwC determined that approximately 115,000 accounts were charged a fee, 

averaging less than $25 per account and totaling $2.66 million in 

revenue to Wells Fargo. Wells Fargo has already made direct deposits and issued checks to refund these fees. We took this intentionally expansive approach because we were willing to refund fees 

to customers who, in fact, approved account openings, but subsequently allowed the accounts to lapse, so that we did not exclude 

customers who may have suffered harm. 

We have found indications that the PwC number includes accounts where the customer authorized its opening. For example, 

Wells Fargo has worked to contact customers with open, inactive 

credit card accounts identified by PwC (i.e., the customers with accounts that could have been [emphasis added] unauthorized) to 

determine whether they want these credit cards. Approximately 25 

percent have informed the bank that they either did not apply or 

did not recall whether or not they applied for their card. For those 

customers who want the credit card, the account will remain open. 

For any customer who does not want their credit card, Wells Fargo 

is closing the account and correcting credit bureau reporting. These 

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1 E. Scott Reckard, ‘‘Wells Fargo’s pressure-cooker sales culture comes at a cost,’’ Los Angeles 

Times (December 21, 2013) (available at http://www.latimes.com/business/la-fi-wells-fargosale-pressure-20131222-story.html). 2 Anastasia Christman, ‘‘Banking on the Hard Sell: Low Wages and Aggressive Sales Metrics 

Put Bank Workers and Customers at Risk,’’ National Employment Law Project (June 2016) 

(available at http://www.nelp.org/content/uploads/NELP-Report-Banking-on-the-HardSell.pdf). 

results demonstrate that PwC’s findings as to credit card accounts 

were over-inclusive, containing accounts where the customer 

authorized the opening of the account. 

Q.1.c. Please provide the annual revenue that Wells Fargo gained 

from deposit and credit card account fees for 2011–2015. 

A.1.c. The following table shows the line-item revenue data for 

Service Charges on Deposit Accounts and Card Fees as reported, 

according to generally accepted accounting principles, in Wells Fargo’s income statements for the years 2011 through 2015. These figures are inclusive of both consumer and commercial businesses, 

with the commercial businesses contributing proportionately more 

in the Service Charge category than in Card Fees. Service Charges 

on Deposit Accounts are primarily composed of periodic account 

fees and overdraft fees. Card Fees are primarily composed of interchange fees, as well as annual and other fees. 

Fair Labor Standards Act (FLSA) 

For years Wells Fargo employees have described a management 

culture characterized by ‘‘mental abuse,’’ being forced to work overtime ‘‘for what felt like after-school detention’’ during the week and 

on weekends, and being ‘‘severely chastised and embarrassed in 

front of 60-plus managers.’’1 And as a June 2016 report from the 

National Employment Law Project, ‘‘Banking on the Hard Sell,’’2

documents, these kinds of practices are pervasive across the 

industry. 

Even in this context, however, Wells Fargo stands out, given allegations that the bank repeatedly violated wage and hour provisions 

in the FLSA by denying employees overtime pay for hours worked 

in excess of 40 hours a week and by misclassifying workers as overtime exempt to avoid paying time and a half for those additional 

hours. My office has uncovered dozens of wage and hour complaints 

from Wells Fargo employees, going back as far as 1999 and cutting 


23001015.eps
164 

3See, for example, Louie Torres, ‘‘Former employee says bank didn’t pay overtime,’’ Penn 

Record (August 22, 2016) (online at http://pennrecord.com/stories/510999469-former-employeesays-bank-didn-t-pay-proper-overtime); James Rufus Koren (with the Los Angeles Times), ‘‘Wells 

Fargo still faces lawsuits from customers, ex-employees,’’ Santa Cruz Sentinel (September 10, 

2016) (online at http://www.santacruzsentinel.com/article/NE/20160910/NEWS/160919974); 

Overtime Pay Laws Resource Center, ‘‘$2 Million Settles Wells Fargo Overtime Lawsuit’’ (May 

12, 2015) (online at http://www.overtimepaylaws.org/2-million-settles-wells-fargo-overtime-lawsuit/); E. Scott Reckard, ‘‘Wells Fargo’s pressure-cooker sales culture comes at a cost,’’ Los Angeles Times, (December 21, 2013) (online at http://www.latimes.com/business/la-fi-wells-fargosale-pressure-20131222-story.html); Top Class Actions, ‘‘Wells Fargo Loan Officer Underpaid 

Overtime Class Action Settlement’’ (October 22, 2015) (online at https://topclassactions.com/ 

lawsuit-settlements/closed-settlements/210771-wells-fargo-loan-officer-unpaid-overtime-class-action-settlement/); Chicago Overtime Law Center, ‘‘Wells Fargo Settles Overtime Class Action for 

Mortgage Consultants’’ (December 29, 2015) (online at http://www.chicagoovertime 

lawyerblog.com/2015/12/1514.html); Shannon Henson, ‘‘Tech Workers File FLSA Suit Against 

Wells Fargo,’’ Law360 (May 30, 2008) (online at http://www.law360.com/articles/57871/techworkers-file-flsa-suit-against-wells-fargo); and E. Scott Reckard, ‘‘Wells Tellers File Lawsuit Alleging Unpaid Wages,’’ Los Angeles Times (November 8, 2003) (online at http://articles.latimes.com/2003/nov/08/business/fi-wells8). 

across many of the different business groups within Wells Fargo, 

including the insurance, mortgage, and retail banking groups.3

These and other allegations raise a number of questions about 

Wells Fargo’s treatment of its bank tellers and associates. 

Q.2.a. What are Wells Fargo’s policies with regard to paying overtime for bank tellers and associates who stayed late or came in on 

weekends to meet their sales quotas? 

A.2.a. Wells Fargo’s policy is that nonexempt team members are 

compensated for all [emphasis added] hours worked, including all 

overtime hours. Wells Fargo’s Team Member Handbook states: 

If you’re in a nonexempt position, you are entitled to pay for all hours actually worked, even those exceeding your regular schedule or those not authorized before working them. Therefore, you must report all hours worked 

in Time Tracker. 

Wells Fargo supports and enforces this policy and wage and hour 

compliance. 

Time Tracker is the online system that Wells Fargo nonexempt 

team members use to enter daily work time. Team members input, 

review, and approve the time reported each week. Time Tracker 

uploads the recorded work time to the payroll system and the team 

member is paid for all time worked, including any overtime pay. 

Supervisor approval of timesheets is not necessary for pay to be 

processed based upon the time entered by the team member. 

A team member may report any discrepancies or concerns 

regarding accurate time reporting or pay, including overtime pay, 

via an email address to the payroll team; by contacting the 

EthicsLine; or by reaching out to Human Resources (HR). The H.R. 

team investigates all such claims. If unreported time is identified, 

the team member is provided a document to record all previously 

unreported work time and pay is processed. 

Nonexempt team members are directed to an online training 

module that details how to properly record all work time in Time 

Tracker. Wells Fargo managers are required to complete FLSA 

training no less frequently than every other year. The training explains Wells Fargo’s commitment to proper pay practices and emphasizes each manager’s responsibilities for ensuring that all work 

time is reported and proper pay is received. Supplemental 

resources, including Manager Tip sheets and H.R. professionals, 

provide further support to managers to help fulfill Wells Fargo’s 

165 

responsibilities to comply with FLSA and fulfill all time keeping 

requirements. 

Q.2.b. What portion of Wells Fargo team members, sales associates, and bank tellers make less than the current FLSA salary 

threshold of $455 per week ($23,660 per year)? 

Q.2.c. For the group of employees that Wells Fargo paid above this 

salary threshold, how many and what percentage were classified as 

overtime exempt? 

Q.2.d. For those employees who were classified as overtime exempt, what percentage of their time was spent performing duties 

that were managerial in nature, as defined by the FLSA? 

Q.2.e. What was the median salary (or wage) earned by the 5,300 

bank employees that were fired for their role in the fraudulent activities at Wells Fargo? 

Q.2.f. What percentage of fired employees were classified as overtime exempt? 

A.2.b.–f. Please see the response to Question 2, subpart (a) above. 

Note that Wells Fargo has set its own minimum pay at $12.00/hour 

effective March 2016, which is higher than the Federal minimum 

wage of $7.25, and results in compensation higher than $455 per 

week for a 40-hour week. In addition, all salaried and hourly team 

members classified as regular or part-time (i.e., those who are regularly scheduled to work 17.5 hours or more per week) are eligible 

for Wells Fargo-sponsored benefits, including health insurance, life 

insurance, dental and vision insurance, short- and long-term disability, 401(k) plan, and paid parental leave. 

At the time each new job is created, Wells Fargo completes an 

analysis of job duties to determine FLSA classification. The Wells 

Fargo Compensation Team also periodically reviews jobs or adjusts 

job classification as necessary in accordance with current regulations and court decisions. 

The average base compensation for team members whose employments were terminated ranged from approximately $26,000 for 

Tellers to over $170,000 for a Regional Banking Area President. In 

general, Community Banking division team members earn an average total compensation of more than $50,000 ($62,000 inclusive of 

benefits). 

Customer Restitution 

Q.3.a. How will Wells Fargo be providing restitution to customers 

affected by wrongdoing in these cases? 

Q.3.b. What is the criteria for determining which customers do or 

do not qualify for restitution? 

A.3.a.–b. Wells Fargo is working very hard to remediate harm that 

may have been caused to our customers. To that end, pursuant to 

the Consumer Financial Protection Bureau (CFPB) and Office of 

the Comptroller of the Currency (OCC) Consent Orders, Wells 

Fargo will retain the services of an independent consultant and 

develop redress and reimbursement plans to identify the population of consumers who may have been affected by improper sales 

practices. We fully expect that, once approved by our regulators, 

the redress and reimbursement plans will encompass various forms 

166 

of harm, including harm related to credit bureau inquiries, and 

that Wells Fargo will issue and track reimbursement payments. 

We asked PwC to analyze approximately 82 million deposit 

accounts for instances of potential simulated funding and approximately 11 million credit card accounts for instances of lack of authorization. The accounts reviewed were opened between 2011 and 

2015. Of the accounts reviewed, PwC found that approximately 

623,000 consumer and business credit card accounts could have 

been [emphasis added] unauthorized, and approximately 1.5 million deposit accounts could have [emphasis added] experienced 

simulated funding, that is, the unauthorized deposit and withdrawal of funds intended to create the false appearance that the 

account was being used by the customer. In other words, PwC did 

not [emphasis added] conclude that these accounts were unauthorized and/or experienced simulated funding; it just could not rule 

out these possibilities because its analysis of credit card authorization and potential simulated funding in deposit accounts was intentionally designed to be over-inclusive. For example, PwC flagged all 

credit card accounts that were not used and were not ‘‘fraud activated’’ by the customer calling an 800 number after receiving the 

card, unless there were indications of customer consent, even 

though there are many reasons why a customer may not activate 

their card. 

Of the approximately 2.1 million accounts identified, PwC determined that approximately 115,000 accounts were charged a fee, 

averaging less than $25 per account and totaling $2.66 million in 

revenue to Wells Fargo. That figure is far surpassed by the costs 

associated with opening and closing the unused accounts. Wells 

Fargo has already made direct deposits and issued checks to refund 

these fees. We took this intentionally expansive approach because 

we were willing to refund fees to customers who, in fact, approved 

account openings, but subsequently allowed the accounts to lapse, 

so that we did not exclude customers who may have suffered harm. 

We have found indications that the PwC number includes accounts where the customer authorized its opening. For example, 

Wells Fargo has worked to contact customers with open, inactive 

credit card accounts identified by PwC (i.e., the customers with accounts that could have been [emphasis added] unauthorized) to 

determine whether they want these credit cards. Approximately 25 

percent have informed the bank that they either did not apply, or 

did not recall whether or not they applied, for their card. These results demonstrate that PwC’s findings as to credit card accounts 

were over-inclusive, containing accounts where the customer authorized the opening of the account. 

For those customers who want the credit card, the account will 

remain open. For any customer who does not want his or her credit 

card, Wells Fargo is closing the account and correcting credit bureau reporting. This means we are removing the account from the 

customers’ credit reports going forward and suppressing the existence of the inquiry so that it is not viewable to other lenders or 

requestors (the Fair Credit Reporting Act prohibits us removing 

the inquiry altogether and it will still be visible to customers pulling their own credit reports). 

167 

Moreover, we are in the process of determining how many customers obtained a credit product, with Wells Fargo or another company, during the time period in which their credit score may have 

been impacted by an unauthorized credit inquiry or existence of the 

trade line. While it may be difficult to calculate the precise impact 

for every customer, our intent is to err on the side of the customer 

and make them whole for negative repercussions that were tied to 

a drop in their credit score. This could include impacts on pricing, 

line or loan size, or credit decision. We have allocated significant 

resources to this effort and are working with the credit bureaus to 

develop a plan for submission to our regulators. 

Going forward, Wells Fargo is voluntarily expanding its review 

of accounts to include 2009 and 2010. Wells Fargo also provides resources to help customers request free credit reports and is offering 

a no-cost mediation option to impacted customers to help identify 

and remediate any other forms of harm. 

Ultimately, if any customer has any questions or concerns regarding his or her accounts—regardless of when those accounts 

were opened—he or she is invited to contact us so that Wells Fargo 

can address those questions or concerns. 

Q.3.c. How many customers will be receiving restitution? 

Q.3.d. What is the total amount of restitution that these customers 

will receive? 

A.3.c.–d. The number of customers receiving restitution, and the 

amount of restitution, will continue to increase as our expanded review and customer outreach efforts continue and as Wells Fargo 

develops and implements a redress and reimbursement plan with 

the independent consultant required by the CFPB and OCC Consent Orders. 

Disclosure and Board Discussion of Problems at Wells Fargo 

Q.4. Prior to the settlement with CFPB, Wells Fargo fired over 

5,000 employees for misconduct related to false accounts. Did the 

Wells Fargo board discuss the reason for this many employees 

being fired, and the problems that led to them being fired? If so, 

please provide copies of relevant board committee minutes relating 

to this issue, including minutes of the Risk Committee and the 

Audit and Examination Committee, from October 2013 forward. 

A.4. From at least 2011 forward, the board’s Audit and Examination Committee received periodic reports on the activities of Wells 

Fargo’s Internal Investigations group (which investigates issues involving team members), as well as information on EthicsLine and 

suspicious activity reporting. Among other things, several of those 

reports discussed increases in sales integrity issues or in notifications to law enforcement in part relating to the uptick in sales 

integrity issues. Some reporting discussed reasons for increases in 

sales integrity investigations and reporting, which included improved controls, tightening existing controls, and enhancements to 

better facilitate referrals of potential sales integrity violations to 

Internal Investigations. 

Later, the Risk Committee began to receive reports from management of noteworthy risk issues, which included, among other 

risks, sales conduct and practice issues affecting customers and 

168 

4 Craig McCann, Chuan Qin, and Mike Yan, ‘‘How Widespread and Predictable is Stock 

Broker Misconduct?’’ Securities Litigation and Consulting Group (April 2016) (online at http:// 

www.slcg.com/pdf/workingpapers/McCann%20Qin%20and%20Yan%20on%20BrokerCheck.pdf). 

McCann, Qin, and Yan replicated the work of Quereshi and Sokobin, ‘‘Do Investors Have Valuable Information About Brokers?’’ (August 20, 2015) (online at http://papers.ssrn.com/sol3/papers.cfm?abstractlid=2652535) and Egan, Matvos, and Seru, ‘‘The Market for Financial Adviser 

Misconduct’’ (February 2016) (online at https://www.chicagobooth.edu/∼/media/B76C81EFE 

39B4EDB9A4B4D8B34D0B0F7.pdf) to reconcile competing estimates of misconduct within the 

brokerage industry. 

management’s efforts to address those risks. The board’s Human 

Resources Committee also received a report from management that 

it was monitoring sales integrity in Community Banking. Sales integrity issues also were discussed periodically with the board. 

We are not presently aware of any document or instance prior to 

the settlement with the CFPB that informed the board of the total 

number of employees who had been terminated for misconduct related to improper sales practices. The number of terminations and 

the reasons for them are subjects that the Independent Directors 

are addressing in their investigation. 

Wells Fargo’s Culture of ‘‘Cross-Selling’’ 

Q.5.a. In Wells Fargo’s 2010 Annual Report, you described the 

company’s cross-selling success and wrote ‘‘I’m often asked why we 

set a cross-sell goal of eight. The answer is, it rhymed with ‘great.’ ’’ 

Was the ‘‘cross-sell goal’’ at the time eight banking products per 

household? 

A.5.b. Was this goal set at eight because ‘‘it rhymed with ‘great’′′? 

A.5.a.–b. While over 25 percent of our customers have more than 

eight products with Wells Fargo, this was an aspirational goal. The 

average U.S. household has more than 14 financial products, and 

we aspired to become our customers’ primary financial institution 

by providing them just over half the number of products and services they need and use and by driving increased customer value 

through consolidating multiple financial products and services with 

one provider. We want to offer our customers valuable products 

and services and, to that end, we use our cross-sell metrics as a 

proxy for the depth of the relationships that we are building with 

our customers. As our annual reports make clear, Wells Fargo has 

always focused on the quality of our relationships with customers, 

not quantity. Providing services that the customer does not need or 

want is not in our interest or the interest of our customers. Clearly 

that happened in some cases. 

High Rates of Wells Fargo Broker Misconduct 

In April 2016, the Securities Litigation and Consulting Group 

(SLCG) used data from the Financial Industry Regulatory 

Authority’s (FINRA) BrokerCheck database to assess rates of 

broker misconduct throughout the brokerage industry.4

As part of its analysis, SLCG compiled a list of brokerage firms 

that employ more than 400 brokers and ranked those firms based 

on the percentage of their brokers associated with ‘‘investor harm 

events’’ (defined, in this case, as ‘‘the initial filing of a grievance 

[reported to FINRA] that subsequently results in an arbitration 

award in favor of the customer or in a settlement in excess of 

$10,000 prior to May 18, 2009, and in excess of $15,000 

169 

5 Craig McCann, Chuan Qin, and Mike Yan, pg. 6. 

6 Craig McCann, Chuan Qin, and Mike Yan, pg. 32. 

7 Craig McCann, Chuan Qin, and Mike Yan, pg. 32. 

8 Emily Glazer and Christina Rexrode, ‘‘Wells Fargo CEO Defends Bank Culture, Lays Blame 

with Bad Employees,’’ Wall Street Journal (September 13, 2016) (online at http://www.wsj.com/ 

articles/wells-fargo-ceo-defends-bank-culture-lays-blame-with-bad-employees-1473784452). 

thereafter’’).5 Wells Fargo Advisors was ranked 16th, solidly within 

the Top 30 recidivist firms cited by SLCG.6 SLCG found that nearly 9 percent of Wells Fargo’s 1,993 brokers were associated with a 

harm event; 30 Wells Fargo brokers, meanwhile, had been previously fired from brokerage firms as a result of misconduct.7

You recently stated that ‘‘there is no incentive [for employees] to 

do bad things’’ within Wells Fargo, and that Wells Fargo’s recent 

misdeeds ‘‘in no way reflect our culture.’’8 But the high rate of recidivism among Wells Fargo brokers raises questions about these 

statements. To help me better understand the culture of Wells 

Fargo Advisors, please provide my office with the following information and answers: 

Q.6.a. A description of the Wells Fargo Advisors broker hiring process, including any policies that outline how Wells Fargo assesses 

potential hires for the likelihood of broker misconduct and a description of how Wells Fargo Advisors factor a potential hires’ past 

misconduct into its overall decision to hire a candidate? 

Q.6.b. Does Wells Fargo Advisors hire brokers with records of misconduct, and if so, why? 

A.6.a.–b. Wells Fargo Advisors, LLC (‘‘WFA’’) subjects prospective 

financial advisors to a robust pre-hire due diligence process. More 

specifically, the Compliance Department performs a detailed review 

of the candidate’s background, utilizing a comprehensive questionnaire, as well as by conducting a thorough review of the candidate’s 

Central Registration Depository (‘‘CRD’’) record at FINRA. The review takes into consideration the candidate’s complaint history, 

regulatory history, reportable financial and criminal incidents, past 

disciplinary or supervisory actions, registration restrictions, terminations, outside business activities, employment history, business 

mix and any other incidents that may be reflected on the candidate’s CRD record or identified through independent validation. 

Additionally, each candidate is fingerprinted and undergoes a 

criminal background and financial fitness check. After a thorough 

and qualitative review of any identified issues, the Compliance Department will either ‘‘object’’ or ‘‘not object’’ to the hiring of the prospective financial advisor. In the rare circumstance where the line 

of business disagrees with the Compliance Department’s 

recommendation, the hiring decision is escalated to senior representatives from Legal, Compliance, and the line of business for 

further review and a decision. 

Q.6.c. A description of how Wells Fargo Advisors compensates its 

brokers. 

A.6.c. Please see response to question 6, subpart (f), below. 

Q.6.d. How does Wells Fargo Advisors ensure that its brokers, once 

hired, do not engage in misconduct? Please provide copies of any 

training materials, policies, or procedures the company uses. 

170 

A.6.d. WFA has established and maintains an extensive supervisory and oversight program, which includes multiple, complementary processes to review the conduct of its Financial Advisors for 

potential and actual breaches of WFA’s policies and procedures 

and/or applicable rules, regulations, and standards of practice. 

WFA utilizes this supervisory and oversight control system to identify potential and/or actual misconduct; of course, WFA also may 

learn of misconduct through customer complaints and/or the Wells 

Fargo corporate EthicsLine. Although not an exhaustive list, some 

of the more pertinent controls, systems, processes, or functions 

within WFA that may lead to the discovery of misconduct include: 

• Field Supervision: As an integral part of WFA’s ‘‘first line of 

defense,’’ Branch Office Managers and local, qualified supervisors perform direct supervision of Financial Advisors and 

other branch team members by enforcing WFA’s policies and 

procedures. 

• Centralized Supervision Units (CSUs): Like WFA’s field supervisors, the CSUs sit within the line of business organizationally, and are delegated the responsibility to review trade 

blotters, and daily and monthly alerts generated by WFA’s 

electronic SuperVision system. SuperVision is a suitabilitybased supervisory system that assists WFA’s supervisory personnel in identifying accounts and transactions that may 

warrant further attention, based on the triggering of established risk-based thresholds. The CSUs also coordinate the 

review of electronic communications for assigned branches, 

review annuity transactions, perform targeted account, product 

and Financial Advisor activity reviews, and perform self-audits, among other risk-related activities. 

• Retail Surveillance & Oversight: The Retail Surveillance & 

Oversight Group within the Compliance Department consists 

of several distinct teams that conduct retail brokerage transaction oversight through both systematic and targeted monitoring. The group monitors activities to mitigate risk using 

various internal control tools, including the SuperVision, 

Smartstation, and Compliance Reporting applications. The 

group conducts oversight of the CSUs and other Qualified Supervisors to assess supervisory practices and to identify and 

address potential compliance and sales practice issues. The Retail Control Group within Compliance maintains WFA’s 

restricted lists and monitors retail trading for compliance with 

trade restrictions. The Market Reviews Group performs targeted reviews of existing products and established supervisory 

programs within the business channels to assess their 

effectiveness. 

• Branch Examinations: The WFA Branch Examinations 

Team is responsible for conducting onsite announced and unannounced compliance examinations of the retail brokerage 

lines of business in order to test compliance with Federal, 

State, and SRO regulations and Firm policies and procedures. 

As with the other WFA Compliance units, the primary purpose 

of Branch Examinations is to provide oversight of branch-related activities within WFA in order to identify and mitigate 

171 

potential risks. All WFA-registered branch sales locations are 

visited within the calendar year. The exam program is riskbased, with a strong focus on brokerage sales practices, product suitability, and supervision. The program is tailored for the 

specific sales practices engaged in by each retail brokerage 

unit. When applicable, current Securities and Exchange Commission and FINRA regulatory priorities are incorporated into 

the program. The exam program is reviewed and updated annually for each business unit with the advice and feedback of 

the Compliance Department, Legal, and senior supervisory 

staff. Summaries of frequent branch exam findings and trends 

are continually shared and discussed with business unit senior 

management throughout the exam cycle. 

• Special Supervision and Review (SSR): The SSR Group 

conducts investigations related to potential violations of Firm 

policies and industry rules; recommends and tracks discipline; 

reviews requests by registered representatives to participate in 

certain Firm programs, and manages the Firm’s Heightened 

Supervision Program. The SSR Group coordinates the application of WFA’s disciplinary review standards with members of 

Internal Investigations, External Fraud, Human Resources, 

Employee Relations, Legal, and line-of-business management. 

• Trading Review Group: The WFA Trading Review Group is 

responsible for performing daily reviews of team member and 

client trading activity with a view toward identifying potential 

instances of insider trading. The Team analyzes trade data, 

market data, news events, and information provided by others 

including from various business supervisors or other Compliance personnel. The Trading Review Team serves as the primary escalation point for potential insider trading occurrences, 

and has the responsibility for determining whether additional 

escalation is warranted. Business and control function units 

that may refer matters to the group include: Corporate AML, 

the field supervisors and the CSUs described above, Legal, and 

other Compliance team members. Matters involving team 

members, or accounts within their control, are referred to the 

SSR group (described above) for further investigation. 

• Complaints Resolution Group: WFA’s Complaints Resolution Group within the Compliance Department gathers, 

reports, responds, tracks, and analyzes sales practice and operational customer complaints, in keeping with Finra’s requirements and expectations. The group routinely refers and 

collaborates with business and control function units regarding 

possible violations of Firm policy, standards of care, and 

industry rules and regulations. 

• Internal Controls: The Internal Controls Group within the 

Compliance Department is responsible for monitoring WFA’s 

overall control environment and for implementing programs 

designed to improve the control environment. The group works 

with managers across all business units to review internal controls, help mitigate regulatory and operational risk, and to 

assist in maintaining high corporate governance standards. 

172 

The Internal Controls Group performs independent testing 

throughout the year in support of WFA’s 3130 program. 

• Internal Audit: Commonly referred to as the ‘‘Third Line of 

Defense,’’ internal audit is another critically important control 

function, which also reviews for policy breaches and 

misconduct. 

• EthicsLine/Employee Escalation: All team members have 

the ability to raise concerns 24-hours a day, 7-days a week, 

anonymously via telephone or online through the Company’s 

EthicsLine. 

Q.6.e. A description of the disciplinary process that Wells Fargo 

Advisors initiates, should it find any of its brokers guilty of 

misconduct. 

A.6.e. Depending on the nature and severity of the misconduct, 

there are a number of ways in which misconduct can be addressed 

by WFA. As a general matter, all compliance policy breaches may 

be subject to WFA’s established disciplinary review process, which 

is designed to provide a swift and meaningful response and to promote consistency in determining appropriate levels of discipline 

across WFA (and its different sales channels). The SSR Group investigates matters relating to violations of Firm policies (including 

the Wells Fargo Code of Ethics and Business Conduct) and industry rules, and typically coordinates with management within the 

line of business, and, as needed, with Internal Investigations, 

Legal, Risk, Human Resources, Employee Relations, among other 

groups to ensure that all disciplinary decisions and recommendations are thoroughly and fairly vetted. WFA may impose internal 

discipline ranging in severity from a Memorandum of Education all 

the way to involuntary termination. Policy violations that are not 

compliance-oriented are generally handled pursuant to corporate 

Human Resources Corrective Action Guidelines. Such corrective 

actions could include a Performance Improvement Plan, Informal 

Warning, Formal Warning, or Final Notice. 

Q.6.f. Are there compensation policies or other business practices 

that Wells Fargo has changed because of concerns that they could 

contribute to or encourage broker misconduct? 

A.6.f. WFA’s compensation plans are designed to be balanced, fair, 

and appropriately controlled, with a focus on product-neutral incentive design and deferral compensation. WFA has also developed a 

comprehensive process for the periodic review and approval of 

changes to such plans. WFA’s CEO, the Head of Wealth Management (for Wealth Brokerage Services, or ‘‘WBS’’) and WFA’s 

Conflicts Committee all participate in the review of field-facing 

compensation plans. WFA’s Conflicts Committee is comprised of 

senior leaders from the various control functions and lines of business, including Compliance, Legal, Risk, Human Resources, 

Finance, Products & Advice, and the sales channels. The Chief 

Compliance Officer, Chief Risk Officer, Head of HR, and the seniormost WFA Legal representative each possess full ‘‘veto’’ authority 

on this Committee, which provides an opportunity for important 

control function representatives to help shape the design of any 

compensation plans. 

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9 U.S. PIRG, The Campus Debit Card Trap: Are Bank Partnerships Fair to Students? (May 

30, 2012) (online at http://www.uspirg.org/reports/usp/campus-debit-card-trap). 

Each compensation plan includes components to mitigate risk 

and incent compliance with industry rules, regulations, and standards of practice. For example, WFA incentive compensation plans 

include the following characteristics: 

• Requirements to comply with all industry laws, rules, and regulations, and procedures applicable to the Participant’s assigned job responsibilities; 

• Performance-based deferrals, with specific goals, such as best 

practices activities that move toward long-term client-focused 

solutions; and 

• Full discretionary authority for the Plan Administrator to adjust or amend a Participant’s deferred compensation incentive 

award under the Plan, subject to the approval of the Line of 

Business Head. This component provides the Line of Business 

with the authority to modify awards due to unknown or unforeseen circumstances that may arise. 

Generally, branch manager compensation plans include several 

risk mitigation components, including: 

• All operational losses and settlements are charged directly to 

the profit/loss (P&L) of the branch, with the branch P&L being 

considered in bonus awards; 

• Annual branch inspections are performed on Markets and 

Complexes by the Branch Examinations team in Compliance 

(described above). Inspection failures result in a direct reduction to the branch manager’s annual performance award; 

• Discretionary awards recognize and reward leadership in numerous areas, including risk and culture in the manager’s 

branch; and 

• Branch manager salary is designed to compensate individuals 

for their role as manager, which includes financial performance, supervision, compliance, risk management, and other 

factors. 

As referenced above, WFA conducts regular reviews of compensation plans for field-facing team members, with a view toward 

incenting client-focused behaviors and outcomes. 

Wells Fargo Campus Card Program 

Q.7.a. According to a 2012 report by U.S. PIRG, Wells Fargo had 

contracts with institutions of higher education serving over 2 million students to provide student identifications that can be linked 

to a Wells Fargo checking account.9 In some cases, these contracts 

provide Wells Fargo exclusive access to market to students. 

In 2009, Congress enacted the Credit CARD Act, which banned 

aggressive marketing practices on college campuses. Banks are now 

forbidden from providing gifts to lure students into signing up for 

credit cards. They are also required to publicly disclose contracts. 

However, these requirements do not apply to student checking 

accounts. 

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10 Consumer Financial Protection Bureau, Data Point: Checking Account Overdraft (July 2014) 

(online at http://files.consumerfinance.gov/f/201407lcfpblreportldata-pointloverdrafts.pdf). 

Q.7.a.i. Have any Wells Fargo staff or service providers offered any 

gift of value to students as an inducement to activate a Wells 

Fargo checking account? 

A.7.a.i. The Wells Fargo Campus Card Program’s policy has been 

to offer gifts of only token value to students who open Wells Fargo 

checking accounts. Such gifts typically have a value of less than $5. 

Q.7.a.ii. Has Wells Fargo established any sales targets to employees regarding enrollment in student checking accounts? 

A.7.a.ii. The Wells Fargo Campus Card Program did not establish 

any student checking account sales targets. 

Q.7.a.iii. How many accounts have been opened by students enrolled in institutions with contracts with Wells Fargo, by year from 

2007 to the present? 

A.7.a.iii. Wells Fargo does not have a means to track accounts 

opened by students attending higher education institutions that 

have Campus Card contracts with Wells Fargo. 

• Students may open accounts in any of our branches from coastto-coast, and may or may not notify a banker of their status 

as a student or the school that they attend. 

• Students may choose to open any of a number of Wells Fargo 

accounts and services that best meet their needs, further limiting Wells Fargo’s opportunity to draw any conclusions about 

accounts held by students based solely on product type/name. 

• Students may open their accounts long before enrolling in or 

attending a school with which Wells Fargo has a Campus Card 

contract, and the students may choose to participate in the 

Campus Card Program with their pre-existing accounts. 

• Students may transfer into/out of institutions or graduate from 

institutions without notifying Wells Fargo. 

• Institutions’ faculty and staff may participate in Campus Card 

Programs, and may choose the same accounts that many students choose. 

Q.7.b. According to a study by the Consumer Financial Protection 

Bureau, nearly 40 percent of individuals aged 18–25 incurred an 

overdraft, with 11 percent incurring more than 10 overdrafts on an 

annualized basis, making these young consumers, often college students, a lucrative segment for big banks.10 What is the total 

amount of overdraft fees incurred by Wells Fargo student accounts, 

by year and by campus from 2007 to the present? By campus? 

A.7.b. Wells Fargo does not have a means to track accounts opened 

by students attending higher education institutions that have Campus Card contracts with Wells Fargo. 

• Students may open accounts in any of our branches from coastto-coast, and may or may not notify a banker of their status 

as a student or the school that they attend. 

• Students may choose to open any of a number of Wells Fargo 

accounts and services that best meet their needs, further 

limiting Wells Fargo’s opportunity to draw any conclusions 

175 

about accounts held by students based solely on product type/ 

name. 

• Students may open their accounts long before enrolling in or 

attending a school with which Wells Fargo has a Campus Card 

contract, and the students may choose to participate in the 

Campus Card Program with their pre-existing accounts. 

• Students may transfer into/out of institutions or graduate from 

institutions without notifying Wells Fargo. 

• Institutions’ faculty and staff may participate in Campus Card 

Programs, and may choose the same accounts that many students choose. 

Q.7.c. In 2013, the Consumer Financial Protection Bureau called 

on financial institutions to publicly disclose their secret contracts 

with colleges. Has Wells Fargo made these agreements available to 

students and their families on an easily accessible website? If so, 

where? If not, why not? 

Q.7.c.i. Please provide all contracts with institutions of higher education to market accounts to students from 2007 to the present, 

including those agreements no longer in existence. 

Q.7.c.–c.i. Campus banking agreements are subject to Department 

of Education rules requiring certain higher education institutions 

to make these agreements available to students and their families 

on easily accessible websites. Due to confidentiality provisions contained in some contracts with higher education institutions, Wells 

Fargo cannot release that information; only the educational institutions can. Alternatively, the Department of Education has published a database of such contracts, as self-reported by higher education institutions. That database is available at this website: 

https://studentaid.ed.gov/sa/about/data-center/school/cash-management-contracts. 

Q.7.d. In the hearing, I raised concerns regarding cross-selling 

practices at Wells Fargo. These concerns are comparable to crossselling issues that have been raised regarding the Wells Fargo 

Campus Card Program. 

Q.7.d.i. Please provide all documentation regarding what policies 

and procedures are in place regarding cross-selling other products 

to Wells Fargo private student loan borrowers. 

Q.7.d.ii. How many private student loan customers have signed up 

for other accounts at Wells Fargo since 2009? 

Q.7.d.iii. For these accounts, what has been the total amount of 

fees related to other accounts charged to students who had Wells 

Fargo student loans? 

Q.7.d.iv. What incentives were provided to Wells Fargo sales and 

marketing staff to cross-sell student loan borrowers into other 

Wells Fargo products? Please provide total amount of additional 

compensation paid to employees for cross-selling student loan 

borrowers. 

A.7.d.i.–iv. For the period from January 1, 2009, through September 30, 2016, there were 570,510 customers that were first-time 

recipients of private student loans. Before opening their first student loan account, such customers had previously opened on 

176 

average approximately 1.6 bank products with Wells Fargo. Such 

private student loan customers as of September 30, 2016, had on 

average approximately 1.8 active bank products with Wells Fargo. 

From January 2014 to September 2016, Loan Origination team 

members for the Education Financial Services (‘‘EFS’’) line of business would refer student loan customers (students and co-signers) 

to a banker if the customer expressed an interest in other banking 

products and services. EFS Loan Origination team members were 

eligible for closed referral payouts for every qualified closed referral—$5 per closed referral in January 2014 and $10 per closed referral from February 2014 through September 2016—with a maximum monthly payout for all closed referrals of $150 in January 

2014 and $140 from February 2014 through September 2016. 

The total amount of banker referrals paid to EFS Loan Origination team members for closed/qualifying referrals from January 

2014 through September 2016 was $95,135. 

Q.7.e. The Wells Fargo student loan program offers different loan 

terms and interest rates for students at traditional colleges and 

universities (Wells Fargo Collegiate) than it does for students enrolled at career and community colleges, which have much higher 

interest rates. Please provide a detailed description of how the 

bank is pricing private student loans for students, including an explanation for why the bank charges career and community colleges 

higher interest rates. 

Q.7.e.i. How many borrowers—by school—are in each of these student loan programs? 

Q.7.e.ii. Please provide the aggregate demographic information of 

borrowers in each of these student loan programs, by school. 

Q.7.e.iii. Please provide the average interest rate for borrowers in 

each of these student loan programs by FICO band. 

A.7.e.i.–e.iii. Wells Fargo is proud to partner with students at 

thousands of institutions across the country. A customer receives 

an interest rate that corresponds with a variety of applicant-specific factors, institutional loss/delinquency rate data, and competitive market considerations. 

The table below includes balance and rate information for Wells 

Fargo’s active loan programs: 

Wells Fargo Student Loan Business Segment 

Q.8.a. On August 22, 2016, Wells Fargo’s student loan business— 

one of the biggest in the country—was fined by the Consumer 

Financial Protection Bureau for illegal student loan servicing 

practices. According to the consent order, Wells Fargo illegally hit 

borrowers with multiple late fees and engaged in wrongful conduct 


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11 Consumer Financial Protection Bureau, ‘‘CFPB Takes Action Against Wells Fargo for Illegal 

Student Loan Servicing’’ (August 22, 2016) (online at http://www.consumerfinance.gov/aboutus/newsroom/cfpb-takes-action-against-wells-fargo-illegal-student-loan-servicing-practices/). 12 Consumer Financial Protection Bureau, ‘‘CFPB Report Highlights Private Student Loan 

Payment Processing Pitfalls’’ (October 16, 2013) (online at http://www.consumerfinance.gov/ 

about-us/newsroom/cfpb-report-highlights-private-student-loan-payment-processing-pitfalls/). 

related to credit reporting.11 The Consumer Financial Protection 

Bureau warned about these practices in a detailed report in October 2013, noting that ‘‘too many borrowers have to run through an 

obstacle course to get their payments processed properly.’’12

Q.8.a.i. What was the total annual compensation for the officers of 

Wells Fargo Education Services’ top 5 executives, including its 

head, John Rasmussen, from 2010 to the present? Please specify 

compensation by component (base salary, cash awards, equity 

awards, other deferred compensation, and other perquisites). 

Q.8.a.ii. What remedial and corrective actions did the board of 

directors take to executives and employees engaged in the illegal 

student loan servicing conduct uncovered by the Consumer Financial Protection Bureau? How many executives and employees were 

sanctioned or terminated (please provide names and sanctions)? 

Q.8.a.iii. Were any executives required to return any bonuses or 

cash awards? Please provide all meeting minutes of the board of directors and the management team related to these discussions. 

A.8.a.i.–a.iii. The August 20, 2016, Consent Order issued by the 

Consumer Financial Protection Bureau covered certain legacy student loan servicing practices concerning (i) how payments were 

allocated across multiple loans (payment allocation), (ii) how partial payments were aggregated, and (iii) a systems programming 

error related to the assessment of late fees. The Consent Order requires a total amount of $410,000 of customer remediation for late 

fees assessed under the following scenarios: 

• Payment allocation: Wells Fargo allocated payments sent in for 

less than the full amount due to pay a group of loans in a single account and in a manner the CFPB found as not for the 

greatest benefit of the customer. Wells Fargo amended its allocation practices in August 2012. Late fees will be 

refunded to customers. 

• Payment aggregation: Wells Fargo did not aggregate some partial payments or overpayments paid within the same month or 

over multiple months when they collectively added up to a 

monthly payment. Wells Fargo automated the aggregation 

process in 2011 and eliminated the issue. Late fees will be 

refunded to customers. Additionally, we will make the appropriate credit bureau reporting adjustments. 

• Late fees on payments made during the grace period: Wells 

Fargo identified a system coding error that resulted in a failure to waive late fees for some payments made on the last day 

of the payment grace period (i.e., payments that constituted a 

full monthly payment). The system coding error was corrected 

in May 2013, and self-identified to the CFPB. Late fees will be 

refunded to customers. 

The matters covered by the Consent Order were operational 

issues and a systems coding error. As the issues came to our 

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attention, we took action to resolve them, in each case well before 

the CFPB issued its Consent Order. The Consent Order does not 

require any changes to Wells Fargo’s current student loan servicing 

methodologies related to payment allocation and payment aggregation, or its approach to processing payments made during the grace 

period. Wells Fargo is enhancing billing statements, repayment 

schedules and borrower—facing Web pages to provide customers 

additional detail concerning its payment application and allocation 

methodologies, including with respect to partial payments. 

Q.8.b. In 2012, the Consumer Financial Protection Bureau released 

a report detailing the deeply troubling practices by the private student loan industry, including aggressive direct marketing and 

subprime-style lending to students, many of whom took out highcost loans before accessing Federal student aid. Many of these 

loans were not certified by the student’s institutions of higher 

education. 

Q.8.b.i. How many loans did Wells Fargo (or its acquired subsidiaries) make to private student loan borrowers that were not 

certified by the student’s institution of higher education? 

A.8.b.i. Wells Fargo is proud to partner with hundreds of thousands of students across the country and offer them valuable products they need, including educational loans. Since May of 2012, 100 

percent of Wells Fargo’s core undergraduate and graduate loans 

have required the school’s certification as a condition of loan 

approval and funding. Wells Fargo continues to provide access to 

needed credit for student customers seeking to refinance/consolidate existing private student loans, to pay for bar exam study, to 

cover medical residency, or for similar purposes where a school certification is not applicable (e.g., for customers that have graduated 

from school and are seeking to refinance existing private loans, the 

student is no longer enrolled). These specialty loan programs constitute less than 25 percent of Wells Fargo’s annual private student 

loan business and less than 3 percent when excluding consolidation/refinancing of existing student loan debt. 

Q.8.b.ii. What referral fees or bonuses did Wells Fargo pay to lenders and marketers who steered business to—or sold private student 

loans to—the bank? 

A.8.b.ii. The sole private loan lead-referral arrangement with 

another organization is terminating at the end of November 2016. 

The terms of this contract are protected against disclosure by confidentiality provisions. 

Q.8.b.iii. What incentives were provided to Wells Fargo sales and 

marketing staff to drive student loan volume? Please provide documentation on these incentive agreements from 2003–2015. 

A.8.b.iii. For Wells Fargo’s education loan division, overall compensation for team members is based on a blend of salary and variable compensation plans. Variable compensation plans are based 

on a balance of product acquisition goals, customer satisfaction 

goals, and compliance and quality goals. 

Q.8.c. The Consumer Financial Protection Bureau has called on 

the private student loan industry to aggressively offer borrowers 

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loan modifications to reduce their principal and help struggling 

borrowers get back on track. 

Q.8.c.i. How many private student loans has Wells Fargo provided 

principal reduction? 

Q.8.c.ii. What is the total amount of principal forgiveness that has 

been provided? 

Q.8.c.iii. What are the detailed criteria for loan modifications with 

principal reduction? 

A.8.c.i.–iii. Wells Fargo’s reliance on prudent underwriting requirements, designed to ensure that credit extensions are only 

made when supported by an ability to repay, facilitates access to 

credit within safety and soundness expectations of our prudential 

regulators. Our long-standing commitment to responsible underwriting has for many years translated into uninterrupted access to 

credit in support of access to higher education with very strong repayment performance within our overall private education loan 

portfolio. 

Today, over 97 percent of our private education loan accounts 

that are in repayment are current, and our private education loan 

portfolio has reflected comparable delinquency management results 

for a number of years. Our servicing program also provides important tools and features to assist the very small percentage of 

customers who experience repayment difficulty, such as an extensive loan modification program, a long-standing loan refinancing 

option, and loan forgiveness in the event of the death or permanent/total disability of the student loan beneficiary. 

Long-Term Repayment Options: Loan Modifications 

For the small number of Wells Fargo private student loan customers experiencing serious financial hardship and who need 

assistance beyond short-term payment assistance options, Wells 

Fargo developed and introduced its Private Student Loan Modification Program in November 2014. The Wells Fargo student loan 

modification program provides financially distressed customers a 

modified, affordable monthly payment by reducing the private 

student loan interest rate to as low as 1 percent, and, only if ‘‘affordability’’ is not reached through interest rate reductions, by extending the loan term up to an additional 5 years. The reduced interest rate approach means that more of each payment that is 

made is applied toward the principal of the loan, more quickly reducing the debt load of the customer while providing a payment he 

or she can afford given her or his current situation. Loan modifications can cover from 1 to 5 years, depending on the individual circumstances of each customer. In accordance with safety and soundness guidance, Wells Fargo’s student loan modification program 

does not include principal forgiveness as part of the solution for the 

customer because principal forgiveness for unsecured debts constitutes a settlement and therefore requires an accelerated payback 

of the remaining balance within a short term, negating the benefit 

of any initial payment reduction. 

180 

Details: 

• Affordability is defined as reaching a prescribed payment-toincome (PTI) ratio based upon the total of our Wells Fargo private student loan payments as a percentage of the borrower’s 

and/or cosigner’s gross income. All liable parties on the loan(s) 

must be demonstrating a hardship for the loan to qualify for 

a modification. Liable parties must provide income documentation to verify their level of income prior to approval. 

• Initial temporary modification periods cover 12 to 60 months 

depending upon the borrower’s circumstances. After this initial 

period, the interest rate will begin to increase in steps every 

6 months until a pre-determined final market-level interest 

rate is reached. 

• A permanent modification, where the interest rate and payment will never increase, may be offered in cases where there 

is no expectation for increased future income. 

• Loans may be current or delinquent to be eligible; however, if 

they are less than 60 days past due, the parties will need to 

meet the ‘‘Imminent Default’’ criteria to qualify. Examples of 

Imminent Default criteria are: 10 percent or greater reduction 

in income since time of origination, unexpected ongoing increases in household expenses >10 percent of income (not 

including debt payments), temporary disability, etc. 

See the answer to Question 8, subpart (c)(iv) below for more detail. 

Q.8.c.iv. Are loan modifications available to borrowers who are not 

yet in distress? If so, please provide the criteria for providing loan 

modifications. 

A.8.c.iv. Customers seeking relief through our student loan modification program do not need to be delinquent to obtain payment 

relief. The borrowers and any cosigners present on the loan(s) in 

question, however, do need to be showing some level of distress. To 

be considered for a loan modification, the hardship the customer is 

experiencing must be 6 months or greater in duration. If it is less 

than that we have other short-term options to help them stay current on their loans. The criteria for determining a hardship are as 

follows: 

• Loan(s) 60 days past due or greater qualify as being in a hardship. 

• For loans less than 60 days past due, a hardship must meet 

one of the following Imminent Default criteria: 

• The combination of the change in income and change in Education Financial Services (‘‘EFS’’) private student loan 

payment must exceed a specified percentage of current 

income. 

• Payment change would not include a private student loan 

account(s) coming out of a deferment. 

• If origination income for the liable parties is not available, 

then we will use the income from the prior 2 years to 

determine if any changes have occurred. 

• For student borrowers who are in their first 2 years of 

repayment, prior income is not considered in the Imminent 

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Default calculation as their income was not used for purposes of obtaining the loan. 

• A documented, involuntary, unplanned increase in monthly 

living expense (this does not include debt obligation). 

• Capacity to repay the current loan terms must be in question 

based on one or both of the following: 

• Exceeding a debt-to-income ratio threshold. 

• Gross residual income is less than the threshold. 

• Death of immediate family member, documented by: 

• Death certificate, or 

• Obituary or newspaper article reporting the death; and 

• Income documentation prior to the event compared to income documentation of the remaining borrower after the 

event. 

• Long-term or permanent disability or illness of the borrower 

or cosigner or dependent family member (in accordance with 

the IRS’s definition of dependent), documented by: 

• Medical bills, or 

• Proof of monthly insurance benefits or government assistance (if applicable), or 

• Tax return showing medical deductions above the minimum for itemized deductions. 

Note: If the ‘‘disability’’ is a total and permanent disability 

of the borrower that qualifies the loan for forgiveness 

under EFS’s Death and Disability Forgiveness Policy, the 

loan will be processed in accordance with such Policy rather than considered under this Policy for a loan modification. Since 2010, Wells Fargo has forgiven over $47 million 

in private student loans due to the death or permanent/ 

total disability of the student borrower/beneficiary. This 

loan forgiveness feature is part of the consumer credit 

agreement that we enter into with our customers, affording our customers a contractual right to this benefit. We 

also provide information about the availability of such loan 

forgiveness on our public website (for example, please see 

https://www.wellsfargo.com/student/repay/). 

• Legally documented divorce or separation, documented by: 

• Divorce decree signed by the court, or 

• Current credit report evidencing recorded divorce decree, 

or 

• Separation agreement signed by the court if separation is 

legally documented by the court, or 

• Current credit report evidencing recorded separation 

agreement; and 

• Income or expense documentation prior to the event compared to the income or expense documentation of the 

remaining borrower after the event. 

• Once a hardship is established either through the delinquency 

level or the Imminent Default criteria, we attempt to reach affordability for our customers by targeting payment-to-income 

182 

ratio thresholds as a percentage of gross income dependent 

upon the level of income. 

Q.8.d. Until it sold much of its portfolio to Navient, another student loan giant, Wells Fargo owned billions of dollars in Government-guaranteed student loans and was one of the largest participants in the Federal Family Education Loan Program (FFELP). 

Borrowers with FFELP loans are eligible for income-driven repayment loan modification plans to help them lower their monthly 

payments if they are struggling to repay their loans. Wells Fargo, 

in its role as a student loan servicer, was responsible for enrolling 

borrowers in these programs so they could avoid default. 

Q.8.d.i. How many borrowers on Wells Fargo’s FFELP portfolio 

have enrolled in income-driven repayment plans since 2009? Please 

specify enrollment by number of borrowers, number of loans, and 

total dollar amount by year, from 2009. 

Q.8.d.ii. How many borrowers have defaulted on Wells Fargo’s 

FFELP portfolio? Please specify defaults by number of borrowers, 

number of loans, and total dollar amount by year, from 2009? 

Q.8.d.iii. Were any Wells Fargo executives or board provided executive performance bonuses conditioned on meeting certain incomedriven repayment loan modification plan targets? If so, what? 

A.8.d.i.–iii. After the sale of substantially all of its legacy Federal 

loan portfolios in 2014 and 2015, Wells Fargo has a very small remaining FFELP loan portfolio, which materially impacts the loandefault figures and enrollment figures in 2015/2016 compared to 

the figures for 2012, 2013, and 2014. 

The table below contains information about Federal loan customers enrolled in income-based or income-sensitive repayment 

plans for calendar years 2012 through 2015. The data has two limitations: (1) a customer is only counted once even if she enrolled in 

income-based or income-sensitive repayment plans more than once 

in any particular year, and (2) a customer can be counted in more 

than 1 year if she was enrolled in income-based or income-sensitive 

repayment plans in multiple years. 

Enrollment in income-based or income-sensitive repayment 

plans 

The table below contains Federal loan default data for calendar 

years 2012 through 2015. The data has two limitations. First, the 


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data captures the number and amount of loan(s) paid-off through 

the guaranty agency claim payment process, as of the date of claim 

payment, where the claim submission was based on ‘‘default’’ of the 

borrower. Second, the data does not include loans that may have 

defaulted but were not eligible for a claim payment because the 

loan lost the Federal guaranty due to an origination or servicing 

defect. 

Federal loan-default data 

The nonmanagement members of the board of directors do not receive bonuses. 


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184 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD


23001041.eps

Testimony of Khalid Taha 

Before the Congressional Progressive Caucus 

Briefing: "Banking on the Hard Sell'' 

June 10,2016-2360 Rayburn HOB-10:00 a.m. 

• My name is Khalid Taha, and I am a personal banker at a Wells Fargo in San 

Diego, California. When I came to the United States as a refugee, I had high 

hopes. 

• After years of being torn by war, first in Iraq and then in Syria, my family 

and I moved to San Diego. I was just months away from graduating from a 

law degree when we came. Nonetheless, I was looking forward to a new 

start. I expected to find a good job in the United States, with good working 

conditions. But the reality I encountered was different. 

• The unreasonable sales quotas at Wells Fargo have taken a huge toll on 

workers like me. The branch where I work is structured in such a way that 

we have to meet sales quotas every day. If I do not meet my sales goals I 

can get written up, and I risk being fired. 

• This kind of pressure means bank employees must prioritize selling 

products, rather than just focusing on what best matches our customers' 

needs. On a daily basis, I have a quota of approximately 10 to 15 personal 

accounts, 2-3 new accounts, 2-3 credit cards and/or loans; and a daily 

referral to an insurance or mortgage. 

• While working as a personal banker, I was being trained and working hard 

to be promoted to a Business Banker, and my supervisor encouraged me to 

take on both roles in order to get the promotion. This resulted in having 

two sets of sales goals that I had to meet, not only to show my manager I 

was qualified for the promotion, but to earn my commission and continue 

earn a living wage. I would work 12 hour shifts and would not take any 

breaks. Because of a strict policy that said employees could not eat at their 

desk, I sometimes wouldn't eat for hours. 

• When I started to lose weight, and began noticing that my hair was falling 

out, I thought to myself that that this was just temporary, but the stress 

from work would keep me awake at night, and I began suffering from 
185 


23001042.eps

exhaustion. After months of hard work, my manager ended up hiring a 

friend of his from outside the company for the business banker position. 

Meanwhile, I ended up in the emergency room as a result of my declining 

health. The hospital staff asked me if I was trying to commit suicide by 

starving myself to death. Since then, I continue to suffer from high blood 

pressure, insomnia, and anxiety, and I am only 28 years old. 

• Not only is the sales goals structure hurting the lives of Wells Fargo's 

workers, they are hurting our customers as well. I would constantly have 

customers come in saying that they could not afford the monthly 

maintenance fees for their checking accounts because they were on a fixed 

income. 

• Wells Fargo's solution is always focused on selling a new product, so the 

workers would be directed to tell the customer to open a Savings Account, 

so that they would not have to pay the maintenance fee for the checking 

account. However, if you do not maintain a $300 daily balance for your 

savings account, you will also be charged a maintenance fee, so customers 

would end up transferring money from their checking account to their 

savings account. 

• Having less money in their checking accounts meant they were more likely 

to be hit with overdraft fees, which are $35.00 for each time you overdraft 

on your checking account. So, instead of helping lower income customers 

to avoid paying fees, Wells Fargo's insistence on selling new products ends 

up taking more money out of the customer's pocket. 

• That's why last year I decided to join The Committee for Better Banks. At 

the committee I have met other workers who like me are fighting 

to improve our jobs and the banking industry. 
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Testimony of Julie Miller 

Before the Congressional Progressive Caucus 

Briefing: "Banking on the Hard Sell" 

June 10, 2016-2360 Rayburn HOB-10:00 a.m. 

Hello my name is Julie Miller. I'm very excited to be here to brief congress on the 

unethical sales practices that make banks incredibly profitable and hurt costumes and 

front-line bank workers. 

I've worked in banking and banking related services for over 9 years. I currently run an 

insurance business with AllState but prior to that I worked in retail banking at Wachovia 

and Wells Fargo for 8 years. 

I worked my way up through the ranks of Wachovia and Wells Fargo and ended my 

career in retail banking as the branch manager of a Wells Fargo in Macungie, PA. As a 

branch manager I have a unique perspective on how insidious the sales goals structure 

is in banking and how the pressure to sell at all costs comes from the upper levels of 

corporate and management. Most people myself including get into banking with the 

hopes of a stable job and the desire to help our customers build a sound financial future 

but high pressure sales just make that impossible. 

As branch manager I was instructed by Wells Fargo to increase my branches sales 35% 

every year. My branch is not in a huge city or major metropolitan area there is a finite 

customer base. So where was that additional 35% supposed to come from, they only 

place it could come from was our existing customers which means selling them more 

and products. 

I was told by Wells Fargo to make my personal bankers and tellers to sell sell sell, 

which often came at the cost of customer service and offering sound financial advice. 

Bankers would •chum' accounts, this is when you close accounts and open up new 

ones to manipulate the sales quota. Some bankers would open up multiple accounts for 

the same customer that weren~ necessary, at times without the custome(s consent. 

Every January Wells Fargo told us that we should require every employee to bring in 5 

friends or family members to open up accounts, that sounds a lot like a pyramid 

scheme. 

The sales goals set by Wells Fargo are out of reach, and just became more 

unobtainable year after year while salaries and bonuses went down. The sales goal 

structure and pay took a dramatic tum for the worst after the 2008 crash and Wachovia 

was bought by Wells Fargo. Bank workers feel the must do these types of things to 

keep their jobs, that allow many of them to just scrape by and corporate turns a blind 
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eye because their only concern Is the bottom line. If the employees working under me 

didn't meet their goals it was three strikes and they are out. The extreme pressure bank 

workers are under takes a huge toll on their lives and health. I knew It wasn't right to 

push products on customers they neither needed or wanted so I stopped pressuring my 

employees to do so. Well Fargo came down very hard on me for not making my 

employees to sell and I was forced to take a leave of absence to mental health Issues 

do to stress. Upon returning to work I was fired in violation of the family medical leave 

act. 

I am testifying here to shed light on how banks are structured to make bank workers 

meet aggressive sales quotas every week/month. This is a great step. The public needs 

to hear what bank workers are going thru to meet their sales goals. Congress should 

hold big banks accountable and expand consumer protections while enhancing full 

transparency on the products being pushed by banks can strengthen integrity in our 

banking system. 

Thank you so much for your time. 
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I NATIONAl 

EMPlOYMENT 

LAW 

PROJECT 

Banking on the Hard Sell: 

REPORT I o~E 2::5 

Low Wages and Aggressive Sales Metrics 

Put Bank Workers and Customers at Risk 

By Anastasia Christman 

Executive Summary 

In the aftermath of the Great Recession, regulators reined in damaging bank practices like 

those concerning mongages and launched invest~Sations of othm such as overdraft fees. 

These new rules diminished the income streams from these practices. However, big banks 

continue to implement practices and policies that hurt customers and boost profits. Among 

these lucrative pr.tctices is the use of aggressive S."tles mettics and incentives progrnms to 

encourage front·line worl<ers to push multiple banki.ng "solutions; or products, on often 

unwitting custome ~. As each product comes with ils own set of rules and fees, customers' 

financial standing can he damaged and their credit rating destroyed, and tbey can spend 

years paying for products they didn't really need At the same time, workers laboriug under 

these onerous quota systems experience hostUe wort conditions, excessive stress, and 

uncertain Incomes that mnke eating for themseh•es and their families nearly Impossible. 

Banking on the /lard Sell Incorporates Information gleaned from class action lawsuits, 

landscape literature on banking practices, and interviews with dozens of workers employed 

by numerous banks in many positions to investigate the dangers of aggressive sales met tics 

to customers and workers alike. We fmd that workers suffer harassment aud threats in 

order to make ever-changing over-aggressive quotas, and that low base wages mean they 

need to put their own financial interests above those of the customers. We note that at least 

one L1rge US. bank, Amalgamated, does not use these types of quotas and tbat in other 

countries, agreements between bank workers and their employers ensure decent quality 

jobs and banking practices tbat put the customer first. 

Key Findings 

• Even six years after launching new consumer protections, the number of complaints to the 

federal Consumer Financial Protectton Bureau (CFPB) concerning "Bank Account or 

Services" and "Ue.bt Collection" continue to rise. 

• Fees and service charges on deposit accounts, credit catds, and other products accounted 

for more than a quanerof revenues at one big bank, Wetls Fargo, wbUe "Commission and 

Incentive Compensation" expenses totaled only balf oftbat wiodfal~ meaning that the 

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employees who sell the products that briog in millions of dollars fonheiremployer re~p 

less than half the reward, wilh the hanks pocketing the rest. 

• Wori<ers speak out: 

o A Maryland SonTru.st wori<ersays that "tbe goals are constantly shifting. if you don't bit 

your goal il goes upSperrent.lfyoudo bit your goal, it goes up 10.15t>ercent" 

o A California teller recalled. "God forbid you went home without solutions. You could be 

subjected to rid~ule for not meeliog goals.· 

o Several workers note that managers would look the other way when documentation 

verifyiog identity was lackiog or when forms were turned in si8Ded but not filled in. 

o Another worker with experience at both Sun Trust and Bank of America ro:alled, 

"Managers really pushed me to ignore it when consumers say no." 

o One Minnesota U5.8ankcolleclionswori<ersaid, "Therewasaconslanl banleofhow 

you do right ~r thecustomerwilhout sacrificing. you know, not paying a light bW or 

having shoes for the kids going back to school. You can't make that sacrifice." 

• Banks in other countries-often the same banks that operate in the United States-work 

with bank workers to establish codes of conduct regarding sales quotas that ensure 

business success while still protecting customets and ensuring decent working conditions. 

Introduction 

With news of the recession and the mongagectisis largely pushed off the nation's front 

pages, big banks are no looger under so much public scrullny nor the object of so much 

public disapprovaL Meanwhile, they've been profillng in ways that hun customers and their 

own employees al(ke. Bank employees walk a tightrope between offering custom.ersetvice 

and financial advice and selling products 10 profit their employer, and the employer is the 

only one who benefil~ Bank employees we interviewed n!porled high slress, menial 

distress, and physical ailmenls due to oveiWhelnllng pressure 10 sell banking producls. One 

BankofAmeticaworker, whoended upwitb an ulcerandvomitotgbloodafteradozeoyears 

In I he industry, recalled a meeting when a cowori<erexplained why he didn't offer to seU a 

product •He said I he aorount was overdrawn and the cus1omer said she was ou1 of work aud 

had just losl her job," he remembered. "The manager told thewori<er that they should have 

offered a credil card because il' s not our responsibility fonhem to pay the bill, jusllo make 

the sale.•• 

"It's not our responsibility for [customers] to pay the bill, just to 

make the sale." 

- Bank of America manager to wori<er on pushing credit cards 

In I he recession's aftennath, regulatory agencies implemenled new rules that cui into the 

cash sn-eams created by sub prime mongages and massive (Werdraft charges, which fed big 

hankprofilcolumns.2Yet, 1hecoun1ry'sbiggest hankssawirupres:sive profilgains in the 

years following the recession-impressive even as compared lo I he profi1 rates they enjoyed 

during the boom years leading up 10 it3 And whUe the big banks see some quarterly losses 

due 10 volatUe market condilions, they report increased sales of credil cards and customer 

aocounts.• They may reporl lower revenues in investment banking, bu1 their consumer 

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banking businesses remain profitable, with Wells Fargo, Bank of America, and J.P. Morgan all 

seeing increases of3 to 4 percent in the first three months of the year.' Overdraft fees at the 

628banks reporting to the Federal Financial Institutions Examination Connell totaled St1.16 

billlonandaocountedfor5.5 pen:ent ofthelrpretaxprofits.•ln the first qoarterof2016, 

Bank of America 1.>1u.edabout 1.2 million new credit cards, Wells Fargorepor1eda steady 

S459 billion lnconsurnerloans,and Cllibanksaw a significant increase In Its average card 

loons in Nor1h America' f'ive years ago, a former Wall Srr-eet bankeradmilted tbat •the 

customer is simply an iocome stream and exploiting that is the purpose of the banking 

organization."' Last year, critics observed that Americans spent more on bank overdraft 

charges in 2013 (S32 billion) tbanwhat thecoontryspeudsonfreshvcgetables.' 

HankCEOsare reaping big rewards. Bank of America CF.OBri.1n Moynihan will take home 

Sl6 million this year, a 23 percent raise from last year, while Michael Corbat of Citi received 

a 27 pen:ent bump to S3.5 million and Jamie Dimon of J.P. Morgan received a whopping 35 

percent raise. As Fortune magazine points out, the average bank CEO takes home 

approximately 455 times the average American worker's salary. 10 As big banks ring up 

profits off customer fees and monthly charges, front-line bank employees still labor under 

extreme pressure to push dangerous products on unwilling customers. Aggressive sales 

quotas rest on low employee wages and complicated commlsslon and incentive programs, 

creating a moral dOemma for millions of low-wage hourly workers who must balance 

protecting customers' fmancial needs 1vitb meeting those of their own families. From 

numerous unnecessary credit cards, to multiple accounts and complicated financial tools 

they may not understand (each with its own set of fees and requirements), customers may 

find themselves struggling with unneeded produciS and unanticipated financial hardships as 

a result ofthese sales requirements. At the sa.me time, bank workers suffer extreme stress In 

the workplare to meet these quotas and physical and mental problems at home trying to 

reconcOedaUy praclioos that feel unethical even if they are not, st1ictly speaking. illegal 

5o lo1J8 as individual workers, teams, brnnrbes,callcenters, loan olfJCes, and managers are 

aD judged-and paid-based on their abttity to meet onerous and ever-changing quotas, 

everyone suffers under this system. While the sales metrics systems remain in place for 

front-line workers-along with the accompanyi1J8 bullying. threats of termination, and 

strong monetary incentives-there appears to be little indication tbal the big banks have set 

aside their view of customers as•siruply an income stream• and workers as simply sales 

machines. 

This paper reveals the responses to the sales quota system from workers themselves in the 

context of extensive literature on current consumer banking practices. Many of these 

critiques center on Wells Farge which, as the defendant in several lawsuits, bas been the 

subject of the most Intense scrutiny. However, coupled 1vitb responses from bank workers 

from a variety of banks to a set of75 informational inte!Viel>~ conducted in 18different 

states, it becomes clear that Wells Fargo is not alone in implementing these policies. These 

workers, some cun·ent and some former bank employees, represent a va1iety of positions 

rangi1J8 from branch tellers to workers staffing collections call centers to branch managers. 

Taken together, their impressions about 1 he dangers of the sales quota incentive systems in 

place in most big banks are troubli1J8. 

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These testimonies hi8hlight a variety of questionable sales tactics that workers are 

encouraged to use every day with banking customers and the banns they do to consumer 

finances and credit reports. It iscritical for workers and customers alike that policymakers 

continue to reform the banking system and address these practices. In this paper, v.-e 51lggeSt 

some examples from which U.S. policymakers might learn bes1 ]Jractices. 

Who Are the Bank Workers? 

Roughly 1.7 million men and women work in retail banking. nearly half of whom are either 

bank teUers or customer service workers. They are overwhelmingly women (843 percent), 

andncarlyoneinthree ma.kes less than SIS an hour. Bank tellers, the single largest 

occupation within this category, have a median hourlywageof$12.44.11 These wages have 

been stagnant for decades; the value of a tcUcr's,vagcs has been dropping since the 1970s." 

Wilh wages this low, II is lillie surprise that so many workers must faU back onto publicly 

funded safety net programs to suppot1themselves and their fumilies. In 2014, researchers at 

the University of California. Berkeley, found that nearly one·thirdoftellers' families were 

enrolled in one or more such programs (the Earned Income Tax Credit, Medicaid and/or 

CIIIP hcalthcare programs. Supplemental Nutrition/Food Stamp~ and TANF) at a public cost 

to taxpayers of nearly $900 million peryear.u Thus ills also understandable that these 

workers would become concerned about and dependent on commission· based incentive pay 

offered on top of these wages for selling various banking products to customers. 

The pressure to do so is extreme. According to recent studies, only about13 pen:ent of 

customer interactions with their bank involve entering a brick and mot1ar branch, 14 which 

can explain inpart theextraordinarypressureworkc~inthose locations feel toofferalong 

list of products to every customer who walks through the door. Workers locaU centers 

sl<lffiug phones are presented with rigid scripts and quotas to close payment commitments 

on outstanding bills or to seU new financial products every few minutes. As one Wells Fargo 

branch operations manager recalled, 1 practically chase customers out the door hawking 

unwanted credit and debit card accounts to a clientele hailit13largely from African· American 

communities that have already been ravaged by foreclosure and predatory lending." 

What Are the Bad Banking Practices and Policies? 

Banks have long counted on various fees and charges on their customers to lift their bonom 

line. New regulations after the Great Recession cut into some of these income streams. For 

example, new rules Implemented in 2010 made it difficult to change the order in which 

transactions were processed to maximize O\•erdraft charges or impose fees on debit and 

automated· teller· machine transactions unless a customer actively opted to participate In 

overdraft protection programs.'' By 2015, ba ~ filings show tbis line item was 4 percent 

lower than the year before." After these practices were publicized and the newly fonned 

Consumer financial Protection Bureau (CFPB) began investigating them, more bi8 banks 

began voluntarily adopting fee disclosure forms. \Vblle workers repot1that sometimes these 

fonns are not properly used and they are not encouraged to educate consumers, there has 

nonetheless been some measurable suocess in addressing these harmful practkcs." As the 

Center for Responsible Lending pointed out, not only do abusive consumer banking practices 

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hun customers' balance sheets, they also •crowd out beuer produciS by removing incentives 

for banks to offer lower·cost' options." 

This Is why the perseverance of aggressive sales quo laS and incenlives programs at tbe 

naliotrs biggest banks is so distuming. Without increased oversight and regulatory refonn, 

these practlces will continue to hurt workers and customers alike In order to boost the 

banks' bonom line. And customers are unhappy: complaints to the CFPBabout "Bank 

Account or Servlces" have increased 34 percent from 2014·15 to 2015-Hi lo February of 

2016, debt coUection achieved the dubious distinction of being the single greatest sourre of 

complaints, constituting more than one·quanerof all compiaittts filed with the agency." 

Without enforred safeguards for customers, the banks lmve liule incentive to stop these 

practices. As WeUs Fargo assured shareholders, "Noninterest income was relatively stable in 

2015 compared with a year ago, rcllecting our ability to generate fee income despite 

fluctuations in market sensitive revenue."" Indeed, service charges on deposit accounts held 

steady at $5.17 million (6 percent of revenue), and card fees brought in another$3.7 million 

( 4 percent of revenue). Other types of fees accounted for an additional S18.7 million (21 

percent of revenue). At the same lime, the line item for•Commisslon and Incentive 

Compensation• expenses totaled $10.4 million, meaning that the employees who seU the 

products that bring in millions of dollars for their employer aren't seein.g 1he rewards in 

their paychecks. 

Aggressive Sales Metrics Hurt Customers 

ln late 2013, I he Los AI!IJeles Times published I he accounts of workers empk>yed al Wells 

Fargo facilities across lhecounll)', revealing the aggressive sales quola syslerus in place 

there and lhe potential harms they caused to cus1omers.21 ~spring of2015, lhe Los Ao.geles 

Cily Attorney's Office had filed a lawsuit on behalf of California cuslomers oflhe bank, 

alleging I bat lhe San Francisco-based bank was engaged in unfair business pracllces by 

misusing personal cus1omer information withoou consen1 or even noliflcaliotL:n Six monlbs 

laler, The Wall Slrret Journal reported tbatlhe Offioo oft he Complrolleroflhe Curren<y and 

the San Francisco Federal ResolVe were also iovesligaling I be praclices at WeUs Fargo."' 

The Los Angeles City Anomey' s Office uses language in ils filing that makes the severily with 

which !bey view lbedangersoftbe sales quota system quite clear. words like "viclimized," 

")lernicious, .. unrealislic; and ·rraudulenf indicate the dangers it sres forcus10mersa1xl 

the dilemma faced by workers. Based on tnfonnarlongiven by numerous employees, the suit 

c:haracteri7.es the \\o'Orking conditions as "unrelenting pressure• and notes lhat managers 

•constantly hound, berate, demeanaud threalen employees to rueelthese unreachable 

quolas." It seeks a stop 10 I he praclices, financial reslilulion to theviCiitns where 

appropriate, and civil penal lies levied on the bank. 

This effort is nollbc firsl in California 10 11)1 to redress unfair banking praCiiccs thai burt 

cus1oruers, !hough it is the 6rs1 anemptlo direclly lake on the aggressive markeling of retail 

consumer debt vehicles by a big bank. In 2012, Los Angeles followed the example sel in 

Cleveland, Boston, New York, Philadelphia, and Pittsburgh of responsible banking 

ordinances, building on Community Rcinveslmcm ACIIaws, 10 ensure thai banks 1ba1 seek 10 

manage public funds commilto fair lending and mortgage practices in underse!Vcd 

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communities." And nationally, in 2010 federal regulators required that customers actively 

opt·in to overdraft protection programs and are currently investigating other practices 

designed to maximize overdraft charges.lS Furthenuore, the CFPB solicits infonnation from 

current and formeremployeesoffinaoclal institutions concerning consumer protection 

violations." However, given the ubiquity of these sales programs not juSt at Wells Fargo but 

at all the big banks, the potential danger to the financial well·belng of area famllies,and the 

challenges that low-wage worl<ers t1re in standing up to the p~sure to engage in unethical 

behavior, it is dear that stronger safeguards need to be iu place regulating the use of sales 

quotas in retall banking. As one Los Angeles-based Wells Fargo personal banker stated, 

'Wells Fargo wants cuStomers to succeed financially while ripping them off through 

overdraft and monthly fees, and all the other unnecessary products they were pushed to get 

in order to increase the monthly fees and interest." 

"(The bank) wants customers to succeed financially while ripping 

them off through overdraft and monthly fees." 

- Wells Fargo personal banker 

In March of2016 alone, almost one· fifth of the more than 115,000 California consumer 

complaints filed with the CFPB dealt with bank ac.counts or services, credit cards, or other 

financial services. If one assumcstbat at least some oft he 16,000 credit reporting 

complaints and 28,000 debt collecting complaints also originated In unwanted products or 

services pushed to meet worker sales quotas, it becomes clear that these pracUces could 

create serious trouble for consumers." And with 12,000 oftheslate's neatly 41,000 bank 

tellers, Los Angeles is the metropolitan area with the second·highest employment level in 

this occupation in the country (second only 10 the Greater New York City area1 a sigo f~an t 

numberofworl<ers laboring under stressful and troubling sales metric quotas." Based on 

the information that hascome to light about this element of routine banking practices since 

the responsible banldng ordinance was last revised, the Los Angeles City Council needs to 

consider the dangers of aggressive sales quotas on its residents- retaU banking customers 

and banking worl<crsalikc-and implement measures to safeguard against the unnecessary 

sale of banking products. 

The California lawsuit is premised on the furt that practices come with umerousdange ~ 

for consumers. They may accrue fees for unknown accounts, and failing to pay them can 

result in accounts going to a collection agency. Unauthorized credit cards or other loans may 

negatively affect credit reports, making il di!ftcult fo r consumers to qualify for pnn:hases 

Later. As one Rhode Island Bank of America worker observed, ·obviously, when you open a 

credit card that someone didn't want, it Jowers their credit score. Closing an account can also 

lower your credit score. There's a lot of confusion it ran cause; people can get all sorts of fees 

they don't understand." A lawsuit Oled against Wells Fargo in Ari7,ona alleges that as a direct 

result of sales metrirs and quotas like the ·GT>Eigbt" program, bank employees opened 

multiple acconnts for the plaintiff without her knowledge, and that as a result offees 

accruing on these accounts, her Information was sent to collection agenciO$." 

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Customers suffe r when banks disap)l!We of their finaneial behavior. As the National 

Consumer law Center points out, the majority of negative repot1S filed on consumers with 

bank-account consumer-reportl"8·agency databases are based on •account abuse" related to 

overdrafts.» However, given the practices laid out here,allegationsoftbese consumer 

abuses must be taken with a grain of salt because some CUS'Iomers may not even be aware or these accounts. Further, the facttbat these reporting agencies are frequently owned by the 

same big banks that seD unneeded and unwanted banking products to consumers is simply 

addi"8lnsult 10 injul)'. Recognizing the financial repercussions of a single bad consumer 

banking report, the New Yorkallomey general negotiated deals with big banks like 

Citigroup. Capital One, and Santander 10 stop using the largest of these screeni"8 companies, 

ChexSystems, which reported only negative Information on those secki"8toopen bank 

accouots.31 

Shopping for a bank ac~:ount can be difficult for any customer, and even legally mandated 

consumer information ca.n be hard to come by and confusing. with disclosure forms ru011lng 

into the dozens of pages." The WeUs Fargo "Vision and Values" pamphlet addresses this 

issucwhenil stateslbatthe banl<s "customers trust us as their financial resourcc:J3 But 

numerous workers we Interviewed expressed frustration at the speed with which they bad 

to SCIVC<Ustomers in order 10 ~ru~ke theirquOlas, often skippi"li clarifying questions or 

ensuri"8 customers understood disclosure forms before signing them. Customers talk to 

bank employees expecting help and infonncdadvicc about financial products, but workers 

need to encourage consumers to sign up for as many products as possible- regardless of 

their applicability- In order to pay their own bills or even to keep their jobs. 

Largest Consumer Banking Screening Companies and Their Relationshtps to Big Banks 

[;and Bank Alfilot<d Companies Nature of Rdation$hrp and Htstoryof hd BehaviOr 

nine Campa'!,__ 

1- - - C«teevcheckse"= Fidelity Hationallnfounation 5erviees. Inc. (FNIS Owned by the FNlS suboidiaiY efunds. In 2013, C«teev 

performs o voritty of strVires fotltoding U.S. bonlcs, pald$3.Smillion tosettJe a FederaiTradeCommission 

in<lvdingdepos~ ond l<nding syotems, mobifeond e- chatce that~ violated the fair Cled~ R<I'Oflirlc Act. 

bonling system~ bronch ovtomotiol\ eleatonic funds 

tran$fet, and it issws aedir cetds ond prepaid cords.) 

~· F1del:ity Hationallnfotmation Services, Inc. Owned by the FNISsuboidiacy efundt CiteXSystems is lite 

country's largest consumer banldBg sctetning agency, 

subsctibers include Sank of Amerb, JP Mocgan Cl\ase, 

C~ibank. and Wells Fareo. 

EafliWarn.ingSefYices 

and 

···-"'' Welk fargo ""'~·-j ·-

80 petctnt · ol .. tite ~-arce~ Ame~ ... lcan 

·-~- banks subscribt to h 

dei>osft<heckseiVlCe i Overa MtlionAteDeruedBank 

Accounts for Pa~ Enors; NlW Vork Time<, July lO, 20H) 

1- - TeleCheck S.rvic,. Fin! Data Corporation. (Frm Dato, a spin-off from Wllollyowntd subsidiary. T<leCiteek and ksaftitiate TRS 

American Exprns, handles e«mmer<e seM<es Reo>very Services, a debt <OIIection company, settled w~h 

in<lvdlng bonk rra!IStJalcm ond atdit ond dtbft cotd the F<dtral Trade Commlstion in 2014 for vlolatiO<l< of lite 

IssvM7g oDd proct$$inQ. I! rt11s the STAR network that Fede"l ere~~ Reportinc Act. 

A'nks ATM mochint$ across numttout banklnQ syStem$. 

Its a:o ~Frank B~ig""""' fotmttly the roo ofJP 

MorgonCII<>se.} 

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The Structure of Abusive Sales Metric Systems 

As Wells Fargo explains to shareholders, they use 'cross-sell menics" to determine bow well 

they are serving their customers. However, they note, products that qualify for inclus'10n in 

the retail household cross-sell metJics must•bave the potential for revenue generation and 

long-term viabUily."Tbus,the types of baseline banking products that most customers 

would request, including A TM cards, online banking. and direct dcposil, are not included in 

the metrics.3< Instead, the bank counts only products such as credit cards, debit cards, auto 

and student loans, mortgages, and home equity loans. For 2015, We Us Fargo's household 

cross-sell was 6.11, or just over six banking products on average per acrountholder 

address." A company pampltlet on vision and values states a desire 10 increase this number. 

'We wanllo get to eight.. and beyond'" 

To fulfdlthese kinds of growth plans, banks need to implement aw·cssivc sales quotas at 

numerous levels: for the company overall. regionally, by location, and for each individual 

v.orker. Employees al every level explain extreme pressure to rueettbesegoals, which often 

change and are sometimes not revealed to the workers in a timely manner. As one former 

manager fora Santander branch expla.ins,goals for each employee of his facUlty came pre· 

packaged from the regiorud brdnch with a rate thatwas'always almost impossible, but 

always increaslng."l1 A We Us Fargo personal banker told The Wall Street }oumaltbat his 

branch bas daily and hourly goals set by the company, which changed based on the season.,. 

Workers are enticed to meet their daUy quota with a reward system that auacbes value to 

eac.h ""solution• or product the workerseUs roa customer, sometimes inlhe form of points 

that lead toward a set commission and sometimes as a dollar value. While the Wells Fargo 

'Gr-Eigbt" program, which set the go.'ll of eight banking products per househol<l. has come 

under the greateS1 public scrutiny, other banks have simUar systems 10 compel froot·line 

v.orkerstopush products such as"lhelluslle' (orii55L: High Speed Swim Lane)programat 

Countryv.ide (latera subsidiaty of the Bank of America), which compensated employees 

solely on the volume of mortgage loans they originated and resulted ln a $1.27 hUiion 

seH eruenl.~ 

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Quota "Lingo" 

Tbe culture of constant cross·sellingand sales metrics comes with its own special 

vocabulary." 

Solutions: Blanket tenn for those financial products that qualify for 

iocentive points, including student loans, car loans, credit canis, 

additional acc.ounts, automatic overdraft protection,or"express 

send" [or overseas money transfers. While the tenn "solution$" 

implies a dearly slated problem, often customers were not aware 

they were receMng these products or that they were optional 

Sandbagging: Because sales goals are often pinned to a (Xlr1icularrcpor1ing 

perio<lsorspecial ~1rgcted days, bank workers m~ht bold off 

processing a new account application until it can count toward 

that date without the customers knowledge. (Often in 

connection with named sales J>romollons such as "Jump lnto 

January; during which quolas at WeUs Fargo were increased 

dramattcally with hopes [or impressive numbers [or first quaner 

shareholder reports.) 

Bundling: 

Pinning: 

lo orderto make sales goals, bank workers might imply-or even 

explicitly claim-that some products were only available when 

combined with otherones,compelliogcustomers to take on 

accounts or credit cards they did not want in onler to get those 

they did. (Also known as "Packed Accounts.") 

A lawsuit fded by the Los Angeles City Attomey against Wells 

Fargo alleges that employees would at limes assign a Personal 

ldentii'ICation Number (PIN) code to new ATM canis In onler to 

later enroll tbecustomers in online services without their 

consent. 

Gypsy Accounts: Aeoountsopened In onler to make a sales quota, but with the 

intention of soon closing them, and often containing only a few 

dollars. 

Tapped Out: 

Gaming: 

The condition or a bank employee's family afterthat worker bas 

asked them to open new accounts or take on new credit cards in 

order to help him or her achieve sales quotas. 

Opening accounts fraudulently by omilting signatures, adding 

secondal)' accounts without permission, or misrepresenting 

costs or benefits to customers. 

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Sales Quotas Are Ever-Changing and Unpredictable 

Workers at many levels within the banks rcpot1that they struggle to mcett heir sales goals 

often without even knowing what those goals are for a given period. 

• One Bankruptcy Relationship Manager at U.S. Bank said In late 2015 that her employer 

\vas"getting re-•dy to change the bonus structure AGAIN In Januaty," even though she did 

not know even at that late date what her current quota numbers were. 

• A Matyland Sunlfust worker says that"the goals areronstantly shifting. If you don't hit 

your goal, it goes upS percent. I( you do bit your goal it goes up HHS percent.• 

• A collections worl<er at U.S. Bank obscJVccl "The goals for bonuses are never announced in 

advance, so i( s hard to know from month to month" what expectations are, while another 

elaborated that bocausegoalswere routinely not released untllthel0" or15"'ofthe 

month, they were largely unattainable. 

• Another U.S. Bank collections worker statccl ' It's really bard to do a budget when I doo't 

know what the bonus is even going to he until halfway througlt the nexl month. I wish 

they'd be more transparent• 

• Managers, too, feel the pressure of these individual goals for tellers and personal bankers. 

One Wells Fargo manager said that while he was responsible 'on papet' for making sure 

that each employee be oversaw met their expcc.ted goals, "off paper the expectation Is that 

as a manager it all fulls your ou ld s~ A long· lime Santander branch manager said 

that if an employee leaves before a full year on the job, the manager's own incentive pay 

was affected. 

Quotas Pit Workers Against One Another and Create a Hostile Work 

Environment 

According to workers, fuUure to meet one's sales quotas doesn't only come with financial 

repen:ussions in the form of lost incentive pay. Workers are also publicly mocked and 

threatened In front of their peers. 

• The lawsuit medagainst Wells fargo In California alleges, '?llanagcrs constantly harass, 

bernie, demean, and threaten employees to meet these unreachable quotas.' A Wells Fargo 

employee cited in the complaint relates that if an employee failed to meet Ms or her quota, 

they were threatened or embarrassed du.ring morning meetings. A Bank of America 

customer ser.'icereprescntative wrote an op-ed In which be referred to "Hunger Games' 

scheduling, In which the most convenient or desirable workshifis were allocated after 

workers submit "bids" based on their quota ~>;ent ivepoints, pitting workers with child 

care needs against those with transportation challenges. As he notccl 'Jiere,ourtime 

rather thana bonusorpromotion opportunity, is the prize.•u 

• A former teller at Wells Fargo revealed of management, "They would put evetyone's 

metrics up in the break room.' 

• A California teller recalled, 'God forbid you went home without solutions. You could be 

subjected to ridicule for not meeting goals.' 

• A br•ncb manager explained that he.vas expected to hover behind employees during each 

conversation with a customer,aod to draw the employee away mid· transaction if 

necessaty to remind him or her to offer another product or ask why they were not doing 

so. 'This was so terrorizing. it was unbelievable.' 

• A Los Angeles persooalbankerstated, "'Enny-leveiWclls Fargocmployeesarebcing 

treated. like bostagcs. We lack the job security and a healthy environment for worl< that is 

not stress, discrimination, or harassment free' 

NElP j8ANI:ING ONTHE HAROSEllj iUNE 2016 10 
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23001036.eps

Sales Pressures Hurt Workers and Their Families 

Workers laboring under these high· pressure inc~nt ve programs bring their work home 

~>ilh them. Many report suffering physical manifestnions and aUments as a result of their 

stressful workplaces, and they struggle to make ends meet and care for their families on 

their low wages. ln numerous cases, managers encou.rdge 1hem to pursue sales opportunities 

among family a.nd friends ln order to bit their goals. 

• Worl<ers open accounts that fumily members don't need juS1 10 make their numbers. One 

manager in Florida with experienc~ at both Bank of America and WeUs Fargo said that she 

opened an account for her daughter that she knew they would soon close, and that one of 

herbankersopenedanaccount for each of his 11 grandchildren just tomakequota 

numbers. 

• Another teller in Florida ad milled that she enrolled her SiSler fora credit card that the 

sister did oot really understand. "She maxed il ou~and she still has that maxed·out credit 

card 10 years later." 

• Uponbeiugasked ifhemadea liviugw38e,oneformer Bank of America personaibanker 

replied, "Oh gosh no. Food for my son was really hard.lle's12.1 couldn't put biro in any 

extracurricular aclivities." 

• One Minnesota US. Bank collections worl<er said, 'There was a onnstant banle of how you 

do right for lhecustoruerwithoul sat~ 0l'i"8- you know, 001 paying a light bill or baving 

shoes fortbe kidsgoingbacktoschool. You can't make that sacrifice.• 

• ARhodclslandcall·celllerworl<ersaicl1 usedtocrycveryday.Eventually, I learned bow 

to rompanmentaiiJ.C." 

To Meet Sales Expectations, Workers Must Weigh Tlteir Interests Against 

Customer Interests 

Wbtle many workers say they enjoy helping people and working in a customer service role, 

they ftnd that these functions too often have to take a back seat to moving various banking 

·solutions" In order to meet their goals and earn crilicalincenlive pay. 

• A call·centerworker alleges that her manager told her to keep numbers oncall liS1s even 

after customers ask for their removal, and when she queslioned whether that was a 

violation oflhe Fair Debt Collection Practices Act, s~ waswrineu up. 

• Several worl<ers note !hal managers would look the other way when documentalion 

verifying !dcnlily w•s lacking or when forms were turned in signed but not filled ln. 

• A former personal banker admilled, •i bad never in my life been the sor1 of person to see 

dollar signs w~n people walk in. I always liked buUding relarionsbips. Bur these inane 

goals really affec:ted how I saw them.i didn't think about meeting their nceds,i thought 

abour bow can I meet my goals: 

• One Florida persooal banker wilh Bank of America admilred, 1 had days that even though 

!tried really bard, I couldn'r seU, and that's very scary. lt's not a financial service posilion, 

i~s a sales posilioo.And thai means It's not about the customer: 

• A Rhode Island B.1nk of America service specialist recaOed, •If someone's gelling married, 

reD them to get a credir card. Any life event that happened, you were supposed to say 'get a 

credit card for it.' lfyouheardkids inthebackground,tbeanswcrwasacredil card.' 

• A former Pennsylvania Wells Fargo branch manager admilled that some tellers would 

"churn; or open new accounts for current customers, bur manipulare tbe recording oflhe 

transaction to make il appear that new accounts were being opened, and that sometimes 

second or third accounts were being opened for customers without their approval 

NElP I IANI:ING ONTHE HAROSEll I IUNE 2016 II 
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Workers Have No Viable Avenue for Reporting Unethical or Illegal Policies 

Workers frequently express discomfon with the tactics they must use to sen bank products, 

but find little redress when they go to managers wilh their conce 11~ In fact, In most rases, 

workers say that thelrma.nagers are already aware of the practices In their branches and 

even encourage them. 

• A Minnesota worker says be bad at least two conversations with his manager about 

unrealistic sales goals and was told, "What do you want me to do, brother? My handsare 

tied and I just do what they tell me to do.' 

• A Chase Bank sales and service associate noted that 'the managers were the ones who told 

us to push the products." 

• A U.S. Bank collections worker couldn't share concerns with management because 'they 

created an environment to gel the payment, no maHer how long II lakes.• 

Another worker with e.']lt'rieore at both Suo Trust and Bank of America recalled. "Managers 

really pushed me to ignore il when consumers say no." 

Workers Can Be Part of the Solution 

There is nothing inherently wrong with businesses selling goals, establishing benchmarks, 

and encouraging all emplayees to help make the business successful. Bnttbecurrent 

structureofthe quota system within the country's big banks bends those practices into a set 

ofinternal poticies that benefit bankCEOs and shareholders, but arc bad for nearly everyone 

else. This does not have to be the case. Amalgamated Bank, whoseemplayees are unionized. 

recently signed a contract that ensured all its bank workers will earn a starting wage of at 

least S15 per hour, which gives them some ability to plan family budgets a.ndcare for 

themselves and their chUdren. These men and women do not depend on sales inrentivcs or 

rewards to make ends meet; in c~ while the bank does set goals for Us branches, it does so 

v.ith the best interests of the customer first and foremost and does oot mandate individual 

goals nor offer individual rewards.<> 

There arc also c:<amplcs in othcrcountrtes of codes of conduct that address the issue of 

over· aggressive sales quotas and Incentives plans. The Finance SectordivlslonofUNI, the 

global union OQlanizatlon, works with financial regulators and banking leaders in the 

European Un.ion to protect worker interests, including ensuring that"the use of sales la'llets 

should be limited In order to avoid conftlctsoflnterestsand to reduce pressure on 

employees."" In 2010, after workers employed by fi n.1nc:ial compGnies across the globe 

shared their stories about aggressive sales praclires, UNI Finanre adopted a Medel Charter 

on Responsible Sales of Financial Products. Recognizing that customers depend on bank 

employees for responsible ad11ce and aid In their financial dealings, the Chanercalls for 

realistic, fa ir, and transparent incentive systems for employees and states that rewards 

should be given for good customer service and qualified advice, not for selling specific 

products." Funhermore, UNI Finanre Sector worked to get whistleblower protections 

wrillen into compulsory financial regulations adopted by 1 he European Commission, giving 

concerned banking employees a process by which to alen lawmakers iftbeiremployerasks 

them to engage in unethical behaviors on the job." 

Additionally, In Br~zilaflera 20141ndustry·wide strike, workers at numerous private and 

public banks won a payraiseand language addressing sales prnclices in that country." 

NElP iiANI:INGONTHE HAROIElli iUNE 2016 12 
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23001038.eps

San!<lnder Bank-one oft be. banks operating in the Uniled S~<~ es using aggressive sales 

mctrics in ils branches, according to workers interviewed for t his report- has an agreement 

~>ith lis workers I here 1hat addresses many of lhe abuses reporled by workers in Ibis 

counlly. Managers are probibiled from publicly posling employees' rankings and from 

mocking ""rkers who are nol meeling their goals. They are encouraged 10 lailor sales offers 

to 1he needs and financlalcapaclly of each banking customer and 1oensurecus1omers 

understand all the oondilions atL1<hed 10 producls before employees close I be sa.le." In 

Denmark and Finland. UNI reports that sales targets are set afterconsul!<llionand 

negolialion wilh worker-led bodies and thatl<lrgets are linked to cuslomerscrvice." 

The majority ofbankand finance sec1orworkers around the world, iocluding those 

employed by U.S. banksoperJiing in other countries, arc union members who are covered 

by co~ ive bargaining agrecmeuiS. Finaoce workers who have a voice on the job and 

whose fundarocmal righlsarc prolected througb collecliveagrccmcuts can be instrumental 

in miligating abusive labor practices I hal can lead to customer harm. Wben workers are 

empowered inside I he workplace they have lhe abilily to cllSllrc, on a day· to-day basis, lbal 

cuslomer inleraclions arc nollied to excessive goals accompanied by the threat oflossof 

incenlive pay, discipline, or termlnalion. Through colleclive bargaining, they can implemcnl 

methnds thai ensure that inleractions wilh customers focus on meeting flnaocial service 

needs and uphold high standards of elhical sales praclices. 

Less than a decade ago, poor praclices and the pursuit of consumer· generated revenue by 

the big banks lrlggered 1bewors1 recession this country bad seen in generalions. 

Policyroakers addt-essedsomc of lhose praclices, bul in the process, banks developed a 

policy of replacing some of I hose revenue slreams with fees and penallles generated by 

multiple accounts and banking products. In order to geucralc these profits, low· wage fronl· 

line workers must engage in sales tacUcs thai range from the uocomfonable and unethical 10 

some tbatborderonlllegallly. II islimeforpoUcymakers lo suppon front·lineworkerswho 

suffer under these systems and to continue the task of cleaning up the financial services 

indusny and protecling consumers by crafting new rcgulalions to cease these practices. 

NElP (IANI:INGONTHE HAROSEll( IUNE 2016 13 
201 


23001039.eps

Endnotes 

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NElP IIANI:INGONTHE HAROIElli iUNE 2016 " 
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