Wells Fargo chief executive John Stumpf achieved a rarity in Washington on Tuesday: bipartisan consensus.
Unfortunately for him, the agreement across the aisle at a Senate Banking Committee hearing was that Wells Fargo failed to do what's right for its retail banking customers. Although the investment advice unit of the bank has not been implicated in the problem, Mr. Stumpf's appearance on Capitol Hill was a setback for
opponents of a Labor Department rule that raises advice standards for retirement accounts.
Mr. Stumpf endured almost three hours of testimony centering on Wells Fargo's $185 million fine from the Consumer Financial Protection Bureau and other regulators for opening about two million unauthorized accounts, and for their related fees, that led to the firing of about 5,300 Wells Fargo employees.
For the CEO, it was a combination of
being raked over the coals and drawn and quartered.
Leading the charge, of course, was Sen. Elizabeth Warren, D-Mass. She's the
Katie Ledecky of assailing Wall Street executives and financial regulators at Senate hearings. She keeps breaking her own record for launching zingers.
She was at the
top of her game on Tuesday, telling Mr. Stumpf: “You should resign, you should give back the money you took while this scam was going on, and you should be criminally investigated.”
Ms. Warren's enthusiasm for protecting the DOL fiduciary rule from Republican legislative attempts to kill it — perhaps in an omnibus appropriations bill at the end of the year — likely has only been stoked by her anger at Wells Fargo.
The bigger problem for opponents of the DOL rule is that Republicans were almost as hard on Mr. Stumpf as the Democrats were.
Sen. Patrick Toomey, R-Pa., dismissed Mr. Stumpf's arguments about why Wells Fargo pushed its employees to open multiple accounts for its banking customers.
Mr. Stump said the goal was not to sell products but to build “deep relationships.”
Mr. Toomey countered that the bank's culture didn't put customers first.
“This isn't cross-selling; this is fraud,” Mr. Toomey said.
The reason to pay attention to Mr. Toomey is that he's involved in a key race this fall that could determine whether Republicans keep control of the Senate.
He determined that strongly criticizing a Wall Street official was good for his constituents and good politics. Perhaps his appetite for killing the DOL rule, which requires that advisers act in their clients' best interests in retirement accounts, might diminish — at least for a while.
Another key Republican critic of Mr. Stumpf was Senate Banking Chairman Richard Shelby, R-Ala.
Mr. Shelby wrote a bill earlier this year that would have overhauled the Dodd-Frank financial reform law. But on Tuesday, he also denounced the Wells Fargo culture.
“I have often said that banking is based on trust, and that trust was broken at Wells Fargo,” Mr. Shelby said.
The debate over the DOL rule revolves around trust, too, and for now — for once — both parties are raising that banner.
