Warren Buffett Will Wait to Comment on the Wells Fargo Scandal
Sep 27 2016 by Johnny Bowman
Pressure from lawmakers on both sides of the aisle is intensifying on Wells Fargo after the bank agreed to pay $185 million in fines to the US regulators and the Los Angeles city attorney's office to resolve claims that employees opened more than two million bogus accounts. (Members to the Federal Advisory Council are appointed for one-year terms each January.) It was unclear whether the letter played a role in his resignation.
At a Senate panel hearing on Tuesday, Ms. Warren urged Wells Fargo Chief Executive John Stumpf to resign and return pay to take responsibility for the problem. CNNMoney spoke to a total of four ex-Wells Fargo workers, including Bado, who believe they were fired because they tipped off the bank about unethical sales practices.
"Mr. Stumpf, the Wells Fargo vision and values statement, which you frequently cite, says 'We believe in values lived, not phrases memorized, '" Sen. Tolstedt was eligible to retire and elected to do so, Stumpf said.
Wells Fargo, asked for a response to the bankers' stories, forwarded an email that Stumpf sent to all bank employees this week. Berkshire Hathaway has held a stake in Wells Fargo for 26 years now, and has returned roughly 7,926% since he first initiated a stake in the bank.
Wells Fargo has fired 5,300 employees since 2011 who were involved with the fake accounts.
The inquiry revolves around sales incentives that encouraged aggressive practices in which bank employees were nudged to sell multiple products to individual customers.
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The revelations are a severe hit to Wells Fargo's reputation.
The question is this: How do 5300 employees commit fraud without managers and executives knowing it?
One by one, senators from both sides of the aisle took turns scolding Stumpf for his bank's actions, in what Sen. If CNN Money's sources are telling the truth, then the answer's clear: the corporate structure knew something was going on, and executives made sure to make it look as though they didn't.
"It never dawned on us that there could be a cycle", the CEO said. If all of the customers issued credit cards without their knowledge had also applied for a mortgage, the result would less than $50 million in higher interest expenses, they estimated. It was estimated more than 2 million accounts were involved.
Wells Fargo chairman and CEO John Stumpf appeared for his Senate hearing today with a lengthy apology and plan for combating backlash following the bank's recent scandal.