NEW YORK — Wells Fargo CEO John Stumpf plans to apologize to Congress and the American public on Tuesday after allegations that bank employees opened millions of unauthorized accounts to meet aggressive sales targets.
The mea culpa comes in prepared testimony for Stumpf’s appearance before the Senate Banking Committee. The Associated Press obtained a copy of the prepared remarks, in which Stumpf says he is “deeply sorry” the bank failed to fulfill its responsibility to customers. He also apologized for “violating the trust” of customers and not doing more sooner to address the causes of “this unacceptable activity.”
Stumpf had been facing criticism after an interview last week in which he implied that retail banking employees were to blame, and the prepared remarks seem to indicate a shift in tone.
The CEO, who had been hailed for expertly navigating Wells Fargo through the financial crisis and keeping Wells out of toxic mortgages, is facing a crisis at the bank that may exceed what it faced then. Some activists have called for Stumpf to resign. One banking industry analyst said Stumpf’s pay should be cut, and for the executives involved with the consumer bank to be required to pay back part of their pay or bonuses.
“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,” according to the prepared testimony.
California and U.S. regulators fined San Francisco-based Wells Fargo & Co. a combined $185 million last week for allegedly opening millions of bank accounts without customer authorization, moving money into those accounts, and even creating fake email address to sign these customers up for online banking. The consumer banking giant has said it plans to eliminate the sales targets by Jan. 1.
In his prepared testimony, Stumpf lays out various ways he says Wells Fargo has improved its corporate culture and can avoid similar problems. This includes new compliance training programs, contacting all customers with inactive accounts to see if they really did open the accounts, and requiring consent from a customer before his or her credit is looked at for a new credit card.
Stumpf is expected to appear twice in front of Congress. The House Financial Services Committee has announced that it plans to conduct an investigation into Wells Fargo’s sales culture, and to have Stumpf testify later this month.
Ken Sweet covers banking and consumer financial issues with The Associated Press. Follow him on Twitter at @kensweet.