We all knew that John Stumpf's appearance before the Senate Committee on Banking this morning would not be pretty, but in a bit of a plot twist it turned out to be so, so, SO much worse than we even dared to imagine for the embattled CEO of Wells Fargo.
Stumpf - who was sporting a mysterious brace and bandage on his right wrist and hand - must have felt a tingle of terror run down his spine the moment it became clear that the committee leaders Senators Richard Shelby (R-AL) and Sherrod Brown(D-OH) were joining forces to tear him a new asshole. Usually, Shelby and Brown are not so much "allies" as much as two political polar opposites who would not piss on the other should he be literally aflame in the Senate dining room.
That hint of fear probably ballooned into full-blown panic when Stumpf (after delivering a mealy-mouthed and lame statement to the committee, outlining what happened at Wells, taking full responsibility, and then blaming everyone else) realized that even the Republicans on the committee - who usually act as sworn defenders of CEOs and reflexive critics of anything involving the CFPB - were also ready to give him a verbal sport beating.
The only member of the committee who seemed halfway interested in giving Stumpf a break was Sen. Bob Corker (R-TN) who opened his questioning thusly:
"I know that you have a whole host of people here with you. I'm sure one of those people is a communications person. I would just make the observation, look, I know you talked daily with board members and been on boards before myself. I would suggest just again as an observation to not invoke some degree of clawback for your self and others involved would be committing malpractice from the standpoint of just public relations."
That's a sitting U.S. Senator offering free PR advice to an embattled executive being hauled before his committee. That's pity, you guys.
Corker even tried to offer Stumpf a lifeline on the subject of Carrie Tolstedt, almost begging the CEO to say that he showed leadership by firing the head of his retail banking unit after she oversaw at least five years of rampant fraud in her division.
CORKER: But I assume her departure after 27 years was based on this issue. Is that correct?
STUMPF: It was based on a number of issues. This is one of them. We wanted to take the business in a different direction.
Seemingly flummoxed by Stumpf's inability to see what he was trying to do, Corker doubled down.
CORKER: She, in essence, was terminated over this issue.
STUMPF: No, Carrie chose to retire. Tim Sloan, our chief operating officer, with my consultation had a discussion with her. It was sometime in June or July, and said we want to go in a different direction. We want to put more focus on the issue. It was a variety of things. She was eligible for retirement and she decided to retire.
How annoyed was Corker? Here are his very next words:
"My time is up. Out of respect to other members i will stop."
Corker should be commended for restraining himself from blurting out "Buddy, you know She is going to be in here any minute, right?"
After Corker, Stumpf got pounded with increasing fervor by Senators from both sides of the aisle. He repeatedly failed to answer with any clarity questions about Tolstedt or when he knew things were rotten at Wells Fargo and what he did to fix it. At one point Stumpf even seemed to not know how credit ratings work. Senator after Senator lit into Stumpf from every angle of the scandal. The battery went on for a little over an hour until Shelby said the very words that Stumpf had been fearing since he got the invite to appear last week: "Senator Warren?"
Elizabeth Warren did not enter the hearing room dressed in a silk robe accompanied by a trainer and a cut man, but that was perhaps the only concession she made in pretending that she had not come to kick some ass.
Warren led off her brutalization by reading aloud from Wells Fargo's own ethics handbook and then proceeded to verbally kick the living shit out of what was left of John Stumpf:
WARREN: 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?"
STUMPF: The board. I serve at the...
WARREN: Have you resigned?
STUMPF: No, I have not.
WARREN: All right. Have you returned one nickel of the millions of dollars that you would pay while this scam was going on?
STUMPF: First of all, this was by 1% of our people and...'
WARREN: That's not my question. This is about responsibility. Have you returned one nickel of the millions of dollars that you were paid while they scam was going on?
STUMPF: The board will take care of that.
WARREN: Have YOU returned one nickel of the money you earned while this scam was going on?
STUMPF: And the board will do...
WARREN: I will take that as a no then.
Warren continued to come at Stumpf like Mike Tyson fighting Betty White, pummeling him with facts and figures that she's been dreaming of getting her hands on since 2008. Stumpf found himself on the receiving end of Warren's almost decade-long crusade, a stand-in for all the Wall Street monsters that Warren and her followers have fatuously assured Americans are everywhere.
But Stumpf provided too perfect a target, and even Warren's natural histrionics seemed to work in the context of his pathetic presentation. When Warren accused Stumpf of "Gutless leadership," it was hard to find fault with her argument. And it felt almost merciful when she set up her final blow by asking about Stumpf's personal stake in Wells Fargo. When he tried to obfuscate, Warren pounced:
"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 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's what really gets me about this, Mr. Stumpf, if one of your tellers took a handful of $20 bills out of the crash drawer, they'd 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 multimillion 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 isn't right. A cashier who steals a handful of $20s is held accountable, but Wall Street executives who 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 be cheating as many customers, investors, and employees as they possibly can. Thank you, Mr. Chair."
Somehow, the hearing went on for almost another hour (Chuck Schumer even dropped by to make pretend that he also hates banks) and Warren was given a second chance to come back and drill down on the Tolstedt issue. By then, Stumpf had clearly decided to employ the tactic of playing dead and hoping Warren grew bored of watching him bleed.
But at that point, so had we.