It almost hurt to watch.
On Tuesday morning, Wells Fargo CEO John Stumpf plunked down in front of the Senate Banking Committee to spend two hours getting barbecued. His company made international headlines earlier this month when news broke that thousands of its low-level employees had opened up additional accounts for customers, without those customers’ consent—then charged them fees for the phantom accounts.
Hillary Clinton has made it a campaign issue, but her response highlights why some progressives feel so conflicted about the Democratic nominee. She’s far and away preferable to Donald Trump, of course, in their view. But they’re still wishing for more—especially after watching Elizabeth Warren grill Stumpf on Tuesday.
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Stumpf initially suggested to The Wall Street Journal that a coterie of rogue employees was responsible for the alleged fraud. But when he appeared before the committee, he said he took responsibility for the scheme.
That’s where Warren came in.
“Have you resigned?” she asked.
“No, I have not,” he replied.
“All right,” she continued. “Have you returned one nickel of the millions of dollars that you were paid while this scam was going on?”
He hadn’t. Warren proceeded to argue that Stumpf himself profited off the controversial sales tactics Wells Fargo used, that he should resign immediately, and that the Department of Justice and Securities and Exchange Commission should both criminally investigate him (You can read a full transcript of the exchange at CNBC).
“The only way that Wall Street will change is if executives face jail time when they preside over massive frauds,” she concluded. “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.”
So Stumpf had a bad morning, and progressives gunning for tighter regulations on financial markets delighted in Warren’s questioning. But there’s a hiccup: She made Clinton look, well, a little soft.
During the Democratic primaries, Clinton faced harsh criticism from progressives for her close relationships with Wall Street bankers—and didn’t do herself any favors when she said they just liked her because of 9/11.
So on Monday, Clinton wrote an open letter to Wells Fargo customers saying she was “deeply disturbed” by the news and that she thinks the bank should rescind some of the compensation that executives responsible for the fraud received. That practice is called a clawback, and Clinton’s letter used that term.
“And they must face appropriate legal consequences if they break the law,” Clinton added.
Alexis Goldstein of Americans for Financial Reform said Clinton’s use of the term “clawback” is a good sign and that she thinks it may be an endorsement on Clinton’s part of stricter rules regarding executive pay.
“The amount of the fine by the three regulators, which is $185 million total, should be paid for out of executive bonuses, specifically Stumpf’s and one executive, Carrie Tolstedt,” Goldstein added.
So she said she appreciates Clinton’s overtures. But the candidate isn’t of one mind with Warren on how the feds should respond to Wells Fargo—at least, not according to public statements on the matter.
“It’s obviously encouraging that Hillary Clinton has been speaking out and putting attention on this,” said Kurt Walters, who directs the Root Strikers Wall Street reform campaign for the progressive group Demand Progress.
But Clinton could go further, he added.
“It’s not a terribly politically difficult move to make,” he said. “It was a little more tepid than I think a lot of leaders have been.”
Warren’s statement, he added, is “much stronger” than Clinton’s, he continued. And criminal investigations matter.
“A lot of American people are hungry for a much tougher method of enforcement,” he said.
And Clinton’s promise of “appropriate legal consequences” might not cut it.
