U.S. lawmakers grill Wells Fargo CEO over fake accounts scandal

U.S. lawmakers grilled Wells Fargo's chairman and chief executive officer (CEO) John Stumpf on Tuesday over the bank's fake account scandal as he declined to support clawing back executive compensation.

Stumpf was summoned to testify in front of the Senate Banking Committee on Tuesday after regulators found that thousands of employees opened more than 2 million accounts without customers' authorization, spurred by the bank's sales targets and compensation incentives.

"I am deeply sorry that we've failed to fulfill on our responsibility to our customers, to our team members and to the American public," Stumpf said, adding that he accepted full responsibility for all unethical sales practices in the retail banking business.

"I am fully committed to fixing this issue, strengthening our culture and taking the necessary actions to restore our customer's trust," he said.

"These were not magically delivered unwanted products. This was fraud. Fraud that you did not find or fraud that you did not fix quickly enough," said Sherrod Brown, the top Democrat on the committee.

Stumpf frustrated lawmakers during the hearing as he declined to make a recommendation to the board to claw back compensation of former community banking head Carrie Tolstedt, who stepped down from her position in July and decided to retire at the end of this year.

He argued that it's up to the board's compensation committee to decide what should be done to her compensation.

"That's unfortunate," Senator Brown responded. "Senior management and the board of directors apparently agreed once the scandal became public, remedial actions were stepped up against front- line team members, but the praise and performance bonuses continued to be lavished upon Ms. Tolstedt until as recently as two months ago."

Senator Elizabeth Warren, a Massachusetts Democrat, told Stumpf that he should resign, return money earned during the fake account scandal and be "criminally investigated" by both the Department of Justice and the Securities and Exchange Commission.

"You haven't resigned. You haven't returned a single nickel of your personal earnings. You haven't fired a single senior executive," Warren said. "Instead evidently your definition of accountable is to push the blame to your low level employees who don't have the money for a fancy PR firm to defend themselves. It's gutless leadership."

"We are committed to getting it right 100 percent of the time, and when we fall short we accept responsibility and we will do everything we can to make it right by our customers," Stumpf said.

Earlier this month, the bank agreed to pay a 185-million-U.S.-dollar fine with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the City and County of Los Angeles to settle the case involving opening unauthorized accounts, with additional 5 million dollars in customer remediation. Enditem