Cspan, your unfiltered view of government. Created by campell and 97 and brought to you today by your television provider. The former wells fargo executive testified themselves as the consumer abuses that led to the executives earnings. Members of the House Financial Services committee question the witnesses on their actions at wells fargo and why no one has been prosecuted for the consumer abuses. This is just over two and a half hours. Thank you. This hearing is entitled Holding Wells Fargo Accountable examining the roll of board of directors and that the greatest patterns of consumer abuses. Today, we received testimony from elisabeth and mr. James quigley who until earlier this weeks are as chair of the board of directors of wells fargo and companys Walls Fargo Bank respectively. Both have resigned as our call for the resignations following the release of us phasing majority statute on wells fargos compliance failures in their individual failures as Board Members. Resignations do not absolve them of their failures. Directors at wells fargo, and institutions across this country must understand that they are the last line of defense when it comes to protecting your companys shareholders, employees and customers. And while ms. Duke mystically said said, there resigned to quote, avoid distractions that would be cleared and this is not a distraction, we are examining the conduct and the dereliction of duty. Over the past decade, wells fargos management and regulators have all failed to fix the companys internal control weaknesses, the cost in. For millions of consumers throughout the country. The majority report, examines wells fargo complaints with five content orders require the Companies Boards and management to clean up the systemic weakness. And it is led to what spread consumer abuses and compliance breakdowns as the Board Members, ms. Duke and mr. Quigley or responsible for ensuring the wells fargo ceo and of the management securities entities and respected programs, to manage risk. However the majority found that wells fargo rated number one failed to ensure management to its competently Risk Management deficiencies allowed management to repeatedly commit materially the efficient plans to address consumer abuses. s current financial considerations over consumer abuses and did not hold management accountable for repeated failures. The majority Staff Reports also reveals attitudes, and failures on the part of ms. Duke mr. Quigley, and are dismaying. In the Consumer FinancialProtection Bureau includes on letters requesting actions from the bank to respond by asking and i quote why are you sending it to me. The board, the department managed. This was surprising to see an official and gives the appearance of an evil mentality from ms. Duke. An unwillingness to exercise the oversight required of her as a member of the board. Mr. Quigley, also did not appear to understand the gratitude of his responsibility. In the office of the comptroll comptroller, wanted to schedule a meeting with the banks directors, to discuss progress and accountability, mr. Quigley told other Bank Officials that he was in a quote, currently scheduled to be away on vacation on some island. On the states. And commented that the sense of urgency is surprising. These statements were made after several actions against wells fargo for a massive consumer abuse scandals while ms. Duke and mr. Cooley resided. The must be held accountable for their duties and members of wells fargo board. And announced recognize the Ranking Members of the committee, the gentleman from north carolina, for four minutes pretty. Thank you for holding this hearing. I think that when his sister voluntarily complying the request to commit to appear. In todays hearing, the proposal attached to this, will make him proud. He once said that you never want a serious crisis to go to waste. Ill make a mistake, wells fargo crisis mode for a while. Wildomar but the makings of the crisis today from our witnesses. They had a front row seat. They are part of the problem. In the spirit the democrats follow the advice and rollout policy proposals that would do everything to expand the authority automatically downsize certain banks and from those proposals it has complete lack of connection with evidence before us in the example of wells fargo. We found that with wells fargo the problem wasnt the lack certain authority, the problem was that they ignored a series of red flags at wells fargo. There was under richards leadership of the cdf fee. We found the problem was not too big to manage but the problem was it was deeply mismanaged. My colleagues on the other side of the aisle also have some ideas about the standards to which we should hold Board Members. How about we start with the proper Legal Framework and the standards of shareholders and the course he is. Lets start there. Lets walk through those british under the law, members of the Corporate Board of directors oh three duties, the chair, the duty of loyalty and the duty of good faith. Those concepts are not very complicated and they must be diligent in the must subordinate their personal interests of the need of the interest of the company, when they have to act in the best interest of the shareholders. This makes is because at the end of the days the directors represent the interest of the shareholders. And they expect the board to do three basic things. First, hold management accountable second, pushed back with the management provides incomplete or overly optimistic information and third, make sure the company has the right leaders in place. It was like based on what we have heard yesterday from mr. Sharp, the board mightve finally got the last one right. The question of leadership. But we have a lot of questions today but everything leading up to the boards decision to elect mr. Sharp. Media why the board as a company insider. This was back in 2016. Why did the board failed to recognize the management was not fixing the companys problems. And why the board stood behind the Management Team for so long. Until the Trump Administration regulators forced change. I think theres a lot we can learn to ensure the new decisionmakers deliver on the muchneeded changes to the institution and i look forward to your answers today about the history, and thank you madam chair for hosting this hearing and i look forward to the questions. I now recognize the chair of the oversight and investigations mr. Green for one minute. Manager, the evidence speaks for itself. Im an article style 35 acres were sent to prison for financial crisis crimes. Bankers can go to jail and they can be held accountable. This is from cnn business on april 28, 2015. Many of these crimes are involving relatively small amounts of money at smaller banks. Smaller banks pay a price and big banks pay off the government. 3 billion paid by wells fargo, make it is demonstrated that it will commit fraud. Nbc news article february 21s february 21st, 2020. I also have an article its in violation tracks of Parent Company at some this is from their jobs. The total amount of penalties that wells fargo has paid since 2000, 17 billion. In the evidence speaks for itself. Both margo has been running a criminal enterprise. Couldn. Also earlier this week the director of wells fargo and company and as the independent chairman of Wells Fargo Bank. Im currently with service as a director of wells fargo mr. Quigley served and continues to serve as the chairman of the corporation and director of the board of merrimack pharmaceuticals. While ms. Duke and mr. Quickno longer serve on wells fargos board, it is my expectation that they will be forthcoming in their testimony and responses to members questions today. Without objection, all of the witnesses written statements will be made part of the record. Before we begin, i would like to swear the witnesses in. Ms. Duke and mr. Quigley, please stand and raise your right hand. Do you solemnly swear to affirm that the testimony you will give before this committee, in that matters now under consideration will be the truth, the whole truth and nothing but the truth so help you god . Thank you. Let the record show that the witnesses answered in the affirmative. You may sit now. Each of you will have five minutes to summarize your testimony. When you have a one minute, a yellow light will appear. At that time, i would ask you to wrap up your testimony so we can be respectful of the Committee Members time. Ms. Duke, you are now recognized for five minutes to present your oral testimony. Members of the committee, thank you for inviting us to testify at todays hearing. With heightened volatility in financial markets, strong wells fargo is needed now more than ever. Transformational changes are getting traction inside the company with strong leadership and management. I believe that today, the company has the right team and path forward to be fully deserving of the trust customer place and thus every day. Over the past several days however, it became clear to my colleague, jim quigley had made that the recent attention on our leadership of the board could hinder the ability of the company and its new ceo to turn the page and focus on the future. And this company must move forward. For this reason, last sunday we informed our board colleagues of our decision to resign effective immediately. We are confident that the board has all the necessary experience and skill sets to smoothly manage that leadership transition. When i look at wells fargo today, i see a Community Bank that under mary mack focuses on customers rather than sales. I see a fully transformed board, with structural changes, that improve the boards in governance and effectiveness. I see an executive Management Team that balances a new approach with institutional knowledge. I see a Risk Management team and a risk platform that is under construction from the ground up. And i see a ceo with the ability to execute on the significant remaining work necessary to meet the companys regulatory commitments. Ever since the board learn the truth about what was going on inside wells fargo, it has been continuously and deeply engaged in understanding the problems and the solutions, and insisting on action. I served on the Board Committee that investigated sales practices. Not only was i appalled by the harm to customers, but i was sickened to hear how our employees were treated by their managers. I started as a teller and a new account representative rooted in jet representative and identified with those employees. An investigation of sales practices was thorough and unfettered. Our attorneys conducted 100 interviews, reviewed interview notes from 1000 more, elected 5 million documents from our threaded custodians. Instructed them to brief regulators, government agencies, and the staff of this committee to investigate in your own investigation. The appendix in my written testimony has are comparisons of my findings the occ, the d. O. J. The work, to truly and sustainability address the root causes of the problem exists in the company has taken time to implement. More time than anyone anticipated, more time than any of us, especially the board of directors wouldve liked. I get the frustration of this committee and our regulators. I hear that loud and clear your reports. I can assure you that nobody is more frustrated than we are, that the bank is not yet satisfied the requirements of the Consent Orders with an enter entrenchment entered into. To oversee the Consent Order work, jim and i reviewed progress reports and grilled staff and management on every detail on a monthly basis. We are confident the board will continue to hold management accountable until the job is finished. To tenure on the board we remain mindful that the board cannot supply consistent with widely accepted principles of corporate governments, the boards primary responsibilities are to oversee the companys management and Business Strategies, select a wellqualified ceo, monitoring evaluate the ceos performance, and importancenot to micromanage the companys business, including its daytoday execution of a Consent Order requirement. Recognizing the critical importance of the responsibility to select a wellqualified ceo, i appointed jim to lead the ceo search that resulted in the hiring of charlie scharf. You heard from charlie yesterday about his plans and timetables Going Forward. We note that our colleagues on the board are determined to find him the space and support to complete the work. We are no longer able to speak on behalf of wells fargo trait a joint wells fargo or address the questions about them Going Forward. We are also constrained about the scope of the regulators waivers in the supervisory privilege. But within those limitations, we are here to answer your questions to the best of our ability. Thank you. Thank you. Mr. Quigley . You are now recognized for five minutes. Chairwoman waters, Ranking Members mchenry, Ranking Members of the committee, im here to share my perspective as a former member on the board of wells fargo, to the banks commitment to its customers, the focus on its brands vision and purpose. As it committee is aware, i decided to resign from the board to permit the bank to turn the page and move forward with a focus on its future. I brought to my role as a wells fargo board member a deep conviction and values of trust and confidence. I learned those for my parents. A forest ranger and a schoolteacher. And i took them with me to it deloitte where i rose to become the ceo, restoring Customer Trust and confidence in wells fargo, was our most important priority. After we learned of the egregious sales practices, and a written testimony ms. Duke has detailed many of the transformational changes that the board has overseen and our efforts to do Everything Possible to ensure similar problems never happen again. And while there is more to be done, undeniably, i believe wells fargo is making progress. I would like to highlight two changes that are particularly important to me. First, the board oversaw a Huge Investment to strengthen the compliance function of wells fargo. One of my roles at deloitte was leading the Manufacturing Group so i understand the importance of zero defects. I know why it is critical to do it right the first time. And i carried that thinking to my governance and oversight role wells fargo. I wanted customer harm. And if it ever occurred, i wanted detected through the banks control and monitoring processes and mediators quickly as possible. As you heard from mr. Scharf yesterday the banks compliance teams have added more than 300 employees since the end of 2017, more than doubling the size of that function in less than three years seconds, the board encouraged and supported the changes in Senior Management of the bank bringing a new capability in stimulating cultural change. Since 2006 wells fargo has hired a new chief operating officer, chief risk officer, general counsel, chief auditor, chief Compliance Officer, head of hr, and head of technology. Ive personally devoted much of 2019 to leading the search for a new ceo. And i am confident that we selected the best candidate to lead the bank. Because i believe deeply in the Critical Role of culture in an organization like wells fargo, i was especially supportive of the culture mr. Scharf is working to establish, one with clear priorities, best in class standards of Operational Excellence and integrity, unified bank with clear line of sight across the business, accountability of management and most important of all a renewed commitment to completing the work of doing right by our customers in satisfying our regulators the cultural and structural changes that are necessary to address the Bank Challenges are farreaching we believe that getting those things right in a way that would provide lasting change, ultimately serves customers and employees better than doing them quickly. I believe the changes we oversaw will make wells fargo stronger, more reliable and more deserving of Customer Trust. And while theres still more to do i am confident the company is moving in the right direction. Because i am no longer a member of the companys board i cannot speak for the board today, i have my personal reflections including the importance of distinct and separate roles for management and the board. The board must oversee the companys management and Business Strategies but it cannot replace or do the job of management and that principle was critical to meet during my tenure at wells fargo in my testimony today i must also respect the limits on my ability to disclose Confidential Bank supervisory information. The regulators have not provided full csi waivers and i need to be particularly careful to stay within the limits of the waivers we have received. Within those constraints i look forward to answering the committees questions. Thank you very much and i appreciate your presence here today. Let me start by asking ms. Duke, how many years have you served wells fargo on the board . Five years. Five years mr. Quigley, years customer. Six years. Are you compensated for serving on the board . Yes we are. How much is your compensation . So my compensation in the last year was similar in 600 and 30,000 dollars. 600 and how much . Synectics under 30,000 dollars. Mr. Qui