Thank you for your patience. Without objection, this hearing is entitled holding wells fargo. Agree just pattern of consumer abuses. I recognize myself for four minutes to give an Opening Statement. Today, we receive testimony from Miss Elizabeth duke, and mr. James quigley, who until later this week served as chair of the board of directors of wells forego and company, and Wells Fargo Bank respectively. Both have resigned after a call for the resignations. Following the release of a scathing majority staff report on walls far goes compliance failures, and their individual failures as Board Members. The resignations dont absolve meant them of their failures. Directors at wells fargo and institutions across the country must understand that they are the last line of defense when it comes to protecting their companies shareholders, employees, customers. While missed duke and quickly state they resigned to avoid distraction and quote let me be clear, this is not a distraction. We are examining misconduct and direction of duty. Over the past decade, wells far goes forward, managers, regulators have failed to reach the companys internal witnesses that cost enormous harm to many consumers across the country. The staff report examines well far goes compliance, management required to clean up the systemic abuse, and compliance breakdowns, as Board Members, miss duke and quickly are responsible for ensuring that wells vargas ceo and upper management executed and Effective Program to manage those risks. However, the majority of staff report that wells far goes board, feel to ensure that they can be efficient, allowing employees, prioritize financial considerations over fixing consumer abuses. Didnt hold Senior Management accountable for repeated failures. The majority staffs report also revealed attitudes and failures on the part of miss duke and quickly that are just name. The Consumer ProtectionFinancial Bureau concludes the letters request action, from the bank. She responded by asking and i quote, why are you sending it to me. The board, as opposed to the department manager. Unquote. This was surprising to see. It gives the appearance of a evil mentality. And unwillingness to exercise the oversight required of her as the member of the board. Mr. Quickly also did not appear to understand the gravity of his board responsibilities. In the office of the control currencies scheduled in meeting with the banks directors to discuss quote high risk and accountability, quote mr. Quigley told other Bank Officials that he was quote currently scheduled to be away on vacation on some islands. During those states. And quote. Commented that the sense of urgency is surprising unquote. These statements were made after several public Enforcement Actions against walls forego for massive abuse complaints, while they have resigned, they need to be held accountable for their actions. I recognize Ranking Members of the committee. The gentleman from north carolina. Thank you. The legislators proposals attached to the hearing would make ron a manual. Proud he said you dont want a serious crisis to go to waste. Nic make no mistake, wells fargo has been in crisis mode for a while now. Well hear more about the crisis from witnesses. You will see they are part of the problem in many respects. In that spirit, the democrats followed their advice. Rolled out policy advisers did everything from expanding their scope of authority, downsizing certain banks, and from those proposals it has complete lack of evidence in the case of wealth pharco. Its not that they lacked authority. Cfpb ignored. Its not that it was difficult to manage because of its size, its that it was mismanaged. The standards to which we should hold Board Members will be discussed. How about we start with the proper legal framework. The standard the shareholders use. Lets work through those. Under the law members of corporate Board Directors have three fishery duties, those concepts arent very complicated. Directors must be diligent. They must subordinate their personal interests beneath the interests of the company. They have to act in the best interests of the shareholders. Those standards makes sense because at the end of the day directors represent the interests of the shareholders. Shareholders expect the board to do three basic things. First, hold management accountable. Second, pushback when management provides incomplete or overly optimistic information. Third, make sure that the company has the right to leaders in place. Based on what we heard yesterday from scharf, the board might have gotten that last one right. Question of leadership. But, we have a lot of questions today about everything leading up to the boards decision to elect mr. Scharf. We need to hear why the board feels from the inside to lead wells fargo from length 16. We need to hear why the board didnt recognize that management wasnt fixing the companies problems. Why they stood by that Management Team for so long, until the trump administrators regulators forced change. I think there is a lot that we can learn to ensure that new decisionmakers deliver on much needed changes in this institution. I look forward to hearing from you, i look forward to hearing the questions. I recognize the chair of the subcommittee on oversight and investigations. Mr. Green you have one minute. The evidence speaks for itself madam chair. 35 bankers were sent to prison for their crimes. Bankers can go to jail. They can go be held accountable. This is from cnn business on april 28th, 2016, many of these crimes involved relatively small amounts of money and smaller banks. Smaller banks pay a price. Big banks pay off the government. Three billion dollars in fines paid by wells fargo. They have demonstrated that they will commit fraud. For 21st, 2020, i have an article but styled violation track summary, this is from the, jobs the total number of penalties that wells fargo has paid since 2000 amounts to 17 billion to hundred 96,835,944 dollars. The evidence speaks for itself. Wells fargo has been running a criminal enterprise. I now recognize the subcommittees Ranking Member for one minute. Thank you. Mr. To talk, quickly, you will testify in this committee today in your capacity as former Board Members of wells fargo. Let me be clear about two things. First, its clear that the board made some mistakes. Yesterday we heard how important leadership is to the company. We benefit from fresh perspectives. Second, decisions about Certain Directors ability to continue to serve is up to the discretion of stakeholders, the call for this director to resign was inappropriate. Sorry to be here under these circumstances. There have been a series of missteps doesnt 16. I will address those in the questioning shortly. I wish to emphasize what the Ranking Member said yesterday. There are pressing issues affecting the economy that the committee is focused on. Its but instead we are spending resources, time, speaking to former directors of a Company Whose ceo testified yesterday. I yield back. I want to welcome todays witnesses. Until earlier this week, Elizabeth Duke was the chair of the board of directors with wells fargo and company. Miss duke served a number of positions, including a member of the board of governors in the Federal Reserve system. Also earlier qugly served as the independent chairman of the wells fargo independent back. Mr. Quigly continues to serve as the chair of the hesco and a pharmaceutical company. They no longer serve on the board of wells fargo, its still my expectation they will be forthcoming in response to questions today. Their written statements will be made part of the record. Before we begin, i would like to swear the witnesses and. Miss duke and mr. Quigly please stand and raise your right hand. Do you solemnly swear to affirm that the testimony that you will get before this committee in matters now under consideration will be the truth, the whole truth, nothing but the truth, so help you god. Thank you. Let the record show that the witnesses answered in the affirmative. They sit now. Each of you will have five minutes to summarize your testimony. When you have five one minute remaining, the 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. This duke, you are now recognized for five minutes to present your oral testimony. Thank you for inviting us to testify for todays hearing. With heightened volatility in financial markets, a strong wells fargo is needed more more than ever. Finish changes are gaining traction in the company, strong leadership and management. I believe that today the company has the right team and path forward to be fully deserving of the trust customers place in us every day. Over the past several days however, it became clear to my colleague jim quigly and me that the leadership in the board would hinder the ability of the company and its new ceo to turn the page and focus on the new future. The company must move forward. For this reason last sunday we informed our board colleagues of our decision to resign effective immediately. Were comforted that the board has the skills to smooth in the leadership transition. When i look at wells fargo today, i see a Community Bank that under mary mac focuses on customers rather than sales. I see a fully transformed board, with structural changes, that improves the boards governance and effectiveness. I see an executive Management Team that balances a new approach with institutional knowledge. I see a risk Management Team at risk platform thats under construction from the ground up. I see a ceo with the ability to execute on this significant remaining work necessary to meet the companies regulatory amendments. Ever since the board learned the truth about what was going on inside wells fargo, it has been continuously and deeply engaged and understanding the problems and solutions, insisting on action. I served on the Board Committee that investigated sales practices. Not only was i appalled by the customers, but i was also second to hear how the employees were treated by the managers. I started as a teller and you cant representative, and i identify with those employees. Our investigation of sales practices was thorough and unfettered. Our tories conducted 100 interviews, reviewed interview notes from 1000 more. Elected 5 million documents from over 500 custodians. We instructed them to breathe regulators, government agencies, the staff of the committee in investing in our own, we provide investigation of our findings,. The work to sustainably address the root problems that exist in the company has taken time to implement. More to anyone anticipated, more time anyone us, especially those on the board of directors would have liked. I get the frustration that everyone has, very clear in the report. I can assure assure you that no one is more frustrated than you are that we havent been able to adhere to the Consent Orders weve been obligated to. Jim and i reviewed progress reports in management about every detail on a monthly basis. We are confident that the board will continue to hold management accountable until the trump is finished. We remain mindful that the board cant supply select a wall qualified ceo. In its twoday today execution order requirements. Recognizing the critical importance of the responsibility to select a well qualified ceo. I pointed jim to continue the ceo search that resulted in the hiring of charlie. We heard from him yesterday about his plans and timetables going forward. We know that our former colleagues on the board are determined to provide him with a space and support to complete the work. We are no longer able to speak on behalf of wells fargo or address the companies are also constrained by the scope of regulators, weavers of the supervisory. Privilege within those limitations, we are here to answer your questions to the best of our ability. Thank you. Thank you. Mr. Quigly. Youre now recognized for five minutes. Chairman waters. Ranking member mchenry, im here to share about the banks commitment to its customers, focusing on its future. I think that we have a deep conviction and confidence in our customers. I learned that from a schoolteacher. I took that with me to delight. Were i rose to become the ceo. Restoring Customer Trust and confidence and wells fargo was our most important priority. After we learned of the egregious sales practices, they have detailed many of the transformational change is that the board has overseen in our efforts to see everything doesnt happen again. Well there is more to be done, undeniably, i believe that wells fargo is making progress. I would like to highlight two changes that are important to me. 4300 employees have been added. Nor than doubling the size of that function in less than three years. Second, the board encouraged and supported the changes in Senior Management of the bank. Bringing new capabilities, stimulating cultural change, since 2006 wells pharco has hired a new chief operating officer, chief risk up for sir, chief auditor, head of hr, head of technology. I personally devoted much of 2019 to leading the search for a new ceo. Im confident that we selected the best candidate to leave the bank. I believe deeply in the Critical Role of culture in an organization like wells fargo. I was especially supportive of the culture that mr. Scharf is working to establish. With clear standards and integrity. Unified bank with clear line of sight across the business. Accountability of management. Most important of all, a renewed commitment to completing the work of doing right by our customers, and satisfy our regulators. The cultural and structural changes necessary to address the banks challenges are farreaching. We believe that getting those things right, and in a way that would provide lasting change. It ultimately serves customers and employees better and doing them quickly. I believe the changes that we oversaw will make wells fargo more strong, reliable, more deserving of Customer Trust. While there is still more to do, i am confident that the company is moving in the right direction. Because im no longer a member of the company sport, i cant speak for the board today. I have my personal reflections, including the importance of distinct and separate rules. The board must oversees these. It cant replace or do the job of management. That principle was critical to me 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 regular viewers havent provided full weavers, i need to be careful to stay within the limits of the waivers weve received. Within those restraints, i look forward to answering the committees questions. Thank you very much. I appreciate your presence here today. Let me start by asking how many years have you served wells fargo on the board . Five years. Mr. Quigly, how many years . Six years. Are you compensating for serving on the board . How much is . It compensation in the last year is somewhere around 630,000 dollars. 630. And yours . 470,000 last year. Thank you very much. I want to get into the majority stance report. How did you prepare for the hearing . Did you read the majority staff report . Mr. Quigly how did you prepare . Did you read the majority staffs report . Yes. Miss duke and mr. Quigly you stated that you resigned from the board out of continued lie to pigment meant to serve our employees and clients, to avoid distraction that could impede the banks future and progress. Miss duke and mr. Quigly, notably absent from your resignation announcement is any acknowledgment of the multitude aboard failures documented in the staff report. Do you disagree that as board chairs you are responsible for the boards approval of poor quality consent submissions, and failure to hold ineffective leaders like him sloan accountable . Mr. Duke . Thank you chairwoman. I believe wholeheartedly that we spent the time, use our judgment, did the inquiries, did our job as thoroughly and as completely as we possibly could. I made decisions according to our best judgment about what the best course of action should for the company. Our role for reviewing the Consent Order submissions was in reviewing them from a very high level. Any of the deficiencies that were in the details of those submissions are the responsibility of management. Thank you. Are you will wear that wells fargo has paid out 17 billion dollars since 2008 i believe on settlements . This is because of fraud, wrongdoing, the kinds of problems of the bank. Are you aware that . I would take that to be true. I dont know the total dollar amount. Mister quigly, how are you made aware of each of the problems . They ended up in the hands of our regulators. Wells fargo had to pay out these settlements. How did that come before the board . Gee nobody should them . Its i was aware and informed as a result of being a chairman of the audit commit. The judgments that are required in providing timely financial formation. The need to be able to test estimate when it obligation is probable and measurable, needed to be recognized in those financial statements. Also a member of the Risk Committee, Regulatory Compliance committee. Management was transparent with us as those items were moving forward. Were you shocked when time time again you are confronted with these scandals that were being presented to the board . They continued right up today. The sales practice abuses were troubling to me. Shocked is perhaps not a overstatement about how i felt what i was made aware that in fact those practices were far more than had earlier been provided to us. But so doesnt the majority staff report direction as duty as board chairs to ensure that th