The committee will come to order. The gentleman from texas, mr. Green, who is also the chair for subcommittee and oversight for investigations is recognized for five minutes. Thank you, madam chair. Madam chair, as a practitioner, i once represented a recipient of welfare who was charged with a crime because she made more money at a job and received some benefits from the federal government. She had to be prosecuted. A crime was alleged. If this bank, where its mu was smaller, had maybe ten employees, had engaged in this type of activity, opening fraudulent accounts, creating fraudulent credit cards, someone would be prosecuted. A small bank would have had prosecutions take place within the ranks of the person within the bank. Evidence shows that small banks have had persons prosecuted. But wells fargo created 1. 5 million fraudulent accounts. Wells fargo had over 500,000 credit cards created, fraudulently. Is it the case that if you become so big and you create such a grand scheme, that youre beyond the law . The law ought law ought to appl fargo just as it applied to that welfare recipient, just as it would apply to any small bank in this country. Wells fargo cannot be too big to prosecute. You cant be too big to jail. Wells fargo has to be held accountable. We cannot allow 17 be billion in penalties to be the cost of doing business. While these criminal activities were taking place you were making billions. And you sat on the board. And you ewe what was happening. And this morning you as much as acknowledged fraud when the chairwoman asked about the accounts. Did anybody ever think to say somebody ought to go to jail . Somebody has to be prosecuted . This is a crime . 1. 5 million accounts. Its unbelievable. Its unimaginable. Yet no one has been prosecuted. Maybe im mistaken. If someone at wells fargo has been prosecuted for these egregious offenses, would you kindly extend a hand into the air, either of the two of you or both. Let the record reflect that no hand has been extended into the air. I shall have a photograph of this in my office, and it will have under it can be ask me about this picture. And it will show you. It will show you with no hand raised. And i will explain this to people. You cannot escape the long arm of the law. It applies to all. If you believe that this board could have done more to bring to justice those who perpetrated these criminal activities, raise your hand, please. Let the record reflect that the Board Members have concluded that no one or the board could not have done more, because no hand was raised. I shall have a photograph of this in my office, along with other photographs i might add ive collected from persons who have been similarly situated. We are now at a point in our history where weve got to rethink the wells fargo paradigm. I concur with those who are saying weve got to rethink whether or not wells fargo is is not only too big to fail but we corrected that but also too big to exist. Maybe you are too big to manage. Maybe the solution is going to have to be something that emnates here because you are not being prosecuted. At some point the long arm of the law has to reach to wells fargo. I yield back the balance of my time. The gentleman from texas, mr. Williams, is recognized for 5 minutes. Thank you, adam chairman. Thank you both for coming here today. Yesterday we heard from the new ceo Charles Scharf who said wells fargo has a lot of work to do before the structural problems that allowed the scandals to go unnoticed for so long aris fixed. The previous Ceo Tim Sloan seemed to care only about getting the assets cap lifted without fixing the underlying problems that caused customers to be harmed. As Board Members im disappointed that you were not more active in positions to get wells fargo back to the strong presence that they have historically been in this country. So uncovered that the board was well aware of mr. Sloans poor performance and misleading comments about the progress yet able to still keep position as ceo. As a Small Business owner for 50 years im a car deal they are texas, i know how important the attitude at the top levels of leadership are to the employees. The ceo sets the tone. And if they are not taking the problems seriously its hard to get other employees to change behaviors as with he will process ms. Duke, quickly, why did you stick with tim sloan for so long . So if im going to answer your question if i could just respond. No, maam ive got time here, please. Answer my question. Okay. Okay. Tim we tim sloane we made him the ceo when we when we replaced john stom of. He stopped the sales practices, incentives, replaced the management in the Community Bank. He took action quickly. We had problems that needed to be addressed immediately. The time it takes to find someone in an external search and as number of you notice, the question of whether or not anyone with the ability to sit into this role would be willing to come into that role, made the question of all right. I understand. All right. The Committee Reports uncover there were a lot of Third Party Consultants brought to work with regulators once the scandal broke. It makes sense to bring outside experts to make necessary shortterm adjustments to protect consumers. However, it will doesnt seem there was a large push internally to hire individuals to deal with the nonfinancial risk in the longterm. Mr. Quigley, did you have concerns that wells fargo couldnt do the work internally . Or why wasnt it a priority even after the regulators voiced their concern . I definitely had concerns and unhappy with the pace occurring. With respect to the use of third parties as the formerly ceo of a large professional Services Firm i know sometimes when you want to accelerate progress you will look to add third party to try to accelerate the activity that needs to be taken. But we needed to build capability. And we needed to recruit capability. And we needed to build capacity into that independent Risk Management group. And one thing that i know is true, to find the most able resource takes much more time than finding the most available resource. Im not happy with the time that has been required. But i am pleased that progress is now being made, and i agree with the points that mr. Scharf made yesterday with respect to the real urgent nature of the action to be taken and his absolute focused on regulatory. All right. Good. So as we mentioned earlier, the regulators took the highly unusual step of making a Public Statement that tim sloane was being overly optimistic in comments about the progress of wells fargo and becoming compliant with various Consent Orders pop so mr. Quigley in your testimony you state once the board is made aware that they were not receiving quality information decisive actions were taken to fix the issue. So my question is, what struck quickly what structural changes made internal to ensure that the board will receive complete and Accurate Information moving forward . We have a very active communication between Committee Chairs and their Liaison Officer who is bringing information. We review the agendas and challenge the quality of the data coming our direction. I was pleased with the elimination of the fed rated model, pleased with the need to strengthen the independent Risk Management group. And with that came Higher Quality information to the board to enable stronger and more effective oversight. All right. In close, let me just say this, i hope that this institution eliminates the i dont know attitude. We heard that from so many people, i dont know. And its unbelievable. I have 200 employees, and i think i know. And that that i dont know attitude has really run rampant. And i hope that your leadership level will stop that. And i still cant believe how much money they pay you as board of directors. Me either, mr. Williams. The gentleman from missouri mr. Cleaver, also the chair for the subcommittee on national kmrt Monetary Policy is recognized for five minutes. Thank you, madam chair. Let me first of all express some appreciation and some surprise. You were not subpoenaed. So you came here of your own volition. And so thank you for coming. Some of us were doubting seriously whether or not you would come. So i appreciate you coming. Let me try to get some information from you. Im gravely concerned about the report we received, the Committee Report we received. Are either of you aware of an informal, unofficial, secret back channel to the cfpb, to the regulators at the cfpb . Im not aware of that. And i dont believe that it occurred. I dont know what it was referenced. I did read the Committee Report. And i was the one that had quarterly meetings with mr. Blankenants. And when i met with him there were members of the cfpb with him and i was accompanied by people from wells fargo. Thank you. Im not so youre saying that the Senate People got something wrong, or made it up or. I understood your question was i aware. Yes, thats right on a back channel cfpb and i was not. That means they put it in the report. So somebody did something incorrectly, or falsely, maybe with intentionality. But you just really got my attention when you said you met with mr. Blancen stene. Do you detect any kind of Racial Attitudes when you were meeting with him . I did not. He came to our board of directors and spoke on behalf of the cfpb. And following his report to the board i then reached out to try to meet with him if he had time when i was in washington. And, again, those meetings i was always accompanied by someone from wells fargo. And he was always accompanied by others from the cfpb pmt i never had a oneonone with him. Im only interested in that because of the fact that we know he used an n. Word because it was his email. Youre not aware of that. I read what was in the report but never seen it before. Its right there now. Yeah. Right there. There was an note allen sent to me summarizing the discussion he had had with mr. Blanken stene. And then at the time he was departing. And i didnt follow up. I was not i didnt ever have further communication with him. But you but when you saw that were you alarmed . Well if you have to think about it, you werent. So i mean, i you know, theres been ailgs about back channel, which you say was not there. So ill change that. I just its so offensive to me as a human being to be referred with the nastiest name that somebody could call somebody of my color. So lets move on. So appoints the compensation committee. I mean you guys are gone. Ill trying to find out, get information. Who appoints compensation committee. All the committees are appointed by the governance and nominating committee. And see like the desirable committee on the bank board . I dont think its necessarily the desirable committee. We look for people on that committee who have had responsibility in their careers for Human Resources. We also look to make sure is that that committee is diverse, because they deal with so many issues related to our management and employees. A lot of people dont want to be on the Appropriations Committee here in congress. So mr. Quigley, do you im sorry i didnt understand the question. Same question, the compensation board are people pushing and shoving there was a time and as an auditor im sensitive to this. But there was a time everybody wanted to avoid the Audit Committee, because they felt that was simply a place not to be. But i have i believe the aggressive approach. Finish your statement. The aggressive approach with respect to the Human Resources committee and the comp committee, thats become a difficult seat on any board. And i dont see people elbowing and fighting and trying to have that privilege. That is a very heavy lift. Thank you, thank you madam chair. Thank you, the gentleman from ohio mr. Davidson is recognized ford five minutes. I chang the chairwoman. And mr. Duke, mr. Quigley, in your view now now youre no longer with the board do you believe that some of the criminal actions taken by employees at wells fargo should be prosecuted by federal officials . Or do you believe that the fines that have already been implemented provide enough redress for consumers . So i appreciate theability to answer that. I wanted to respond to it twice before. We when we did our investigation of what happened in sales practices, we delivered all of the evidence that we found to the s. E. C. , doj, criticism and criminal. In the pleads the plea agreements highlighted as you paid find fines, settlements as a corporation, you acknowledged crimes were committed. Thats correct. Thats correct. We dont have the ability to prosecute. But what we did do with the individuals we found culpable was to claw back, forfeit, not pay compensation to terminate for cause, and we we find individuals through those mechanism 180 million or so. And in particular carrie tolsted and john stumpf took 60 million each. So should the prosecute prosecution occur for the crimes. Thats a decision for prosecutors but we have in no way impeded the ability to do to. Mr. Quigley. We provided all the information we learned through the investigation. I understand. He committed crimes should they be prosecuted you dont have an opinion. Im not on the bench. You vote present . I would say yes. On the buttons you get yes no who are present. You guys say present . On an essay. Yes no or present. Do you ac flonl it wasnt the atms wsh the Conference Rooms committed crimes. Someone working for wells fargo committed crimes should they be prosecuted. Your point is acknowledged. Present. Pathetic. I dont know what else to say im glad youre not on the board there fang frankly. Presumably by getting hired for such a board you had an exceptional amount of experience, and you are well qualified, considered so by someone who offered you the position, and generous compensation package for being Board Members. How was the culture at wells fargo different than the presumably positive cultures that you were port part of before . Or is this just really indem nick of all the place sns should we look at everyone in the industry the same that the world is looking at wells fargo. At wells fargo we have stated clearly that culture change is needed. Im pleased with the progress that is being made. These are early days for charlie. But his commitment to change culture, as i stated in my opening statement, im pleased that that is one of his top priorities. Better late than never right. I need mr. Scharf has potential. I like his resume and background. Its not my job to hire the Board Members or ceos of any corporation now i know longer own or control shares of a private company as i did. But i do know the culture matters. Unless he is empowered to change a ship of 270,000 employees, that culture isnt changing overnight. Now, as the federal government having seen very little action by the executive branch with a duty to take action where federal crimes have been committed, i think its right that the legislative branch is calling attention to that not just with the failures with in particular bank but with the failures within the department of justice to prosecute people. Yes, there is prosecutial decisi succession but the idea every day americans feel there is a standard for them and a different standard for the well connected well to do people operating Companies Like wells fargo or frankly work at the fbi, the director of national intelligence, the cia or any other part of the executive branch. And we cant have people going around lock her imip u. P. Be lock him up all day because the department of justice continually fails to apply one standard of law and have the lady justice blindfolded. There lass to be accountability. And frankly when crimes are kplited, particularly in cases like this six plus billion dollars in fines and acknowledged that the crimes were committed someone should go to jail. We need our department of justice to provide that accountability and we need Board Members doing their duty. I look forward to the progress made under the new ceo scharf and hope we never need to see wells fargo here again except to kmepd them for positive change in culture accomplished. And i yield. The gentleman from colorado mr. Perlmutter is recognized baier five minutes. I guess im sounding like a board apoll gist compared to everybody else. Because i look at the board a little different. I have been a zmers of the bank and have been a customer of the bank for years. And went from two accounts to eight credits. I was given a credit card for twice the amount with a big line of credit attached. Things i never asked for just sort of appeared. So i know the abuses that occurred. My my problem here is theres been a lot of time passed, obviously. The report detailed all of that. The board in some instances appears to have taken really some serious action with mr. Stompf mr. Sloane trying to deal with the consent decrees. So my questions and you can answer as you choose. I think there is three choices sit something up here. Either you were derelict in duties and didnt address the Consent Orders. Or the culture of the bank needs to be changed pretty dramatically in terms of its personnel and operations. Or the thing is just too big and for any board or anybody any manager to get their arms around it cant be done. So, ms. Duke if you could respond to my concerns. What we have found is that some of the issues are directly are directlily attributable to individuals. But a number of of the issues are attributable to the structure of the way the company is managed, the decentralized structure. And that is required that we centralize, and also standardize and simplify the way all of our employees do their work. We need to be much clearer about that. So what that looks like is, for example, if you take 83 different Human Resource departments and put them together, you dont get one fully functioning Human Resource department. It takes quite a bit of tim