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House lawmakers heap blistering criticism on Wells Fargo CEO

John Stumpf chairman and CEO of Wells Fargo testifies during a Senate Committee on Banking Housing and Urban Affairs hearing

The fraudulent accounts earned the company a huge profit, allowing Wells Fargo employees to boost sales figures.

News of the penalties came as Wells Fargo and CEO John Stumpf faced the wrath of the House Financial Services Committee at a hearing about the millions of fake bank and credit card accounts, plus claims that it retaliated against whistleblowers.

Earlier this week, the bank took back US$41 million in stock awarded to Stumpf, an unprecedented rebuke to a major USA bank chief executive officer.

For years, Stumpf has strived to separate Wells Fargo, one of the largest banks in the country, from the controversy that has typically dogged many of its biggest competitors.

Stumpf responded that he had led the bank with "courage", but was interrupted again.

As he had also done before that panel, however, Stumpf seemed to tacitly acknowledge that previous bank-wide practices were problematic.

Several members in both parties said Wells Fargo's actions threatened to undercut the trust at the heart of the banking system in the U.S. While the Department of Defense maintains a database accessible to banks, studies by the U.S. Government Accountability Office found that loan servicers often didn't check military status.

The bank has been in the news lately after it was ordered to pay hundreds of millions of dollars in civil fines for creating fake debit and credit accounts. Sherrod Brown of OH, the Senate Banking Committee's senior Democrat.

"It strikes me how huge this bank is", she said.

Sept 29 Warren Buffett, chairman of Berkshire Hathaway Inc, has had one conversation with Wells Fargo & Co boss John Stumpf since a sales scandal erupted on September 8, knocking billions of dollars in market cap off the company, Buffett's office confirmed on Thursday.

He asked for specific details that he said the Senate Banking Committee didn't get when Stumpf testified before it last week. The allegations of the unauthorized accounts are documented in wrongful termination lawsuits filed by Wells Fargo employees as far back as 2009, according to Hensarling, and over a five-year period, 5,300 Wells Fargo employees were fired over the unauthorized accounts.

Wells Fargo was fined $185 million and has returned more than $2 million to customers who were charged fees for accounts they didn't authorize.

She called the sales abuses "some of the most egregious fraud we have seen since the foreclosure crisis".

The directors also said Carrie Tolstedt, who until July was the head of the division at the heart of the accounts scandal, had left the company and would not be receiving a bonus or severance pay.

Astoundingly, this is the first time a Wall Street banker has had to disgorge any of his ill-gotten pay. He also defended his dual roles as chief executive and chairman, positions that some critics have suggested should be split. Stumpf said all of the terminated employees were fired because of unethical conduct - not because they failed to meet sales goals.

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House lawmakers heap blistering criticism on Wells Fargo CEO