Wells Fargo CEO John Stumpf appeared before the Senate Banking Committee this morning to answer questions about, and apologize for, company policies that led employees to open millions of fake accounts in customers’ names.

“I do want to make very clear that there was no orchestrated effort, or scheme as some have called it, by the company,” said Stumpf, who later admitted that he first learned of employees opening unauthorized accounts in 2013.

The CEO stopped short of denouncing Wells Fargo’s policies to promote cross-selling of products, like pushing checking account customers to open lines of credit.

“I’ve been through many challenges with Wells Fargo, but none of which pains me more than the one we will discuss this morning,” Stumpf told the Committee. “This not representative of Wells Fargo as an institution. In this case, we let our customers down.”

Making It Right

Stumpf went on to discuss ways in which the company plan to “make it up” to customers and the American public.

For starters, the company will expand an internal review of accounts and refund processes to cover 2009 and 2010. While this could shed more light on how long the opening of unauthorized accounts had been taking place, Stumpf said he was unsure if additional years could be reviewed.

“I have to talk to our folks. I want to make sure any customer that has had harm of any kind to do right by them,” he said, noting that he would take it under advisement to review files prior to 2009.

The company has also recently begun sending confirmation emails to customers within one hour of the opening of any new deposit account. Additionally, acknowledgment letters are being sent before the bank submits a credit card application.

As for the long-lasting effect that unauthorized accounts will have on customers, Stumpf was unsure.

If inaccurate information was sent into credit bureaus based on the unauthorized accounts, it could have “far reaching negative consequences” on customers, Sen. Jon Tester, of Montana, said.

Stumpf replied that the company does pull credit reports for each new card requested, and noted that this could ding customers’ scores. To remedy the issue the bank will call each customer and find out if this was a credit card they truly wanted.

“If they want it we don’t want to take away their credit,” he said. “If they didn’t then we will go back and make it right with the credit bureau and the customer. We will do what’s right to make this right.”

Just 1%

While Committee members welcomed these remediation steps and business changes, many took issue with Stumpf’s refusal to admit there was fraud taking place at the bank and the apparent willingness of executives to ignore the issue for at least two years.

“These were not magically delivered unwanted products, this was fraud, fraud that you did not find or fraud you did not fix quick enough,” Senator and ranking member of the committee, Sherrod Brown, of Ohio, said.

Stumpf told the Committee that he became aware of the issues at some point in 2013, when he learned that, at the local level, banks were trying to root out the bad behavior exhibited by 1% of employees.

Yet, Stumpf admitted it wasn’t until 2015 that the company began the process of finding a way to reimburse and identified affected customers, noting that it just never occurred to the company that something was amiss.

“About the time we were considering who we would bring in, that was when we finally connected the dots,” he says. “It never dawned on us, that there could be a cycle where a fee would have been associated with that account.”

Bad Apples

Stumpf reiterated several times during the hearing that Wells Fargo had let go 5,300 employees found to take part in the misconduct.

“Shouldn’t the workplace action of employees reflect the values of the institution?” Sen. Robert Menendez, of New Jersey, asked.

Stumpf noted that yes, this should be the case and that Wells Fargo’s board will take an independent review of executive’s actions and their connection to the unauthorized opening of accounts.

“This isn’t the work of 5,300 bad apples; this is the work or result of sowing seeds that rotted the whole orchard,” Menendez said. “You and senior executives created an environment where a culture of deceit thrived.”

Several senators took issue with Stumpf’s continued explanation that it was simply lower-level employees — retail bankers and branch managers — who were responsible for the issues.

“You haven’t resigned, you haven’t returned a single nickel of personal earnings, you haven’t fired a single senior executive,” Massachusetts Senator Elizabeth Warren said. “Your definition of accountable is to push the blame to your low level employees… it’s gutless leadership.”

The role of Carrie Tolstedt, former head of Wells Fargo’s retail banking division, has come under a lot of scrutiny in the last week after it was reported that she had earned $124 million in stock and options when she recently left the bank.

Stumpf all but acknowledged that Tolstedt was nudged out the door for her failure to fix issues like the glut of unauthorized accounts, but he defended her as a hard worker and maintained that Tolstedt chose to retire after the bank decided to “go in a different direction.”

The bank’s board will, however review Tolstedt’s actions and could claw back some of her compensation.

“The board has the tools to hold senior management accountable, including me and Carrie Tolstedt,” Stumpf said.

No Day In Court?

As we mentioned in our story about a recent customer lawsuit over these fake accounts, Wells Fargo’s customer agreements include binding arbitration clauses that can be used by the bank to block lawsuits and prevent wronged account holders from joining together in a class action.

Sen. Sherrod Brown (OH), asked Stumpf this morning if Wells plans to compel arbitration in such cases. Not surprisingly, the CEO’s response was noncommittal.

“I have instructed my team to do whatever it takes, within reason, to take care of these customers,” said Stumpf, adding that he would have to discuss the issue with his legal team.

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