Stumpf’s performance at the hearing
Wells Fargo’s CEO, John Stumpf, appeared for a hearing before the Senate Banking Committee. Bank (XLF) analysts, however, were unimpressed. Most believed that his testimony would not have a major impact on the senators and that the bank will most likely be scrutinized further.
In a report on Wednesday, September 21, FBR & Co. mentioned that Stumpf’s performance at the hearing should have been stronger. In a report titled “Stumpf Stumped,” the analyst said, “Overall, the committee’s response to Mr. Stumpf’s testimony was not positive. Senators expressed frustration with Mr. Stumpf’s inability to take ownership of the issue and to punish those involved.”
Fallout and clawbacks
Brokerage house Keefe, Bruyette & Woods noted that Stumpf was unable to impress the Senate committee. Although Stumpf repetitively apologized for the fake accounts, he was unable to appease the investigators. The general opinion remains that a clawback of top executives’ pay is necessary to satisfy Wells Fargo’s critics.
A clawback, the report says, “would help put the scandal to rest.” It still remains unclear whether the bank would resort to clawbacks. Stumpf told the senators that a decision regarding such a provision would be taken up by the board of directors.
J.P. Morgan analyst Vivek Juneja went on to downgrade his rating on Wells Fargo to “neutral” due to the “tough” grilling on Tuesday. Read on to the next part for our in-depth discussion on J.P. Morgan’s (JPM) downgrade report.