English Subtitles for Wells Fargo CEO John Stumpf: Moving Forward | Mad Money | CNBC

Subtitles / Closed Captions - English

last week we got some stunning news about wells fargo companies long with

use one of the best friend banks in the world stopping for my Chapel trust but since last thursday the reputation has been seriously toners well Scott hit 485 million dollar sanction from a number of regulators including the Consumer Financial Protection bureaus involving 5300 employees and aunt old number of accounts we got drill down that may sound like a small amount of money for such a gigantic bag yet the stock is

down big since the beginning of last week precisely because the nature of the scandal really calls into question what's going on at a company that prides itself on the way it treats the customers top that Wells going to have to change change some of these practices going forward we don't know how badly that will hurt the numbers it still is mad money

this is a serious issue that raises a lot of questions let's go right to the top let's speak to John Stumpf chairman/ceo wells fargo get some answers thank you so much for coming on the show I really appreciate it sir Jim thank you for having me ok and and frankly I could just before we start or as i start i want to tell

you your audience and our customers that we are sorry we deeply regret any situation where customer got a product they did not request that hasn't there is nothing in our culture nothing in our vision values that would support that is just the opposite our goal is to make it right by a customer every time a hundred percent and we don't do that we feel accountable

ok but I look at these headlines John be candid I have backed you in your bank and particularly you because I think that you're a leader but community bank here you started all the way going all the way up but I see you I see things like Wells Fargo to be sanctioned for allegedly aggressive sales tax wells fargo to pay a hundred eighty-five $MONEY million settlement for outrageous

sales pervasive sham from our own Andrew Ross Sorkin it deals that no one noticed and then today I see wells fargo CEO defense bank culture lays blame with bad employees that's not you what you don't like playing with it you're the pet coach you told me you're the vince lombardi there's somebody never blame the linemen apples you let me tell you say one more time

ok we take accountability for not getting it right a hundred percent of the time let me tell you a little bit about our business absolutely we have at any one time 100,000 team members in our branch in retail bank network and we hire people and people turn over all those 100,000 the vast majority do the right thing they come to work their life's work on condition is to help people and I love these people every year there are on average last

five years 1,000 did not do the right thing and look at the numbers 1000 out of how many out of 100,000 ok now but that's still 1,000 too many ok and that's over a five-year period so that's how you get to the 5300 and we've actually increased our investment in compliance and different tools to help make sure that this becomes a smaller and smaller number but we all all levels of management feel responsible to make sure that we do it right every time

ok i'm looking at your code of ethics we have a responsibility to always act with honesty integrity when we do so we earn the trust of our customers we have to earn that trust every day by behaving ethically rewarding open honest communication still in holding ourselves accountable for decisions and actions are a lot of people tell me that you have to hold yourself accountable and that you have to hold carry toll stead who collected apparently a hundred and

twenty four million dollars in shares we're not sure when she retired and to do that it may mean some people say that you have to resign well Jim I think the best thing I could do right now is lead this company and leaders company for in fact today we made actually an announcement about product sales goals you know we never intended for product sales or any dynamic or any part of a poor performance management system to be

misinterpreted and I'm and again the vast majority of the right thing so we took that off the table because even one instance of a sale or a product that everyone is one too many so we took it off but also it has a good business purpose we still love cross so we still loved up the relationship and but one the tools of getting there we think today doesn't make sense anymore and also the business has changed

you and eighty-five percent of our customers hundred percent of our customers in the past about things in the store it's only eighty-five percent so we're seeing that grow but at the same time John your buck stops here guy didn't the box top with you on this well of course it stops with all of us especially me I'm know I'm the leader i I get it okay I'm I said right off the bat I when we

don't meet our goals of a hundred percent right I'm accountable and I'm leading this company and leading it forward through this i want to make sure that every customer knows when they come into one of our branches deal with one of us on the internet whatever the case is we are a hundred percent on their side your gym and unwanted product or unused product doesn't help us doesn't help customer but just the opposite ones that are used and valued they help all

of us ok ok I understand that but I also want to know why if you have clawback provisions if there are callback divisions why wouldn't someone like Kerry told stead ran this to the consumer Bank why wouldn't you want to reclaim some of her stock even if she worked there for many many years because someone oversaw jama catches but we have to the low guys

well that's not how we were of course not to the extent that's a consideration to the extensive consideration we report process ok so much as just as James quickly from the lawyers the head of the audit committee has he looked at this as federico pena the corporate responsibility committee head and they look at this gym to the extent that's a consideration board process

ok let's go through New Yorker says says two million customers are known to be explicitly defrauded your fault that is absolutely false there's a channel its socialist so we hired an independent third-party accounting from to look at all of the products that our customers opened ok from from 2011 through 2015 there's a four-year four-month period they reviewed 93 million accounts opened ok and of that two million accounts they

they identified were they there was a possibility they could not rule out that their authorizer and authorized we didn't know either way they couldn't tell from the data and their third party not beholden to you and really hard to not tell two million that is not explicitly the front no it's just that's just hopeful it's just two million that they couldn't rule out with whether it was authorized by sometimes savings accounts open and

close within a 30-day period was that about me you know what happened for you I don't know and then we said to ourselves we said to ourselves we don't want one dime of income ok if we don't know if it's authorized or unauthorized so then we will they look for that and we found 2.6 million dollars of fees 415,000 accounts averaging about twenty-five dollars per account we sent that money back

we apologize and even though that's a small number and compared everything its we don't want one diner of income that we don't learn that is unacceptable 5300 people were not fired after the LA Times did 2013 piece Wells Fargo's pressure cooker sales culture comes in because you know it we have had we know running a business that not everyone will do everything right every minute of every day that's why you build compliance programs

that's why you do training that's why you don't coaching and unfortunately 1001 percent of of these 100,000 who are in a seat at any one time in the year you know they didn't get it right but but I i have to say we've got the best majority do the right thing every day why did anyone risk their career with wells fargo for 25 bucks a throw John that I I can't you know I don't know how to explain that I don't explain human

behavior but i know we own it also but so so I mean we meaning you waiting Kerry told stead meaning the board who is we let me tell you let me start with me to the extent that we don't get it right a hundred percent of the time because that's our goal right if we don't make that plan i'm responsible i'm accountable anybody else you know in the company we all feel when we fall short of that place

and we feel accountable and responsible ok we're taking action we're investing in more complaints in fact we have a couple new tools out there the tool right now so if a customer has an account open for a customer pick an email within one hour that ok if that's the case then this you did not like this headline you think is misleading Wall Street Journal you did not lay blame with bad employees you're taking responsibility for shit

of course I'm i didn't set but we all are in this but if you did change your rules when I spoke to you last you were obviously thinking you were doing everything for the customer why do you have to change the rules then one cross-sell if you were always doing what was right for the customers a great question we are not abandoning cross-sell we love cross across the shorthand for deep do

long-term relationships we love that one of the tools is are changing and that's the tool a product sales we're gonna have no more product sale requirements anyplace in the retail bank because we never know some people might misinterpret those units a little few people that somehow that's our motivation it is not in fact we've been migrating that way we we have things like customer service customer loyalty usage all things that customers value

are some of the things along with ballons why my Chapel trust owns that white was like it is that you would take you at 10 / reach you at ten account of pieces of business called for / retail banking so that's one of the reasons why Warren Buffett is always liked it but Piper Jaffray the only else has come out this is that you may not be doing a material change that could hurt earnings do you expect this to hurt earnings you expect mr. Buffett to pull back from his

ownership he was trying to increase their above ten percent i'm not going to make any you know proclamations or or assumptions on future but I about talking about burning ok I without giving you any guidance and i believe were growth company worth company yesterday where growth company today we're going to be a growth company tomorrow this idea of deepening relationships and and doing more business with our

customers who we just love is as firm today is it's ever been ok now dick hostage on August twenty-fourth 2014 told walk that Squawk Box that if the government never goes after the actual wrong-doers because that's too hard he says it takes a long time to do so have you cooperated with the authorities to actually give up the people in bridge high branch levels who may have encouraged something you clearly don't

want to have appt well first of all of the 5300 people who we terminated because they did not live up to abrasion values it was bankers branch managers and in some cases managers of those managers so and secondly with respect to cooperation with our regulatory authorities when we did this full review every issue right you know we shared that with our regulatory it absolutely so if they want to take action you would have cooperated in fact we were we

worked hard to get to share everything that we knew with them and we worked hard to get to the agreements that we had that were announced last days there anyway this is concentrated because la got 50 million dollars or their other cities that are now going to go after Wells Fargo and we're tip of the iceberg moment rather than through the so-called new site know while again if we go back to this independent review right 993 million two million honored 215,000 and

and now will continue to be vigilant will continue your luck but but for that period of time we think that is all settled okay i think that yeah i just--literally because what this is a social media generation John I just quiz Twitter okay was it ignorance this is the question people wanted me to ask you over and over again so I'm gonna ask if this is what people who watch the show one was it

ignorance of the practice that was happening or was it your culture well I don't think it's either i think we have been working on this for a long time we're making investments in compliance in training and so forth we we've got new tools we've actually seen the incidents come down so we're making and today again the announce we're making today about taking product sales goals off the table I think

is another way of taking some risk off the tour is your bonus ever tied to those products sales ok all of my compensation is in the public record under on our proxy okay and there's no a anything tied to product sales goals in my conversation or for any of the named executive officers you're going to be front in front of Congress it is a hostile environment for banks john will they

give you this amount of time to discuss what a particular but well I don't know but i will show up there next tuesday and i'm looking forward or surely are going to be prepared to answer their questions and and that'll happen next Tuesday up have you gotten a call from warren buffett you know I talked to a lot of our constituent Warren I mean he would obviously very important if I knew that

he back to i would personally feel better telling people to only stop gym again I'm not going to talk with any conversation anyone investor but I'm talking a lot of constituents and working hard to lead our company through this is 125 million the right amount for this Carrie toasted who quit and what can be put out taking back well again as I said before to the extent that to consideration

it's a border alright John I want to thank you for coming on I have to tell you that it verifies that you are the kind of guy i think you are to come on the show even though i know this is not the kind of action that I expect for the wells fargo you thank you so much John is the chairman and CEO of Wells Fargo man months back we are Jim Cramer hear from money thanks for watching CNBC when

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Video Description

Jim Cramer spoke with the CEO on his plan to rebuild customer and investor trust in the company following public scrutiny over account opening practices.
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Wells Fargo CEO John Stumpf: Moving Forward | Mad Money | CNBC