500% increase for the epipen. you have written over 10 stories on the company. what is the takeaway on mylan and epipen? >> well, i think this is part of a recurring pattern that we have seen happen where congress is very concerned about the consumer pocketbook issues of access to drugs. they have had other ceo's come and try to explain high drug prices. they have talked about possible solutions. ink one of the realities, as somebody who covers drug prices and the industry, is this is an extremely complicated issue. it is hard to fix it with a band-aid. but it is also not going away. consumers are increasingly shouldering more of their health care costs, and so, drug companies that raised the prices of their drugs and outrageous ways do risk sort of inciting the wrath of politicians.

for me, watching this, i thought this was probably something we are going to see again. it is something we have seen before. we will see what kinds of solutions happen. but it is a symptom of a much larger issue that continually rears its head. >> you can read carolyn johnson's stories that washingtonpost.com. >> our viewers can watch the complete hearing on mylan and the epipen on www.c-span.org. us now is a reporter for bloomberg. she has been covering the hearings on capitol hill, dealing with wells fargo after it issued unauthorized accounts. elizabeth, what exactly was happening at wells fargo that got the attention of regulators, and then congress? >> so, this issue really came to

a point here in washington in september, which is when it was announced that wells fargo had reached a settlement with the consumer financial protection bureau and other regulators over allegations that it had opened more than 2 million accounts without customers knowing about it. this was something that immediately got the public's attention as well as outrage from lawmakers on both sides of the aisle. over the consumer protections and perhaps that the size and scope of this misconduct that had gone on for so long. allegedly it had touched thousands of employees and the bank had failed to stop it over five years. it raised questions about materiality in terms of whether the bank had failed to inform investors. about what was happening at the bank and what they were doing about it. the backlash came from both sides of the aisle very quickly

after the announcement was made about the settlement. ceotor sho shelti called the of wells fargo at the time to testify and give more information about what the bank was doing about this, who knew what, a lot of the basics, really. i was there and lawmakers, republicans, and democrats were outraged. fargo'sot help wells case that this was two months before an election and as you can imagine, lawmakers used wells fargo as an example to advance a number of issues that were important to them in the financial services space. was a toughable, it morning, had to be a tough .orning for the ceo he was getting a grilling from both sides of the aisle. that whatteresting is came out of the hearing, one of many issues is that republicans saw this as an opportunity to

look at what the regulators know. and whether or not they were asleep at the wheel. whereas democrats, generally speaking, and this is an example of why there needs to be strum consumer protections. fiery -- somea very fiery exchanges from both sides. >> let's back up. how did congress even first hear about the issue and then why did they decide to hold hearings? >> it was public. announcement with wells fargo that they had reached this settlement. that is when details were made public about what was known about the scandal and how many customers and might have affected, or how many accounts, and what the bank was doing about it. this is when this came to light. i would say that part of what spurred lawmakers to not only react, but to call the hearing

and to take action on this was the scope of this, that this had gone on for so long. it raised questions of accountability and whether or ceoexecutives, including john stumpf at the time, it should return their compensation, whether or not they should be reprimanded. this all became public and it was a reaction to a public announcement. >> what was the reputation of wells fargo, if we go back in our time capsule here, before this came out? >> what is interesting is here in washington, wells fargo had always maintained that image of being a hometown, big regional bank. even though the bank is one of the largest in the country and does engage in investment banking and trading and other sort of traditional wall street businesses. but here in washington it had always sort of spun this image of this hometown bank.

what was interesting, a lot of folks who had followed the bank and know it very well in washington, is this was an issue that was not at all -- this was a business, i should say, that was not a wall street or the recon located business. this was in the traditional bread-and-butter, consumer community bank at wells fargo and it was pretty simple for consumers and really anyone to understand that the bank was opening up accounts and misleading and essentially, lying to its customers. >> what about the reputation of the ceo, john stumpf? before this came out and after. >> wells fargo had always stood out as a bank that had not had as many scandals since the financial crisis that some of the other big banks have. that has certainly changed. the bank is taken quite a reputational hit, but here in washington, as well as abroadly

with the customers and investors. it is an issue of trust. it has raised a lot of doubt about trust with the bank. the ceo john stumpf has since stepped down from the bank as ceo and chairman. tim sloan has taken the helm as ceo. john stumpf has returned over $41 million of their compensation. he and other executives. so, the bank has definitely been taking steps to try to show that they are holding their executives accountable and righting this wrong, but time will tell how successful those efforts are. >> we are going to take a look back now at some of the senate hearing. there was a house and senate hearing. we will start with the former , and then comef back and continue our conversation. >> do you swear that the

testimony you are about to give is the truth, the whole truth and nothing but the truth, so help you god? you may be seated. statement willr be made part of the hearing record. welcome to the committee. >> members of the committee, thank you for inviting me to be with you today. i am chairman and chief executive officer of wells fargo, where i i have worked for nearly 35 years. it is my privilege to lead this company, which was founded 164 years ago and has played a vital role in the financial history and development of our country. we employ more than 268,000 team 95% of whom are in the united states. one of every 600 working adults is a member of the wells fargo

family and we have a presence in all 50 states. i am deeply sorry that we have failed to fulfill on our responsibility to our customers, to our team members, and to the american public. i have been through many challenges at wells fargo, but none of which pains me more than the one we will discuss this morning. practice behavior in our retail banking business goes against everything regarding our core principles, our ethics, and our culture. vision ofunter to our helping our customers succeed financially and it is not representative of wells fargo as an institution. i am here to discuss the situation today and tell you about the actions we have taken

and our commitment on how to move forward. our entire culture is centered on serving our customers and in this case, we let our customers down. our retail banking practice issues, the sales issues, are not a reflection of our hard-working, intelligent team forers deserve thanks helping our customers with their financial means. i want to make very clear that we never directed, nor wanted, our team members to provide products and services to customers that they did not want. that is not good for our customers and that is not good for our business. it is against everything we stand for as a company. accept full responsibility for all unethical sales practices in our retail

banking business. i am fully committed to fixing this issue, strengthening our culture, and taking the necessary actions to restore our customers' trust. and senators, let me tell you here today, the wells fargo board is actively engaged in this issue. tools to holdthe senior management accountable, theuding me and kerry told former head of our baking business. any board actions taking with our named executive officers will be appropriately disclosed and i want to be clear on this, i will respect and accept the decision of the board. leadership we have already begun taking steps to ensure that the sales culture in

our retail banking business is wholly aligned with our customers' interest. on september 13, 2016 we announced a major decision that we will end product sales goals for everyone in our retail banking business because we want to make certain that nothing gets in the way of doing what is right by our customers. the new leadership team's primary mission will be to provide the best possible service to our customers. today threenouncing new initiatives that will reinforce our commitment to our customers. first, we are expanding the scope of our account review and remediation to include both 2009 and 2010.

second, we will be contacting every single one of our deposit customers across the country using the same process that we agreed to with the city of los angeles for our california customers. and third, we have begun contacting hundreds of thousands of our customers with open credit cards, including those for whom we've already refunded fees, to confirm whether they need or want their credit card. addition, we have also started sending customers a confirmation email within one hour of opening any new deposit account and an acknowledgment letter before submitting a credit card application. we recognize now that we should sooner tomore eliminate unethical conduct or

incentives that may have unintentionally encouraged that conduct. we took many incremental steps over the last five years in an attempt to address these situations, but we now know those steps were not enough. team beganedicated to engage in active monitoring of data analytics, specifically for the purpose of rooting out sales practice violations. in 2012, we begin reducing sales goals for team members who need to qualify for incentive compensation. in 2013, we created a new corporate wide oversight for sales practices. in 2014, we further revised our incentive compensation plans to align pay with ethical performance. in 2015, we added more enhancements to our training materials, further lowered goals

and begin a series of town hall meetings to reinforce the importance of ethical leadership and always putting our customers first. throughout this five-year period, we identified potential inappropriate sales practices and we investigated those and we took disciplinary actions that include terminations of managers and team members for sales policy violations. the 5300 terminations over the five years that had been widely reported. despite all of these efforts, we did not get it right. we should have realized much sooner that the best way to solve the problems in the retail banking business was to completely eliminate retail bank product sales goals. one of the areas that we missed was the possibility that the customer could be charged fees in connection with the opened

without their authorization. accountshe deposit that are not used are automatically closed. we assumed this could not happen. we were wrong. we took steps to refund fees that were charged and made changes so that this could not happen again. in august 2015, we began working with a third-party consulting s,rm, price water house cooper which conducted extensive, large-scale data analysis of all 82 million accounts, deposit accounts, and nearly 11 million credit card accounts that we had opened from 2011 through 2015. of the 93 million accounts reviewed, approximately 2%, 1.5 million deposit accounts, and 565,000 consumer credit card

accounts were identified as accounts that may have been unauthorized. pwc did not find these accounts had been unauthorized, but because it could not rule out the possibility, these accounts were further reviewed to determine if any fees had been charged. pwc calculated that approximately 115,000 of these accounts had incurred $2.6 million of fees, which had been refunded to those customers. even one unauthorized account is one too many. this type of activity has no place in our culture. we are committed to getting it and when% of the time we fall short, we except responsibility and we will do everything we can to make it right by our customers.

saying again, i am deeply sorry that we have not lived up to our values in this way. i also want to take the opportunity to thank our 268,000 team members who come to work every day to serve our customers. today i am making a personal commitment to rebuilding our customers' and investors' trust, the faith of our team members, and the confidence of the american people. i am happy now to address your questions. thank you. >> thank you, mr. chairman and thank you for calling this hearing. i have to say what we have been learning is so deeply disturbing at so many levels. first, we discovered that wells fargo had a sales culture that was blatantly antithetical to what is best for customers. we discovered that management had far too few common sense

controls in place to prevent the customersuse that were subjected to. we discovered wells fargo executives were completely out of touch. in a 2011 forms article, wells fargo was rated the best cross selling its products. we discovered wells fargo was not always cross-selling, signing up customers or products when you know the customer does not want the product. failing to notify customers about these sham accounts and this is not cross-selling, this is fraud. that is what this is. and then we discover way too frome done to prevent it continuing, even after it was discovered. so, wells fargo employees continued for years to literally forged customer signatures, including mikmy constituents, to open up accounts. my understanding is something on the order of over $20 million in bonuses tween 2010 and 2015 were

awarded because of strong cross sell ratios, ye twt we know, in some cases, she was hitting numbers by these fraudulent accounts. this is unbelievable. let me begin, mr. stumpf, do you it knowledge that the employees engaged in this activity were committing fraud? >> i am not a criminal officer and i don't know the -- i am not a lawyer. i know this. they broke our code of ethics. they were dishonest, and we did everything we could to support law enforcement in these issues. >> i am not a lawyer either and neither are most adults in america. but i think most people understand the meaning of the word fraud. the dictionary does provide a useful definition. it says fraud is a knowing misrepresentation or knowing

concealment of a material fact made to induce another to act to his or her detriment. falsely signing a customer up for an account they do not want, how does it not meet that definition? >> and again, if that is the definition, i can tell you this, it is absolutely wrong. we found this out, we got rid of those people and they have no place. that behavior has no place in our culture. if that means fraud, that means fraud. >> at what point did you alert your regulators and law enforcement that you had probably criminal activity happening on a large scale. >> again, it was 1% of our people. >> 5000 is a big number. >> it is bigger than my hometown. i do know that. but we also have the vast majority who did the right thing. every time, and we made a very bright line. if it happend one time.

>> i have only five minutes here. >> to answer your question, i'm sorry. we sent it. we did everything we needed. >> did refer to law enforcement customer >> we did everything according to the rules. >> when did you begin to disclose in sec filings that you had this potentially set of adverse circumstances that could have huge damage to your reputational value? >> i don't -- i cannot answer that. i would have to get to our legal team. i do not have an front of me. i would just have to get back to you on that. i do not know. >> well, we have not been able to discover such a disclosure -- and sec there it clearl the sec very clearly requires a disclosure. i do not know how this could not be deemed material. the market cap lost 9% over the last couple of weeks. that is pretty material. >> from a financial perspective,

$2.6 million, and it is $2.6 million too much -- >> i get those dollar amounts may not qualify as material to a bank the size of wells fargo, but the reputational damage done to the bank clearly his material. and that has been manifested by this huge adverse movement in stock prices. let me raise one other issue. you mentioned in your testimony, and you state unequivocally that there are no orchestrated efforts or schemes by the company. but when thousands of people conduct the same kind of fraudulent activity, it is a stretch to believe that everyone of them independently conjured up this idea of how they would commit this fraud. isn't it very probable that there was some orchestration that happened at some level --

i'm not suggesting it with you personally by any means, but doesn't it define common sense to think there was not some orchestration of this? how,nator, i don't know what motivated, or why people did this. but we did fire managers and managers of managers, and in one case, an area president. again, this 1% is way too many. i don't want to minimize it. i also want to make sure we recognize that the vast majority of people did exactly the things we wanted them to do to help deepen customer relationships, help them succeed financially. and also, we have put a number of other controls in place, besides taking sales goals off the table. we don't open any deposit account today come or any credit card, without his signature. there are a couple cases where the ada -- where they can't.

we are also doing mystery shopping and we are giving customers a one hour notice by email, or letter, so we make sure they know exactly and they know exactly what they have opened. >> it seems like it took an awfully long time to impose those basic controls. i see i am out of time. thank you, mr. chairman. this massive, years long scam came to light, you have said repeatedly, "i am accountable." but what have you actually done to hold yourself accountable? have you resigned as ceo or chairman of wells fargo? >> the board -- >> this massive, years have you? >> no, i have not. >> have you returned one at nickel of the millions of dollars you will pay while the scam was going on but mark >n? >> first of all, this was 1% of our people -- >> that was that was my

question. have you repaid one the money you earned while the scam was going on. i will take that as a no. have you fired a single senior executive, and by that i do not mean a regional manager or branch manager. i am asking about the people who actually lead your community banking division, or your compliance division. to leadve made a change a regional banks. >> i just said, i am not asking about regional managers or branch managers. i am asking if you have fired senior management, the people who actually led community banking divisions, who oversaw this fraud, or the compliance division that was in charge of making sure the bank complied with the laws. did you fire any of those people? no, ok. you have not resigned, returned a single nickel of your personal

earnings, you have not fired a single senior executive. instead, your definition of accountable is to push the blame to your low-level employees who don't have the money for a fancy pr firm to defend themselves. it is gutless leadership. in your time as chairman and ceo has been famous for cross-selling, which is pushing existing customers to open more accounts. cross-selling is one of the main reasons that wells has become one of the most valuable banks in the world. wells measures cross-selling by the number of different accounts the customer has. other big banks average fewer than three accounts per customer. but you set the target at eight accounts. every customer of wells should have eight accounts with the bank. and that is not because you ran the numbers and found the average customer needed eight banking accounts. it is because "eight rhymes with

great." cross-selling isn't about helping customers get what they need. if it was, you wouldn't have to squeeze your employees so hard to make it happen. no, cross-selling is all about trumping up wells' stock price, isn't it? mr. stumpf: no, cross-selling is shorthand for deepening relationships. sen. warren: let me stop you right there. you say no? no? here are the transcripts of 12 orderly earnings calls that you participated in from 2012 to 2014, the three full years in which we know the scam was going on. i'd like to submit them for the record, if i may, mr. chair. thank you. these are where you personally made your pitch to investors and

analysts about why wells fargo is a great investment. and in all 12 of these calls, you personally cited wells fargo success at cross-selling retail accounts as one of the main reasons to buy more stock in the company. let me read you a few close you -- quotes that you had. april 2012, "we grew our retail banking crossover ratio to a record 5.98 products per household." a year later, april 2013, "we achieved record retail banking -- cross-sell of 6.1 products per household." april 2014, "we achieved record retail banking cross-sell of 6.17 products per household." the ratio kept going up and up.

it didn't matter whether customers used to those accounts or not. and guess what? they all recommended people by wells fargo's stock, in part because of the strong cross sell numbers. i would like to submit them for the record. >> no objections. sen. warren: thank you, mr. chair. when investors saw good cross sell numbers, which they did when the scam was going on, that was very good for you personally, wasn't it, mr. stumpf? do you know how much money -- how much stock value your stock holdings in wells fargo gained when the scan was underway? mr. stumpf: first of all, it was not a scam. cross-selling is a way of deepening relationships -- sen. warren: we have been through this. i asked a very simple question. do you know how much the value

of your stock went up when the scam was going on? mr. stumpf: all of my compensation is in the public -- sen. warren: do you know how much it was? mr. stumpf: it is in the public filings. sen. warren: you are right. it is in the public records, because i looked it up. when the scam was going on, you personally held an average of 6.75 million shares of wells stock. the share price during this time period went up by about $30, which comes out to more than $200 million in gains, all for you personally. thanks in part to those cross sell numbers that you talked about on every one of those calls. now, here's what really gets me about this, mr. stumpf. if one of your tellers took a handful of $20 bills out of the cash drawers, they would probably be looking at criminal

charges for theft. in prison. but you squeezed your employees to the breaking point, so they would cheat customers, and you could drive up the value of your stock, and put hundreds of millions of dollars in your own pocket. when it all blew up, you kept your job, you kept your multimillion dollar bonuses, and you went on television to blame thousands of $12 per hour employees who are just trying to meet cross sell quotas that made you rich. this is about accountability. you should resign. you should give back the money that you took while this scam was going on, and you should be criminally investigated, by both the department of justice and the securities and exchange commission. this just isn't right. a cashier who steals a handful of 20's is held accountable, but wall street executives who almost never hold themselves

accountable, not now, and not in 2008, when they crushed the worldwide economy. the only way that wall street will change is if executives face jail time when they preside over massive fraud. we need tough new laws to hold corporate executives personally accountable, and we need tough prosecutors who have the courage to go after people at the top. until then, it will be business as usual. and that giant banks like wells fargo, that seems to be cheating as many customers, investors, and employees that they possibly can. thank you, mr. chair. >> some tough questions there, from senator elizabeth warren of massachusetts, grilling the ceo, former ceo of wells fargo. that was in september. and we are back with elizabeth, a reporter with bloomberg. elizabeth we just saw some of

, the key portions of the senate hearing. what happened immediately after the senate hearing, and also what happened after the house hearing a week later? elizabeth: elizabeth warren has definitely been one of the most outspoken critics of this misconduct that occurred at the bank, and wells fargo's response to it. so that's definitely -- as you saw, it was a fiery exchange, and she in particular continued to call for the ceo to resign, and there could be a criminal investigation into his and other executives at the bank's conduct and involvement. immediately after that, the house held its own hearing, which was arguably just as, if not more painful for john stumpf in that it was longer and there were more questions, and the criticism could get personal at times.

soon after that, the ceo, john stumpf, did step down. before the second hearing, he had returned, he and other executives at the bank had returned quite a bit of their pay. the bank has taken a number and continues to take a number of steps to change their sales practices, the culture at the bank. it certainly -- they have certainly been trying very hard to reach out to customers, to their own employees, to focus on the hill, and answer questions and be more accessible, and right the wrongs, so to speak. but this continues. lawmakers on both sides of the aisle have continued to call for investigations. there's a number of government agencies including the sec, looking into various aspects of this. it definitely will continue. wells fargo continues to be in the hot seat. regulators across the board are

under pressure, more so than even before to demonstrate they are on top of what happened at wells fargo, and more broadly at other big banks. wells fargo has a lot of work, and continues to do a lot of work to renovate this. >> you mentioned them reaching out to customers and employees. what exactly have they been doing to help affected customers, to help employees who might have gotten fired? elizabeth: that's part of their strategy as well, several different aspects of how they are helping to -- particularly one issue, i will give an example, helping identify customers whose credit score might have been affected by having the bank opening an account, which could have negatively affected their credit score. the bank is working with credit bureaus and others to identify any of those customers who might have been affected, and fix it so the credit scores are not

harmed. they're taking many steps to demonstrate and rebuild trust, as well as actually fixed the -- fix the problem that exists at the bank. >> they mentioned regulators. what steps are they taking exactly, if they move forward as a result of the scandal? >> well, already the fed, the occ -- the occ, one of the regulators which was part of the settlement in september, has said they are going to be looking into sales practices at other large banks. certainly, the fed has also indicated they will be looking at compliance overall, and how well banks are following through with what they should be doing. we have already seen wells fargo recently, separately a report about whether an annual report about whether they can go through, whether they can stand

in the case of a bankruptcy, that they have the adequate tools in place, so to speak. they failed that test. it shows you how wells fargo continues to be in the hot seat here in washington, and something that is very much on all regulators across agencies' mind. do think that will continue. the trump administration will be coming in. republicans are in control of congress. do you think that will continue, or what can we see in terms of the dodd frank laws? will they stand? do think that . elizabeth it's a great question. : there is a lot of uncertainty and a lot of unknowns. democrats for sure will continue to use the example of wells fargo to illustrate why they think more consumer protections and other financial regulations are needed. it remains a question about

whether or not this will be as elevated an issue as it would have been, had democrats been in control of congress. yes as you mentioned, dodd , frank, the trump administration, and his advisers have mentioned they would like to see changes to dodd frank. where this fits in, and where wells fargo fits in on that it , will certainly come up. whether or not you have additional hearings like what we saw with john stumpf, that remains to be seen. >> elizabeth is a reporter with bloomberg. you can find her reporting at bloomberg.com. thank you so much for joining us. elizabeth thank you. : >> you can find the hearings, both the house and senate, dealing with wells fargo on our video library at c-span.org. >> congress this year also looked into cable tv billing practices, and customer service complaints. here is more on that issue, and the testimony of industry