Wells Fargo CEO Testifies On Unauthorized Accounts Scheme; Warren: Stumpf Should Quit; Suspect's Father: I Called The FBI About My Son 2 Years



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NEIL CAVUTO, FBN HOST: Anyway she's asking for physical custody of their six kids, wow. Trish, I didn't see this one coming, do you?

TRISH REGAN, FBN HOST: Oh, yeah, I know. Sad stuff, very, very sad indeed. Thank you so much, Neil.

CAVUTO: All right.

REGAN: All right, breaking right now. Wells Fargo CEO, John Stumpf, blasted on Capitol Hill today for opening 2 million phony accounts in customer's names all in an effort to rake bigger fees, and to meet their sales goals.

Welcome to "The Intelligence Report" everyone, I am Trish Regan.

This is -- I got to tell you, it's just unbelievable to watch today. I know you think, OK, typical Capitol Hill hearing, the CEO is going to get raked over the coals, all his expense for lawmakers so that they can take some kind of victory lap. But this was actually all that and then some more.

I mean don't forget what Wells Fargo did is really, really bad. I mean it's criminal, right? I mean they're out there stealing customer information. Opening phony accounts, customers effectively got robbed and executive got paid hundreds of millions of dollars, this testimony was so extraordinary to watch I'm playing it again. Take a look.


SEN. ELIZABETH WARREN, (D) MASSACHUSETTS: I don't quite understand. How do you explain this to your own shareholders?

JOHN STUMPF, WELLS FARGO, CEO: There is process that the board goes through, and they will do that, they have already (inaudible) and .

WARREN: Mr. Stumpf, I don't understand if you're saying there's, you know, the board, the board, these are strangers that you met in a dark alley. Under to bylaws of Wells Fargo I'm quoting here," The chairman shall preside at all meetings of the board."

STUMPF: Hence.

WARREN: You were able to make changes, why can you not make a change here?

STUMPF: I'm not on the human resources committee of the board. They have their own government and structure. We want that to proceed in the process in which we have.

WARREN: All right, so, shall we do this you. Our letter asks a number of questions about clawbacks of Ms. Tolstedt and other executives pay including yours.

Wells Fargo's answer to our letter was just basically you punted (ph) that the decision would be up to the board, the same punt (ph) you've given here.

So, you're the chairman of the board, let me ask it this way, will you personally support clawing back all or part of Ms. Tolstedt's pay?

STUMPF: I'm not going to in anyway try to influence or prejudice the board as they would do their -- their delivery (ph).

WARREN: So you have absolutely no opinion on this?

STUMPF: I'm not going to opine on that.

WARREN: You're not going to opine on -- you're going to say get out there, defraud, cheat, lie, steal and I have nothing to say about whether or not you all still be getting your bonus?

STUMPF: I never said and I will -- we'd never say to our company go out there and do any of those things. We try to do the right thing .

WARREN: But you say if you do then you can count on Chairman Stumpf not to stand up and say you shouldn't get your incentive bonus.

STUMPF: The board has a process. And .

WARREN: I think you started this whole thing by saying, don't tell me what you say, tell me what your actions are.


WARREN: And your actions are -- people do this and you're not going to take a single step to shut it down.

So I guess I can ask this question again. Will you personally support clawing back any or all of the pay for the person in charge of compliance, someone we haven't talked about much today? The person who was supposed to be responsible to make sure that the bank is following the law. Will you have any recommendation about that person?

STUMPF: I'm going to have the board do their process.

WARREN: You are going to have no recommendation at all?


WARREN: Ever? At any point in this process?

STUMPF: Whatever the board accepts, and whatever they do I will accept, and I will support.

WARREN: You are not passive here. If you have nothing to do then what are you doing serving as chairman of the board?

If you have no opinions on the most massive fraud that has hit this bank since the beginning of time, how can it be that you actually get to continue to collect the paycheck for being chairman of the board?

STUMPF: First of all, I disagree with the fact this is a massive fraud, but, secondly, the board will do their work and I'm not going to prejudice their work. And I will be -- and I'll accept whatever they come up with, and I will be supportive.

WARREN: You know, you accepted all along as this fraud built up, this massive fraud. You accepted all the performance bonuses based on the cross-selling that is at the heart of this. You watched your own stock go up by more than $200 million based in part on the exactly this massive fraud.

You go out it (ph). You punted to Wall Street. And you said to Wall Street, hey, we are doing such a great job cross-selling here at Wells Fargo.

You used to tell everybody to buy our stock. And now you turn around and say I shall remain passive and simply accept what Wells Fargo wants to do.

You know, in 2008, Wall Street promised change, but it looks like it is business as usual. A giant bank cheats the little guys and executives line their own pockets.

Mr. Stumpf, you make it clear that Wall Street won't change until we make it change. Thank you Mr. Stumpf.


REGAN: Wow, all right, joining me with the latest in D.C. is our own Peter Barnes.

Peter, she went after him really hard and regardless to what you think about Elizabeth Warren she makes pretty good points.

PETER BARNES, FOX NETWORK WASHINGTON CORRESPONDENT: Yeah, she definitely had her prosecution down cold, Trish. And I got to tell you, I've been covering a lot of these hearings of a life 25 years with the top executives, I don't -- I can't member one this tough. And this was not just Senator Warren it was a bipartisan grilling John Stumpf. He had no defenders among Republicans or Democrats.

And it was over these 2 million accounts that the bank owned without the customer's approval or authorization. Senator Warren as you saw that was toughest on him, here's what else she had to say.


WARREN: You should resign, you should give back the money that you took while the scan was going on, and you should be criminal investigated by both the Department of Justice and Securities and Exchange Commission.

You know, this just isn't right, a cashier who steals a handful of 20s is held accountable, but Wall Street executives who almost never hold themselves accountable.


BARNES: Now, Stumpf scrambled through this whole hearing to try to explain what went wrong at Wells Fargo. He said he was deeply sorry, apologizing numerous times. And he said that he should have acted sooner to stop all this.


STUMPF: I accept full responsibility for all unethical sales practices in our retail banking business. And I am fully committed to fixing this issue, strengthening our culture and taking the necessary actions to restore our customer's trust.


BARNES: Now, two weeks ago as you recall, regulators find Wells Fargo $180 million for these practices which hit customers from 2011-2015, and then refunded more than 100,000 of them, $2.5 million in fees, the bank blamed dishonest employees and managers for all this, saying it has put in place reforms.

But these senators wanted to know as you heard whether or not John Stumpf would resign, or perhaps whether or not the board might fire him. He did not say he would resign, but he did say that that independent compensation committee of the board is evaluating whether or not some of those millions of bonuses that he and his other senior managers made during this time should be clawed back, Trish.

REGAN: Well, I mean, yeah, I mean people are looking for some accountability here, for goodness sake, the woman who ran the whole division walked away with $100 million, and there was .

BARNES: That's right.

REGAN: . no clawback despite the fact that many are saying she probably knew because they had fired some employees for this practice earlier. Peter, thank you so much.

I am joined right now for more by our very own Elizabeth MacDonald and Charlie Gasparino, along with Kaltbaum Capital Management President, Gary Kaltbaum.

You know, what do you think is going to happen? Does he need to leave over this?

CHARLIE GASPARINO, FOX SENIOR CORRESPONDENT: He's going to be fired I believe, or -- I think what's going to probably happen is, he's going to finish this hearing obviously today. I think there's a house committee hearing later in the month. I think he'll do that. And I think, you know, but what I heard just from inside the bank was about his future particularly whether he's going to at the bank for next two years where he set to retire, it was depending on how well he did at this hearing.

REGAN: And how would you classify how about he did?

GASPARINO: A C-, and that's a gentleman's C-. I think it's a D. I mean he did very badly, poorly. I mean he did not answer questions rights. He came very unprepared. I mean (inaudible).

Yeah, if you give these guys rope they are going to hang you. I remember .

REGAN: And this was not just rope.

GASPARINO: Right, right.

REGAN: I mean this was like rope with red needle.

GASPARINO: But you remember Jamie Dimon, when he -- now Jamie Dimon was speaking on list, esoteric (ph) topic -- a more esoteric (ph) topic about a trading loss, a London well trading loss a couple years ago.

But again, these guys are trying to whip up the class warfare stuff again. So Jamie was smart enough and he's prepared enough, Stumpf had no idea what he was walking into. So my guess is he's gone.

REGAN: Elizabeth, let's back up for a minute and talk to our viewers about just exactly what happened here. Because people are saying, wait a second. If I had an account at Wells Fargo might I been vulnerable to this fake accounts .


REGAN: . 2 million of them were actually created.

MACDONALD: That could affect your credit score too. And in fact, we had a guest on Varney's show and she said her daughter hit, was really bad credit scores now for seven years. And she didn't even apply for a credit card account.

Here's what the bottom line is for the bank, John Stumpf revealed the testimony that he knew about this -- this was going on in 2013. So this becomes a Sarbanes-Oxley issue, did he disclose it in SEC filings? That's just one thing.

The other thing too is this -- you know, whether or not he will basically give back his own compensation, because under Dodd-Frank, they don't have to do clawbacks because it is materially affecting the earnings. It's a 185 million, and then another five million in penalties then another five million going back to consumers.

The way John Stumpf is argument is that they don't have to do clawbacks, because of that material but, you know .

REGAN: But the earnings worth but for .

MACDONALD: . yeah, but .

REGAN: I mean what artificially .

MACDONALD: . the main stock is getting affected. The stock is getting affected. So, the question for him at the hearing was, should you just have given back your compensation? Because here's what Liz (ph) Senator Warren pointed out, about three years of worth of telling Wall Street, cross-selling is great for the stock, it's a reason for that .


REGAN: OK, but here's, he knew that all comes down. And Gary, I want to bring you into this.


REGAN: Because I think a lot of Americans sitting at home, watching this thing. This is exactly, by the way, why Donald Trump is doing as well as he is. And why we saw Bernie Sanders doing as well as he did.

Because people feel as though the system is stacked against them and the little guy has no voice, while executives, the do bad things like the woman who's running this division walk away with $100 million.

And the CEO still stands there and says, oh, you know, I have no opinion on this, no recommendation to even give the board.

You know, isn't this effectively what is now wrong with the system when these kinds of things go unchecked?

KALTBAUM: This is going to be -- right this second is less about what they did but what -- how their reaction. Imagine as you said, the person most responsible for overseeing all this, walking away with $100 million and 5300 people who don't get paid a lot get fired. And no senior management, no problem, just keep on keeping on. Bad optics and they earned the right. This guy earned the right to be put in front of Elizabeth Warren.


KALTBAUM: This was chum for somebody like that.

GASPARINO: But let's be .

KALTBAUM: And this is all going to affects the company for a very, very long time. He is out of a job. I don't know if it's today, tomorrow or in three weeks, but that has got to happen.

REGAN: It's got to be now.

KALTBAUM: And changes going to be .


KALTBAUM: . and remember two Warren's, Warren Buffett, I can guarantee you he's going to be in their in conference with the company because he owns a ton of stock .


KALTBAUM: . and he wants to get in front of it quickly.

GASPARINO: You would think Warren Buffett who opines on every single scam in the world would be a pining (ph) here if he knows that he's very silent, so that pretty critical on news point.

I would make one other point. The root cause on this guy is Dodd-Frank, and that something that none of these liberal lefty senators including Elizabeth Warren .

REGAN: And why do you say that .

GASPARINO: I mean it's simply this, when they created Dodd-Frank they forced banks out of major moneymaking business who's -- by the way, had nothing to do with the financial crisis, proprietary trading, hedge funds. So what did they do? They went on the retail side of the bank, you know, the bank-bank, the commercial bank.

REGAN: Right.

GASPARINO: And they said, how do we get this? How do we start to the -- so created incentives for employees to get this. I mean .

REGAN: I think you keep do it .

GASPARINO: I mean, let me .


KALTBAUM: But that doesn't called form.

GASPARINO: I know that, let me make the point. On top of that you have major banks, huge banks that can't be regulated internally. Nobody can manage a bank of that size. That's what Jamie Diamond had no idea but .

MACDONALD: But that's what Senator Warren was saying .

REGAN: Maybe here. I got to go back because we're short in time. But maybe this is why I need some kind of return, do not steal .

GASPARINO: Break them up.

REGAN: Separate, the investment side from the retail side.

GASPARINO: I think so.

REGAN: Thank you Liz, Charlie, Gary, good to see you guys


REGAN: All right, the political implications of today's grilling of the Well Fargo's CEO, I'll tell you they are frame right into this election right now.

How does a bank pay $185 million in fines for opening up phony accounts in 2 million customer's names, and then the executive who oversees the whole scheme, instead of being fired, she gets to retire with a $125 million bucks.

I mean no wonder, the voters think this whole game is rigged, we are on it next.


REGAN: Senator Elizabeth Warren blasting Wells Fargo CEO John Stumpf today, saying he should be criminally investigated by the Justice Department.

This is all over allegations the bank employees opened up customer accounts, 2 million of them, with no permission from the actual customers and it was all in effort to meet aggressive sales quotas.

So far, the only punishment is a tiny, we say tiny because of the big bank, $185 million fine. You know, isn't this why voters are so fed up with cronyism?

Joining me right now for a rare moment when I actually think they're going be on the same side of issue, Alan Colmes, from Fox News, and Katrina Pierson, the spokesperson for the Trump campaign.

Katrina, I mean Wells Fargo, what happen here seems to be just another example of these big corporations taking advantage of the little guy. And I think, I want to hear your thoughts, this is one of the reasons why Donald Trump and Bernie Sanders saw the success they have seen this far.

KATRINA PIERSON, TRUMP'S CAMPAIGN SPOKESPERSON: This is absolutely an example, and this is just what we know about. We are talking about entities gained by the government as too big to fail. So there really is no incentive to do what's right, but here we again talking about fraud, thief and most importantly hidden profits on the backs of the consumers.

This is absolutely absurd. And now at the same time we have over 5000 low- wage employees that have lost their jobs.

Meanwhile, the executives and their $100 million bonuses are walking around scot-free. It's not fair. The system is totally rigged and this is exactly why the people in this country are standing up today.

REGAN: Alan, there's something really wrong about it. I mean, this is what Bernie kept saying, right, over and over and over again.


REGAN: Why is this happening? Do you believe in loving money, do you .

COLMES: It's big-money, it's -- whoever has got the money that's where they --where you follow the bouncing ball. But I wouldn't put Donald Trump in the same category as Bernie Sanders because he has someone who has benefited in cronyism. $855,000 in tax breaks during his career. We just helped him build all the things he's built. He's .

REGAN: Yeah, I mean the one thing I think Donald Trump and .

PIERSON: Legal versus illegal.


PIERSON: Legal versus illegal.

REGAN: Yes, illegal. And also, by the way, he probably be the first to tell you that he had benefited from this. Another is he recognize this that the system is set up in such a rigged way that only those who can afford to take advantage of it are actually .

COLMES: Well not only that.

REGAN: . taking advantage of them.

COLMES: But, the fact that he is alleged to have given money to Pam Bondi and another Attorney General Greg Abbott, with attorney general in Texas in order to them .

REGAN: How much money .

COLMES: . and then pulls out when investigating Trump University.

PIERSON: But, but -- that's the reason why, the reason why .

COLMES: I mean this is the kind of cronyism that the people are sick and tired of it.

REGAN: Go ahead Katrina.

PIERSON: The reason why, Alan Colmes, once to divert the things that are .

COLMES: I'm not diverting.

PIERSON: . element to this discussion is very simple.

A Hillary Clinton is the Wall Street candidate. She is the recipient of Wall Street money. She is the one that went around lobbying for the banks, voted for the bail out and continues to work for them with her six figure speeches that she's given to many of these banks. She is their protector. And she even admitted that when she was running against Bernie Sanders by trying to claim that the reason why she supported the bank bailout was support the people.


PIERSON: It's absolutely .


PIERSON: She also add .

REGAN: And people see that she did this.

Tim Kaine is just days before he was named as her VP pick came out with a letter basically advocating on behalf of Capital One and some other banks in his region. So he also looked as though he was a bit in bed there with the banks.

COLMES: The problem is .

REGAN: The final thing I'll add though (ph) is -- and I don't know how familiar you guys are with this, but the viewers, just so that -- to keep them informed, he had something called the Glass-Steagall Act that had been in place for many, many years since the 1930s. And it was all designed to prevent banks from getting too big and able to take on basically too much risk.

Bill Clinton, Bill Clinton is the guy that actually got rid of that way back when. And, you know, 2008 and the aftermath was in fact blamed on the fact that you now had banks with the ability to invest using your funds and my funds, Katrina. And so, they became more and more aggressive.

You know, I don't know if we can blame Bill Clinton for the whole thing, but it certainly seems as though there were some policies that had existed for decades quite well, once they were gone we got in a lot of hot water.

PIERSON: Well, you can blame the politicians in general, on both sides of the aisle that has been in bed with Wall Street and corporate America for a very long time. Which is exactly why you see this uprising on both sides of the aisle by the average worker, who say enough is enough. This is the fault of Bill Clinton and those that follow him and as well as Hillary Clinton .

COLMES: Here we go.

PIERSON: . who continue to push.

COLMES: You know .

PIERSON: . who continue to push for bailing out the banks. They're too big to fail deemed by the government and the little people are getting hurt. If this were a smaller bank, a mom and pop shop somebody would go into jail.

REGAN: Final word Alan.

COLMES: It is disingenuous to blame this on Hillary Clinton, let Donald Trump off the hook, even an inside player.

REGAN: How to blame on Hillary is much .

PIERSON: He never voted for a single one of those bills.

COLMES: . Katrina. You had a lot of time to speak here. Donald Trump was an inside player in Atlantic City, you're an inside player with the government, he got all kinds of largess in the government. He wouldn't have had his career, had he not gotten tax break, he would sue the government when he didn't get tax breaks, and that's how he built his career on the backs of taxpayers.


COLMEWS: . so don't act all innocent like it's all Hillary Clinton, come on.

PIERSON: All legal, all legal, Alan, and he didn't vote for a single bail out for these banks. Not one.

REGAN: All right. Well, you know .

COLMES: That's how he does his career.

REGAN: . and I might actually get you guys to agree on.

COLMES: Well, we're on Elizabeth Warren, right?

REGAN: The cronyism that we have seen in corporate America and on full display with Wells Fargo. Alan, Katrina, thank you so much. Good to see you guys.

COLMES: Thank you.

REGAN: We are learning some new details right now, about the 28-year-old suspect Ahmad Khan Rahami, the suspect, of course, in that string of bombings that happened in New Jersey and in New York over the weekend. His father telling just telling Fox News that he called the FBI about his son two years ago because he says, he stabbed his brother.

His father had misgivings about him all along. Why didn't law enforcement act on it earlier? We got the latest. I'll see you here.


REGAN: OK, right now we are getting more details into this right now, about this 28-year-old man Ahmad Khan Rahami, he's, of course, the man suspected in that string of bombings in New York and New Jersey.

Coming into us right now is this bit of information. Ahmad's father called the FBI on his son two years ago after Ahmad stabbed one of his brothers.

The terrorist suspect now remains in the New Jersey hospital, that's where he is right now for refusing to speak with authorities. But according to his high school sweetheart with whom he had a child. Rahami hated America and hated everything our country stands for.

So let me bring you up to speed here. The suspect is being held on more than $5 million bail. He has been charged with five accounts of attempted murder of a police officer in New Jersey, federal charges have yet to be filed. And he's expected to make his first court appearance as early as this Friday. We also know that Rahami, his family first came to the United States of America in 1995 when he was age 7.

The family arrived as asylum seekers from Afghanistan. He made multiple trips to Afghanistan and Pakistan and he's married to a Pakistani woman whom he brought to the United States several years ago.

Also get this, just days before the bombings, his wife left the country. She is now being detained in the UAE.

I want to go straight to our own, Adam Shapiro who has got more information coming to us right now from Elizabeth, New Jersey. He has the latest, Adam.

ADAM SHAPIRO, FOX BUSINESS: And the thing that's really key about everything you've just said is that Mr. Rahami's own father called the FBI two years ago. After one of those trips to Pakistan and reported his son to authorities as a terrorist. His own father called him a terrorist.

The FBI apparently opened up what they call an assessment, but then the father recanted his story and it went no further. A lot of people are going to have questions as to why it went no further. But let me listen to what -- let you listen to what the father had to say about all this.


MOHAMMED RAHAMI, AHMAD KHAN RAHAMI'S FATHER: Two years ago I called the FBI. My son was doing really bad, OK? They checked for almost two months and they said, he's OK, he's not terrible, he's OK. And now he says he's a terrorist.


SHAPIRO: And so, Mr. Rahami, the father, says that his son got into a fight, hit his wife, and then stabs his brother. Mr. Mohammed Rahami's other son.

He has been in jail briefly. There were charges here and that's how they were able to match the finger print from West 27th street device which did not explode and identify Mr. Rahami, Trish.

REGAN: What a guy, should also point -- you're standing is point out -- you're standing right outside the family's first American Fried Chicken. That was his family's business there .

SHAPIRO: That is correct.

REGAN: . where he had worked, and then head -- coming to some issues with authorities regarding the timing of when they could be open. Anyway thank you so much Adam Shapiro.

I want to go right now to world renowned terror experts Dr. Sebastian Gorka, he is the author of the best selling book, "Defeating Jihad".

You know, Dr. Gorka, we know this guy wasn't on a terror watch list, but his father had contacted the FBI about him. We do know that he spent a lot of time traveling to Afghanistan. Should he have been -- I mean should there have been warning signs that the authorities could have caught?

DR. SEBASTIAN GORKA, "DEFEATIGN JIHAD", AUTHOR: Indeed, if we have in the place the kinds of programs that have been very effective since September 11th, the kinds of programs that the NYPD created to protect New York and which people like Mayor De Blasio are trying to shut down.

So, these individuals follow a very clear pattern and this is exactly the same in this case. They are individuals who aren't radicalized. It's not something that is done to them. They choose the life of Jihad.