Wells Fargo takes 6 big blows from House panel

Members of the House Financial Services Committee pounded Wells Fargo (WFC) CEO John Stumpf on Thursday and indicated several times that the investigation into the bank and the industry itself was far from over.

Stumpf was called to resign, lashed for not moving fast enough once the alleged scam surfaced, was compared to a bank robber and warned that investigation for criminal charges should be pursued during the grilling, which lasted more than four hours. "You have proved you did not offer leadership in this. ... I think you should submit a resignation," charged Rep. Steve Pearce, R-N.M.

Stumpf was noticeably better prepared this time, vs. his testimony in front of the Senate Banking Committee last week. The bank has also taken steps to accept accountability. Stumpf this week agreed to forfeit $41 million in unvested stock awards, and a senior executive in charge of community banking surrendered $19 million in unvested stock awards. But lawmakers delivered several key blows including:

• Claims that Wells Fargo is "too large to manage" and should be broken up. Lawmakers discussed dismay that an alleged scam involving more than 5,000 employees accounts for just 2% of Wells Fargo's workforce. "Can you really know what is going on at this bank?" said Rep. Maxine Waters, D-Calif., who declared that she would move forward to break up Wells Fargo, which is based in California.

• Calls for Stumpf's resignation. Stumpf, who has been CEO since June 2007, was challenged to step down by several lawmakers. "I don't personally see how you survive" as CEO, said Rep. Dennis Heck, D-Wash. Heck questioned how the board couldn't see Stumpf is "no longer the correct" person to lead the company. Several lawmakers also questioned how Stumpf also serves as the chairman of the board in addition to being CEO.

Naughty executives beware. Post Wells Fargo, your pay at greater risk.

•  Warnings that criminal charges should be examined. Several members of Congress stressed that Wells Fargo customers were stolen from and suggested criminal charges should be considered. Rep. Michael Capuano, D-Mass., asked Stumpf how the actions of executives are any different than a bank robber who didn't use a firearm and said he was sorry afterward. "Why shouldn't you be in jail?" Capuano asked.

• Calls for more banks to be investigated. Stumpf was asked by Rep. Al Green, D-Texas, whether other banks use aggressive sales tactics to urge employees to open accounts for existing customers, which Stumpf said he did not know. Green and several other lawmakers expressed interest in bringing in executives at other banks to see if sales practices potentially leading to fraud might be occurring at other banks.

Wells Fargo claws $41M from CEO

• Questions over Stumpf's financial gains during the alleged fraud. Several lawmakers pointed out that while Stumpf agreed to a clawback, he has still personally profited during that time. Specifically, Rep. Carolyn Maloney, D-N.Y., called him out for a $13 million sale of Wells Fargo stock in 2013 around the time the fraud became more clear.

• Disputes claims the fraud wasn't big enough to be material. Lawmakers blasted suggestions that because the wrongdoing affected a small percentage of accounts it wasn't material. More than $24 billion in market value has been shaved off Wells Fargo since the scandal broke, said S&P Global Market Intelligence. That's more than half the value of all of Ford (F) at $48.9 billion, said Rep. Jim Himes, D-Conn.

Stumpf tried to deflect some blows, showing the sham accounts that were opened cost the bank money, too.  He also agreed to help lawmakers as they continued investigations. But the damage was done. Shares of Wells Fargo closed down another 2%, or 93 cents, to $44.38. "I can't believe what I'm hearing here," said Rep. Gregory Meeks, D-N.Y.