Tim Sloan faced skeptical lawmakers Tuesday as the Wells Fargo CEO argued he remains the right person to lead the scandal-stained bank. “It’s my job as CEO to make sure things change, and they are changing,” he said before a House panel convened to examine the company’s record of consumer abuses.
Sloan remained calm despite being grilled by members of the House Financial Services Committee, chaired by California Democrat Maxine Waters, who is among the lawmakers looking to increase oversight of large banks. After citing a litany of Wells Fargo’s abusive practices, Waters told Sloan “this conduct appears to persist.”
Waters, a noted critic of Wall Street, also said the bank’s “ongoing lawlessness” and its failure to reform suggests it is “too big to manage.” The lawmaker pointed to a New York Times story published Saturday that outlined how Wells workers remain under pressure to squeeze extra cash from customers, with rules reportedly bent or broken to meet performance goals.
North Carolina Republican Patrick McHenry also cited the Times article, asking Sloan if he could ensure that the bank would no longer harm consumers.
“I can’t promise you perfection, but what I can promise you is that the changes we’ve implemented since I’ve become CEO will prevent harm the best we can,” responded Sloan, who also told lawmakers the Times report was “inaccurate.”
Bank regulator “disappointed” in Wells Fargo
While Sloan assured lawmakers that Wells is doing everything it can to comply with regulators, one federal banking agency took issue with the assertion.
“We continue to be disappointed with Wells Fargo Bank N.A.’s performance under our consent orders and its inability to execute effective corporate governance and a successful risk management program,” a spokesperson for the Office of the Comptroller of the Currency told CBS MoneyWatch by email. “We expect national banks to treat their customers fairly, operate in a safe and sound manner, and follow the rules of law.”
Sloan defended Wells in the hearing, saying it has changed since what he called the “unauthorized account problem” in 2016, when the company admitted. Improvements in the company’s risk management practices means the chances of further customer abuses is “very low, if not zero,” he told lawmakers.
Sloan said the bank had reviewed 165 million accounts going back 15 years, contacted 40 million customers and provided millions in compensation to redress consumer abuses. In prepared testimony, he also underscored his bank’s progress in refunding customers wrongly charged fees.
“The past few years have taught us that our company does well by doing right. But doing right does not stop with simply repairing harm and rebuilding trust. It is an ongoing commitment by all of Wells Fargo’s 260,000 team members — starting with me — to put our customers’ needs first; to act with honesty, integrity, and accountability,” Sloan stated in his prepared statement.
“Time for change”
The CEO’s repeated statements about working to restore trust in Wells prompted a visual display by California Democrat Katie Porter, who held up a board with the phrase: “Paradigmatic examples of non-actionable corporate puffery, on which no reasonable investor would rely.”
The wording was used by Wells Fargo attorneys in asking a federal judge to dismiss a proposed class action accusing the bank of misleading investors late last year.
Waters took to social media in advance of the hearing, tweeting her intent to confront the bank CEO, writing that it is “time for change” at the bank, which “engaged in predatory lending, created false customer accounts, forced consumers into insurance, and cheated service members.”
Sloan took the helm at the nation’s fourth-biggest bank in October 2016, a month before the phony account scandal.
As a result of its misconduct, the Federal Reserve barred Wells from growing its assets above its 2017 levels until the bank showed it had resolved the issues. Wells has paid more than $1.5 billion in penalties to federal and state regulators and $620 million to settle lawsuits in connection with various abuses.
Wells last year also acknowledged it had improperly foreclosed on 500 homes after incorrectly denying mortgage modifications.