Wednesday, 22 May, 2019


Both sides of the aisle slam Wells Fargo

Wells Fargo CEO Tim Sloan testifies before a congressional hearing Tuesday Wells Fargo CEO Tim Sloan testifies before a congressional hearing Tuesday. C-SPAN Screengrab
Conrad Doyle | 15 March, 2019, 13:29

Tim Sloan, president and chief executive of Wells Fargo, arrives for a House Financial Services Committee hearing on Tuesday.

But Democrats - and some Republicans - on the House Financial Services Committee didn't seem to be buying it. They're conducting a hearing on Tuesday titled "Holding Megabanks Accountable: An Examination of Wells Fargo's Pattern of Consumer Abuses". Waters also accused the bank of being a "recidivist" institution.

Criticism of Wells Fargo came from so many that Kentucky Republican Andy Barr opened his questions by expressing surprise: "I'm shocked that you're not in an orange suit and little jail cell today".

Democrats and Republicans took a broadly tough line, quizzing Sloan on the bank's remediation efforts, personnel changes, risk management, culture and whether it should be broken up. "We provide financing to the company that is operating the company", Sloan answered.

Wells Fargo contends that it's made progress toward turning itself around, and that it's committed to making things right for its customers and earning back the public's trust.

The committee's ranking Republican Patrick McHenry made it clear that his party would not go soft on the country's fourth-largest US bank as they sought evidence it had remedied customer abuses. "It promises to make sure it doesn't happen again". Those pay practices and sales goals pushed employees at the bank's branches to open, in total, more than a million fake accounts in real customers' names. He said that the total number of products sold without customers' consent may be 3.5 million.

The bank has paid billions of dollars in fines to regulators for consumer abuses in virtually every part of its business. The bank has launched multiple marketing campaigns hoping to fix its reputation as the scandals continue to pile up, repeatedly reassuring investors of its great progress during quarterly earnings calls. "Robbing your customer is not an error in business", Lynch said.

"Are you going to use your clever arbitration provisions, applicable to an account they never signed up for, in order to keep them out of court, if that's what they decide they want?" He said repeatedly that, although he can't promise perfection, he's the right person to lead the company and that it's getting better.

"And you refuse to let people go to court", Sherman countered.

"Why should Wells Fargo continue to be the size that it is?" asked Waters.

"The sales incentives have changed, not disappeared", the Times wrote, citing current and former employees.

"The past few years have represented a hard chapter in Wells Fargo's storied history", Sloan, 58, said in prepared remarks.

"Obviously the bank has a ways to go before the Federal Reserve is satisfied", said McHenry. Waters, who took control of the committee after Democrats won the House in the 2018 midterms, has pledged to more closely examine large banks.

The shares were up 0.2 percent in early afternoon trading Monday, a fraction of the gains at other big banks including JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. Waters' office did not confirm the report.

Sloan on Tuesday said the bank has held "no conversations about that topic" with the bank regulator.

"Our customer experience and loyalty survey results are now at their highest levels in the past 2 1/2 years", he said.

He said one exit was finalized and the other was still pending, but he couldn't remember which was which. The firm surveyed US banking customers in late 2018. Wells Fargo's 8.4 percent advance so far this year trails the KBW index's 14 percent jump and an 11 percent increase in the S&P 500. "At the end of the day, these are just words". "But when you think about the wide range of issues they've had over the course of the last few years, and when you think about the relatively modest penalties they've received and the relatively modest changes they've made in light of those challenges".

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