Wells Fargo Chief Executive Officer and President Timothy Sloan testifies before Congress Oct. 3, 2017.
Source: Associated Press
Wells Fargo & Co. President and CEO Timothy Sloan spent four hours in front of Congress on March 12, defending his bank's reform efforts while acknowledging that regulators are not yet satisfied.
Sloan said the bank's disclosure that a regulatory cap on assets would remain in place all year, for example, was due to additional feedback from the Federal Reserve "as part of our normal give-and-take."
"They wanted us to make a little more progress in terms of our required improvements under the order, and based upon that, we believe it will take us a little bit longer," he said, declining to offer additional detail since regulatory discussions are confidential.
Sloan's testimony in front of the House Financial Services Committee included tough questions by politicians from both parties. Several Democrats called for the bank to be broken up, arguing that it was too large to manage. Chair Rep. Maxine Waters, D-Calif., offered closing remarks that appeared to suggest Sloan should be personally ousted over the bank's numerous scandals. Waters cited a report by The Wall Street Journal that the Office of the Comptroller of the Currency, one of the bank's regulators, is considering the forced removal of several executives and board members.
"I think the OCC should take this important step, and the regulators should also consider [taking it] with you, Mr. Sloan," Waters said.
The report came up earlier in the hearing, and Sloan said regulators have not communicated that possibility to the bank. "I've had no conversations about that topic with the OCC," he said.
Another news report was featured heavily throughout the hearing. A March 9 article in The New York Times alleged that some employees do not believe the bank's sales culture has changed since the fake accounts scandal broke more than two years ago. Sloan pushed back against the article, calling its conclusions inaccurate while acknowledging the existence of a survey featured in the article that was reported to have highlighted employee concerns.
Some Republicans said they were frustrated by the bank's actions. Ranking Member Rep. Patrick McHenry, R-N.C., said issues of "dishonest sales practices or gross mismanagement" seem to recur after the bank has promised it will improve. And Rep. Andy Barr, R-Ky., said the bank's actions have provided ammunition to banking critics who want to implement regulation that would harm community banks.
Some Republicans were supportive and used their questioning time to back Wells Fargo's decision to continue financing firearm-related companies, a move that several Democrats criticized during the hearing. Similarly, some Republicans criticized Democrats who questioned Sloan about the bank's overdraft fees and use of arbitration agreements.
Other Republicans offered open-ended questions that allowed Sloan to explain how the bank's operational structure has changed since its settlement over the fake accounts scandal. Sloan said the bank has centralized its enterprise risk and control functions, a move he called the bank's most important fundamental change.
"The way that data and information ... is being shared today is completely different," Sloan said. "We connect data in a different way to spot problems across the entire company, and that's fundamental to the changes that we've made since I've become CEO."
Democratic members appeared unimpressed with Sloan's answers. Rep. Gregory Meeks, D-N.Y., said no executives from Wells Fargo have been sufficiently punished for the bank's scandals. He then referred to the regulator's unusual double-downgrade of Wells Fargo Bank NA's Community Reinvestment Act rating and asked whether Sloan thought it was an appropriate action.
"I don't believe it was appropriate," Sloan said.
"Well, then, you don't get it," Meeks said, adding that the bank's numerous fines justified the CRA downgrade.
"He doesn't get it," Waters also said before moving on to the next question.