WASHINGTON -- Wells Fargo's CEO Timothy Sloan on Tuesday defended the bank against criticism from lawmakers that it has not done enough to reform itself since admitting last year it had opened millions of fake accounts customers didn't want.
"I am angry about how we handled these problems," Sloan told the Senate Banking Committee. "We can never let something like this happen again."
The bank has overhauled its community banking division where the problems occurred, ditched the aggressive sales goals that led some employees to open fake accounts and clawed back millions in bonus money from senior executives, he said.
Sloan's sales pitch appeared to fail to impress skeptical lawmakers. "What in God's name were you thinking? I am not against big, but with all due respect, I am against dumb. I am against a business practice that has puts Wells Fargo first and customers second," said Sen. John Neely Kennedy, R-La. The changes the company has made "are not sufficient to reform a corporate culture that is willing to abuse its customers and employees in an effort to pad its numbers and increase executive compensation," said Sen. Sherrod Brown, D-Ohio, ranking Democrat on the committee.
In one exchange, Sen. Elizabeth Warren, D-Mass., a longtime Wall Street critic, questioned whether Sloan's 30 years experience at the bank made him the right choice to overhaul its corporate culture. Warren brought out a large black binder filled with the transcripts of statements Sloan had made to investors over several years, noting how in several cases he appeared to be bragging about the company's sales culture. "No one bragged more," she said.
By focusing on the company's track record for opening new accounts, Sloan helped increase the company's stock price, she said. But it was that aggressive sales culture that led Wells Fargo employees to open millions of fake accounts, she said.
"At best, you were incompetent, and at worst, you were complicit," Warren told him. "Either way, you should be fired."
Sloan, who was wearing and red-and-gold Wells Fargo pin, defended his track record at the bank and said Wells Fargo was doing more right than wrong.
"The reason I am the right person [to lead the bank is], I have been making changes at this company for 30 years," Sloan said. His knowledge of the bank allowed him to make fundamental changes, he said. "I am not afraid to make hard decisions."
Warren shot back "Are you kidding?" There is a broken culture at Wells Fargo that still needs to be changed, she said. "Wells Fargo is not going to change with you in charge."
The exchanges between Sloan and lawmakers were similar to the beating Wells Fargo took on Capitol Hill last year when its former chief executive John Stumpf was pummeled by lawmakers for hours as he attempted to explain why the mega bank had created millions of fake accounts that customers didn't want or need. After a dismal performance, Stumpf stepped down.
Sloan acknowledged that precedent, saying he was determined to do better. "When my predecessor testified here last year, we had not fully grappled with the damage the sales practices scandal had done to our customers, our team members, and their trust in the bank," Sloan said. "But I heard you -- and I heard our customers and our team members -- loud and clear. You expect us to do better, and so do we."
At times Sloan appeared frustrated as he was repeatedly interrupted by lawmakers during the more than two-hour hearing. He repeatedly apologized for the bank's conduct and was stern when they pressed him on some issues, including when questioned about Wells Fargo's practice of requiring customers to agree to settle disputes with the bank through arbitration rather than by filing a class-action lawsuit.
"Will you commit to this committee that you will stop requiring forced arbitration?" Brown said.
"No, I won't, senator," Sloan said.
Business on 10/04/2017