WASHINGTON (Reuters) – Both Democratic and Republican lawmakers pressed Wells Fargo & Co Chief Executive Tim Sloan for more proof that the bank has moved past its customer abuse scandals in a tense hearing in Congress on Tuesday.
FILE PHOTO: Wells Fargo & Company CEO and President Tim Sloan testifies before the Senate Banking Committee on Capitol Hill in Washington, U.S., October 3, 2017. REUTERS/Aaron P. Bernstein
Sloan is the first bank executive to be grilled by the House Financial Services Committee since it was taken over by Democrats following the 2018 congressional election. A nervous Wall Street is keen to see how hostile the panel will be towards the industry.
The CEOs of Morgan Stanley, Goldman Sachs Group Inc, Citigroup Inc, JPMorgan Chase & Co and Bank of America Corp are expected to appear before the House panel next month.
The hearing could see Sloan clash with Democrats including panel chair and vocal bank critic Maxine Waters, as well as Alexandria Ocasio-Cortez, a rookie lawmaker and leading voice of her party’s progressive wing. Fellow freshman Katie Porter likewise built her campaign on bashing Wall Street.
Waters took a tough line on Sloan as she opened the hearing, recounting Wells Fargo’s numerous missteps, saying the bank had failed to prove it had abandoned harmful policies, and describing it as a “recidivist financial institution.”
“Wells Fargo’s ongoing lawlessnness and the failure to right the ship, suggests the bank … is simply too big to manage,” she added.
Republicans have also criticized Wells Fargo and on Tuesday said they would also be pressing Sloan for proof the fourth-largest U.S. bank has addressed customer abuses.
Patrick McHenry, the ranking Republican on the committee, made it clear in his opening remarks that his party would not go soft on Sloan.
“This is an important hearing and you will hear bipartisan criticism of the actions you have taken and the failures that you have overseen under your watch,” he said.
Stakes are high for 31-year Wells Fargo veteran Sloan, who was appointed CEO when John Stumpf retired soon after the sales practices scandal erupted in 2016. Sloan has faced calls to step down from investors and politicians, including U.S. Senator Elizabeth Warren, a 2020 Democratic presidential contender.
Wells Fargo shares were flat as the hearing started.
Sloan’s prepared remarks emphasized changes the bank has made to culture, sales practices and risk management, as well as efforts to repay wronged customers.
“Wells Fargo is a better bank than it was three years ago, and we are working every day to become even better,” Sloan, 58, will say, according to testimony published by the bank on Monday.
He declined however to give the committee confidential information on the progress of the bank’s various remediation efforts, and firmly rebuffed claims by Waters that the bank should be broken up.
If lawmakers are unhappy with what they hear, they could pressure the Federal Reserve to maintain restrictions imposed on the bank’s growth until governance and risk management improve.
Sloan has not appeared before Congress since a 2017 Senate hearing, where he clashed with lawmakers from both parties.
Wells Fargo has since deployed more lobbyists in Washington and launched a public relations offensive, but remains in politicians’ crosshairs.
The 2016 revelation that Wells Fargo created millions of fake customer accounts prompted regulatory probes into mortgage foreclosures, auto insurance sales and its wealth management businesses, resulting in billions of dollars in fines.
Reporting by Pete Schroeder and Imani Moise; Editing by Michelle Price and Meredith Mazzilli