Wells Fargo’s CEO says the bank has changed
Wells Fargo CEO Tim Sloan says the bank has changed and abandoned its scandalous past. But Congress has its doubts.
Sloan will face skeptical lawmakers when he testifies in front of the House Financial Services Committee on Tuesday. He’ll try to convince House members that Wells Fargo has become a “better bank,” according to prepared remarks.
The CEO plans to lay out how Wells Fargo has addressed the aggressive sales tactics that led to the creation of millions of fake accounts and other issues, such as charging thousands of customers for auto insurance they didn’t need and imposing unwarranted mortgage fees on homeowners.
On Monday, the bank released a progress report detailing its “transformation” since September 2016. It highlighted leadership shakeups at the company and new measures aimed at curtailing risk.
“While we have more work to do, we’ve worked hard over the past two years to address the root causes of our mistakes, make things right for team members and customers, and lay the foundation for a better company,” Sloan said in a press release.
For Sloan, who has been in charge for more than two years, the stakes of the hearing are high.
Wells Fargo remains embroiled in legal trouble on the federal and state level, and impatience with the pace of the bank’s turnaround efforts is growing.
The Federal Reserve has yet to remove the unprecedented asset cap it placed on Wells Fargo in early 2018 for “widespread consumer abuse,” which keeps the bank from growing.
Senator Elizabeth Warren, a Democrat who is running for president, continues to call for Sloan to be fired.
The hearing will provide insight on how much political trouble Wells Fargo still faces, even if little of substance comes out of it.
“If the bank gets some support, it could suggest that the political environment is improving enough for the Federal Reserve to lift the asset cap late this year,” Cowen analyst Jaret Seiberg said in a note Monday. “Absent political support, risk rises that cap stays well into 2020.”
The tone could depend in part on Chairman Maxine Waters, a Democrat who has previously suggested that regulators should shut down Wells Fargo entirely because of its customer abuses.
Seiberg points out that Waters represents Los Angeles, where the fake account controversy first surfaced. As a result, she may feel the need to be combative with Sloan on behalf her constituents, he said.
“If Sloan can appease Waters at the hearing, then it would represent a major step for the bank in getting past these troubles,” Seiburg said. “But if the two engage in a verbal sparring match, then the bank is likely to face at least another 18 months of political attacks.”
— CNN Business’ Matt Egan contributed to this report.