CEO Says Wells Fargo Has Transformed After Scandals; Lawmakers Are Skeptical

Wells Fargo CEO Timothy Sloan is questioned by the House Financial Services Committee about revelations the bank had created millions of fake bank accounts to reach their financial goals on Capitol Hill in Washington Tuesday

Rep. Alexandria Ocasio-Cortez (D-N.Y.) grilled Wells Fargo CEO Tim Sloan over the bank's financing of the Dakota Access Pipeline.

"Each time a new scandal breaks, Wells Fargo promises to get to the bottom of it".

While Sloan spoke definitively about how the bank has moved past the fake accounts scandal, he hedged his answer to Rep. Greg Meeks (D-NY), who asked if there were more negative stories about the bank to come: "I can't control the media". But, he said, the bank has made "substantive" changes that will prevent problems from occurring "as best we can".

"We continue to be disappointed with Wells Fargo Bank N.A.'s performance. and its inability to execute effective corporate governance and a successful risk management program", said OCC spokesman Bryan Hubbard.

The bank's stock is trading almost flat Tuesday.

The lender, however, is now operating under 14 consent decrees from federal regulators, and key lawmakers suggested the company is too big to properly manage.

Wells Fargo's scandals have been wide-ranging and costly.

"The reason we were one of the 17 or 19 banks that financed that is because our team reviewed the environmental impact and we concluded it was a risk we were willing to take", Sloan said.

Patrick McHenry, the top Republican on the committee, acknowledged that Sloan has made some progress, but expressed concern that the Fed and the OCC still don't seem comfortable with measures taken so far.

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

On Tuesday, Sloan claimed Wells Fargo customers and workers were responding well to changes in the bank. Wells Fargo has shaken up its executive ranks, raised the minimum wage to $15 an hour and given millions to charity, he told them.

Waters, a Democrat who became head of the committee in January, has been a frequent Wells Fargo critic and represents San Francisco-based Wells Fargo's home state.

At the hearing, Porter asked Sloan whom Congress should believe: Sloan when he says he's fixed things, or his lawyers who say he's just resorting to puffery.

The Federal Reserve took unprecedented action on Wells Fargo's business in February of 2018, forcing the bank to replace four of its directors and capping its growth until the bank developed better risk-management practices.

Still, Beck doubted the House hearing would lead to more drastic penalties on Wells Fargo, like breaking up the bank.

"Mr. Sloan, why was the bank involved in the caging of children and financing the caging of children to begin with?"

The bank's scandals have included millions of unauthorized accounts to meet high-pressure sales goals, improperly repossessing cars, overcharging small businesses for credit card transactions and accidentally foreclosing on homeowners due to a software glitch.

She quickly pivoted to whether Wells Fargo should have to pay for environmental clean-up when one of the projects the bank financed, like the Dakota Access Pipeline, goes awry.

The confrontation with lawmakers underscored how far Wells Fargo has yet to go to win back the public 30 months after it was fined for opening millions of bogus accounts for consumers.

He said one exit was finalized and the other was still pending, but he couldn't remember which was which.

Sloan, in his remarks, pointed to steps such as the addition of seven new members to the bank's board over the past two and a half years.

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