Thursday, 21 March, 2019

Wells Fargo CEO draws bipartisan ire in Congress hearing

Wells Fargo Trails Bank Rally Before Tim Sloan's Big Day in Congress Wells Fargo Lawyers: Our CEO Is Full Of 'Corporate Puffery'
Priscilla Morrison | 15 March, 2019, 13:27

Rep. Alexandria Ocasio-Cortez (D-N.Y.) grilled Wells Fargo CEO Tim Sloan on Tuesday over the bank's financing of private prisons.

Timothy Sloan testified in the House Financial Services Committee Hearing meant to hold "megabanks" accountable. Sloan would not commit to say whether Wells would consider backing a law that let customers who believed they had been defrauded or misled sue banks rather than be forced into arbitration.

Wells Fargo has undergone a radical transformation since it was mired in scandals that resulted in billions of dollars in penalties and fines, the bank's CEO, Tim Sloan, told lawmakers Tuesday.

But just hours after the hearing ended, one of the bank's chief regulators, the Office of the Comptroller of the Currency, indicated that Wells Fargo has a long way to go.

In another case, last year, the CFPB imposed a $1 billion fine against Wells Fargo for overcharging customers for mortgages and auto loans. Within risk, the company has three "lines of defense" - front-line risk, independent risk management, and audit - to ensure multiple layers of review and to improve internal oversight.

"No, we're not", Sloan said.

In his response, Sloan announced that the bank is in the process of cutting ties with one group and has already stopped financing another-information that wasn't publicly known before the hearing.

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.

"Because we don't operate the pipeline", Sloan replied.

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Sloan, who made $60.4 million working for the bank before the fake-account scandal broke in 2016, has been saying this kind of thing for years now. "It is an ongoing commitment by all of Wells Fargo's 260,000 team members - starting with me - to put our customers' needs first; to act with honesty, integrity, and accountability", Sloan stated in his prepared statement.

Wells Fargo has admitted to several misdeeds over the past two years: opening millions of accounts that customers didn't want or ask for; improperly repossessing thousands of cars, including from some members of the military; mistakenly foreclosing on hundreds of homeowners; and miscalculating the fees it charges customers.

Committee Chair Maxine Waters opened by recounting Wells Fargo's missteps, saying the bank had failed to prove it had abandoned harmful policies.

The committee's ranking Republican Patrick McHenry made it clear that his party would not go soft on the country's fourth-largest US bank as they sought evidence it had remedied customer abuses.

After the hearing, the Office of the Comptroller of the Currency, which previous year fined Wells Fargo $1 billion for faulty mortgage and insurance products, echoed comments made by its head in October that the bank still had much work to do to.

Other scandals engulfing the biggest United States mortgage lender have included selling auto insurance and other financial products to customers who didn't need them; charging service members higher rates on loans than allowed by law; and improperly selling complex financial products to retail investors.

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 panel next month.

Sloan said since assuming the role of chief executive, he's implemented a culture where the customer comes first.

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