Wells Fargo CEO Defends Bank on Capitol Hill -- 2nd Update
October 03 2017 - 2:36PM
Dow Jones News
By Emily Glazer and Andrew Ackerman
Wells Fargo & Co. Chief Executive Timothy Sloan defended the
bank's handling of its sales scandal and more recent consumer
problems as the executive faced some tough questions and one call
for his departure.
Mr. Sloan ticked off a variety of changes Wells Fargo has made
to its business over the last year, including those affecting
management and customer practices, testifying in front of the
Senate Banking Committee on Tuesday.
But it wasn't enough to satisfy some of the bank's most
vociferous critics. Sen. Elizabeth Warren (D, Mass.), told Mr.
Sloan he "should be fired," calling him "incompetent" and
"complicit" during the sales practices scandal for not
investigating the problems sooner.
"Wells Fargo needs to start over; that won't happen until the
bank rids itself of people like you," she said.
Mr. Sloan apologized for the bank's conduct while defending his
role as CEO, pointing to the changes that he's made leading the
company over the past year. Though he's a 30-year veteran of the
bank, he hasn't worked in the retail and consumer-lending units
facing problems.
In a later exchange between the senator and Mr. Sloan, the bank
executive said he "couldn't disagree more with almost everything
Sen. Warren said," adding that she took statements out of
context.
Republican senators questioned Mr. Sloan over more details
around the scope of the sales practices problems, largely rehashing
what happened. Some senators across the aisle acknowledged Mr.
Sloan's visits to their offices in recent days before the hearing,
a change of tone from the bank's hearings last year.
Wells Fargo is no stranger to congressional hearings, having
endured two last year during its sales practices scandal. But it
was Mr. Sloan's first time in front of the committee, housed
Tuesday in a packed room of about 75 people in the Dirksen Senate
Office Building.
Mr. Sloan replaced former chief John Stumpf after the former
executive abruptly retired about a year ago. During Tuesday's
hearing, he addressed questions on topics including forced
arbitration, which deals with the legal forum that handles customer
claims against the bank.
The Senate hearing largely focused on the bank's sales practice
problems, which led to the opening of potentially 3.5 million
accounts for customers without their knowledge. Questions focused
on how such a thing could happen and why executives didn't act
sooner.
Mr. Sloan also said during the hearing the bank is reaching out
to 108,000 customers for refunds over separate mortgage problems.
Wells Fargo in recent months has disclosed problems around certain
mortgage services as well as auto-insurance charges to customers
resulting in refunds of around $80 million.
Sen. Warren was among Mr. Sloan's toughest interrogators,
following up on her rhetoric after the scandal broke last year.
Then, she said Mr. Stumpf should be fired. Now, she says Mr. Sloan
made remarks to investors over the years that she claims were
"pumping up the stock price, bragging about a record number of new
accounts."
Sen. Warren was the only senator to call for Mr. Sloan's firing.
Other Democratic senators asked if Wells Fargo would commit to no
longer using forced arbitration clauses, which limit consumers to
using arbitration to resolve disputes over financial services. Mr.
Sloan did say he'd try to minimize the number of customer disputes
that go to arbitration.
"Limiting the number of times is good, but give them their day
in court, " Sen. Sherrod Brown (D, Ohio) said.
The debate around Wells Fargo's arbitration policies are part of
a Senate fight over a Consumer Financial Protection Bureau rule
approved in July barring fine-print requirements over forced
arbitration.
Democrats are fighting GOP-led efforts to use legislation to
kill the rule, saying forced arbitration diminishes legal
protections for everyday people and prevents them from joining
together to bring class-action lawsuits.
Critics in the financial industry and Republicans in Congress
say arbitration provides a faster and more cost-effective way to
resolve disputes with consumers.
Write to Emily Glazer at emily.glazer@wsj.com and Andrew
Ackerman at andrew.ackerman@wsj.com
(END) Dow Jones Newswires
October 03, 2017 14:21 ET (18:21 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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