Wells Fargo CEO Tim Sloan took a bipartisan battering in front of the House Financial Services Committee, as lawmakers blasted the executive for a series of scandals engulfing the bank.
Those scandals include opening millions of customer accounts without permission, charging service members illegal fees and charging customers for unnecessary automobile-insurance payments. The Federal Reserve took the unprecedented step of capping the bank’s assets.
Chairwoman Maxine Waters, a California Democrat, called the bank “too big to manage” as ranking member Patrick McHenry, a North Carolina Republican, got the CEO to admit that the bank is operating under 14 different consent decrees from federal regulators.
“Each time a new scandal breaks, Wells Fargo promises to get to the bottom of it and promises to make sure it doesn’t happen again. Then, a few months later, we hear about another case of dishonest sales practices or gross mismanagement,” McHenry said.
Asked if there were more scandals to come, Sloan said he was not aware of any. In prepared testimony, Sloan said he was there to discuss the transformation of the bank into “the most customer-focused and innovative Wells Fargo ever.”
Other highlights:
• Waters told Politico after the hours-long hearing that she is planning a committee vote on legislation to break up any bank that had a pattern of repeated consumer violations.
• Sloan said he’s had no conversations with the Office of the Comptroller of the Currency about pushing out top executives. The Wall Street Journal reported the bank regulator is considering that move and that it is considering assessing a special fee on the bank because it’s spent so much time dealing with the bank.
An OCC spokesman said: “We continue to be disappointed with Wells Fargo Bank N.A.’s performance under our consent orders and its inability to execute effective corporate governance and a successful risk management program. We expect national banks to treat their customers fairly, operate in a safe and sound manner, and follow the rules of law.”
• Unlike Citigroup C, +0.80% , Wells Fargo has not required those it lends to in the firearms industry to adopt background checks and prohibit gun sales to teenagers. That drew criticism from Rep. Carolyn Maloney, a New York Democrat, and praise from Rep. Sean Duffy, a Wisconsin Republican.
• Rep. Katie Porter, a California Democrat, asked Sloan about a 2017 statement about restoring trust and all key stakeholders. When Sloan agreed that the statement “means something” to him, she then asked Sloan why lawyers for the bank in a federal court called them “paradigmatic examples of non-actionable corporate puffery, on which no reasonable investor should rely.”
Wells Fargo shares WFC, -0.22% edged lower on Tuesday. The stock over the past 52 weeks is down about 14%, compared with a roughly flat performance for the S&P 500 SPX, +0.30% over the same period.