WASHINGTON (AP) — The CEO of beleaguered Wells Fargo told Congress Tuesday that the bank has cleaned up its act after a series of scandals that affected millions of customers.
But Democrats — and some Republicans — on the House Financial Services Committee didn’t seem to be buying it.
Wells Fargo & Co. President and CEO Tim Sloan told the committee the bank is compensating customers who had been harmed, strengthening risk management and internal controls, and improving the culture at the consumer banking giant. Wells has paid billions of dollars in fines to regulators for consumer abuses in virtually every part of its business.
Sloan was grilled by lawmakers about the scandals and about how the San Francisco bank planned to make amends and be a more consumer-friendly bank.
Committee Chair Maxine Waters cited the bank’s “ongoing lawlessness” and said its $1.9 trillion in assets was “too big to manage,” which became a theme of the questioning.
Several times, Sloan said he didn’t think the bank’s enormity was its issue.
“I think in fact there’s a place for every size bank in this country — small, medium and large,” Sloan said. He added that larger banks have the ability to invest in products and services, like real-time balance alerts, that smaller and mid-size banks probably can’t.
Sloan was also pointedly questioned by Rep. Brad Sherman of California about the bank’s use of forced arbitration, even in cases where customers had accounts opened in their name without their knowledge. 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.
Among a litany of scandals in recent years was Wells’ acknowledging that its employees had opened up to 3.5 million accounts without customers’ authorization or knowledge in order to meet sales quotas. 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.
Other scandals engulfing the biggest U.S. 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.
Several lawmakers noted that Wells had been fined by every agency it is regulated by and Sloan said that by his count, the bank is currently under 14 consent decrees with those agencies.
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