U.S. Bancorp's Davis: Don't Blame All Banks for You-Know-Whose Problems
Cue the inspirational music.
Describing banking as a "noble occupation," U.S. Bancorp Chief Executive Richard Davis on Wednesday said the public should avoid viewing all banks in a negative light despite recent headlines about questionable business practices in the industry.
He never named Wells Fargo specifically, but fallout from the Wells' phony-account scandal was clearly what he was addressing when he responded to an analyst's question about some recent "issues around cross-selling."
Davis said that the cross-selling abuses are not systemic across banking. He also said that while the industry rarely speaks with one voice, it has made progress since the financial crisis to repair its collective reputation.
"Each bank needs to stand strongly on its own and do right by its customers," Davis said during a conference call on U.S. Bancorp's quarterly results. "If one bank falls away from that, then it's just one bank; it's not an industry."
Davis is known for making lofty speeches about the state of the banking industry. During a presentation last month, for instance, he told investors that the industry can "change the world" by facilitating economic growth.
When the analyst pointed to those remarks Wednesday, Davis suggested that he stood by them despite recent controversy.
Wells Fargo agreed to pay $190 million last month to settle accusations that its employees created fake accounts to meet sales goals. Wells' CEO, John Stumpf, resigned last week, amid snowballing allegations of misconduct.
Davis made a point of distancing himself from the kind of problems facing Wells. He said he has "never, ever" looked at cross-selling ratios and that U.S. Bancorp doesn't impose sales quotas on its bankers.
He also said that consumers rarely need "more than probably two or four services at one time from a bank" at any point in their lives.
During a follow-up interview Wednesday, Andy Cecere, president at the $454 billion-asset company, said that the U.S. Bancorp conducted an internal review after the Wells scandal broke and did not find any issues with cross-selling.
Cecere also said the company has ways to track and quantify company values, including by using employee surveys.
It's an issue that will likely come into focus in the months ahead as regulators become more concerned about the issue of corporate culture.
Davis noted on the call that the Office of Comptroller of the Currency has begun a review of unauthorized new accounts across the industry.
Down the road regulators may expand their reviews, incorporating corporate values in regular examinations of management and board oversight, Davis said.
"I think we're going to have to show sustainably good practices, and that does require us to do a lot more record-keeping, a lot more auditing, a lot more quality assurance," he said.
Davis added that any future reviews will likely show culture as a strong point of the industry.
"I think we're going to find out that that's an area of strength that we can showcase, that banks haven't been able to really put their finger on until now," he said. "Unfortunately, it takes a blemish to bring out the issues, but I think you'll be — the American people will be quite pleased with what they find."