Three big questions as Wells Fargo’s CEO heads to Capitol Hill
Will Tuesday be an uphill battle or mission impossible?
That’s the overarching question facing Wells Fargo CEO Tim Sloan as he prepares to testify before the House Financial Services Committee. The hearing is expected to be a marathon session, as Sloan fields questions from most, if not all, of the committee’s 60 members.
The task before Sloan is simple, though hardly easy: Demonstrate that the bank has addressed chronic operational problems and turned over a new leaf.
Wells has faced “unprecedented and well-deserved scrutiny,” Sloan said in his written testimony, published Monday in advance of the hearing.
“We have gone above and beyond what is required in disclosing [problems at the bank] in our public filings, we have worked to remedy these issues, and, most importantly, we have worked to address root causes that allowed them to occur in the first place,” he added. “As a result, Wells Fargo is a better bank than it was three years ago, and we are working every day to become even better.”
Following are three big factors that will likely determine Sloan’s success before the committee — and help shape the bank’s broader efforts at rewriting the public narrative surrounding it.
Can Sloan stay on message?
It won’t be easy. To be sure, Wells has made numerous changes since its fake-accounts scandal came to light in 2016. It has reportedly centralized its organizational structure, improved its risk management, realigned incentives for retail bankers and donated more than $400 million to nonprofits and community groups, among other updates.
But keeping lawmakers focused on those reforms and not the bank’s various misdeeds is likely to prove difficult.
That’s especially true in light of a new report published Monday by the Committee for Better Banks, a group trying to unionize bank employees, arguing that some Wells workers continue to feel heavy pressure to upsell customers, despite changes to sales practices. The New York Times reported on the concerns over the weekend as well, adding fuel to the fire ahead of Tuesday’s hearing.
A spokesman for Wells called the group’s report “inaccurate” in a written statement, noting that “we strongly disagree with the characterization of our sales culture.”
Will Sloan’s job security become an issue?
Sen. Elizabeth Warren, D-Mass., has led the charge for years in arguing that Sloan should be fired. Yet while House Democrats have knocked the bank countless times for past misconduct, Sloan himself has not come under the microscope in the same way in the chamber.
But that could change this session, particularly with the addition of several outspoken freshman lawmakers — including Reps. Alexandria Ocasio-Cortez, D-N.Y., Katie Porter, D-Calif., and Rashida Tlaib, R-Michigan — who could be more inclined to make Sloan’s tenure a central focus.
The bank has repeatedly said that the CEO has the full support of the board of directors, but questions about his position and whether he deserves to remain at the bank’s helm could derail efforts to underscore the positive changes Wells has made in recent years.
To this end, it will be incumbent on Sloan to stress that the bank takes genuine responsibility for its past actions and the harm they caused. Any indications that the bank is under siege or has been unfairly singled out, as Sloan has suggested in the past, are likely to fall flat and could further the bank’s — and his own — position in the political crosshairs.
Will House Democrats land any blows?
While Sloan’s performance will be the most critical factor on Tuesday, observers will also be watching House lawmakers, especially Democrats, to see whether they’re able to break new ground in the debate over the megabank.
Consumer Financial Protection Bureau Director Kathy Kraninger emerged relatively unscathed last week after her appearance before the House committee, despite strong concerns from the left about the agency’s practices under Republican control.
This is a particular issue for blockbuster hearings with the likes of Kraninger and Sloan. With so many lawmakers asking questions, any number of topics is likely to be broached — from sales practices to pot banking to the Community Reinvestment Act — potentially watering down the overall effect of the event for the bank’s harshest critics.
Still, ultimately, the event remains Sloan’s to win or lose in persuading the public that the bank has changed its ways for good.
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