Sen. Elizabeth Warren, D-Mass., told Wells Fargo President and CEO Timothy Sloan on Tuesday that he should be fired and renewed her call to the Federal Reserve to remove all of the bank’s board members who served during the fake-accounts scandal.
“You enabled this fake-accounts scam and you covered it up,” Warren said to Sloan during a Senate Banking Committee hearing titled “Wells Fargo: One Year Later.”
“At best you were incompetent, at worst you were complicit,” Warren said to Sloan. “Either way, you should be fired.”
Wells Fargo “needs to start over, and that won’t happen until the bank rids itself of people like you who led it into this crisis,” she told Sloan, a 30-year veteran of the bank who served as its chief financial officer when it was revealed that the bank created millions of fake accounts and collected unnecessary fees from clients.
Sloan responded to Warren by stating: “Since I’ve become CEO, I’ve made fundamental changes to address the issues that we’re talking about today.”
During his testimony, Sloan, who took over as CEO after former Wells Fargo chief John Stumpf resigned last year, told the lawmakers that he is “deeply sorry for letting down our customers and team members,” and that he apologized “for the damage done to all the people who work and bank at this important American institution.”
When the challenges at Wells Fargo “demanded decisive action, the bank’s leaders acted too slowly and too incrementally. That was unacceptable,” Sloan continued.
“I also want to be clear about another thing: Wells Fargo is a better bank today than it was a year ago. And next year, Wells Fargo will be a better bank than it is today. That is because we have spent the past year determined to earn back the public’s trust.”
Sloan detailed the changes at Wells Fargo over the past year, including “dramatically” overhauling its community bank’s “leadership, its organization, and its incentives,” stating that “at every level of the bank, our efforts focus squarely on the needs of our customers, not on achieving product sales goals.”
Wells Fargo, Sloan continued, has “eliminated product sales goals for retail bankers. Those goals contributed to a high-pressure sales environment that failed our customers. In some cases, these goals even resulted in customers receiving products they never requested or realized they had.”
The bank, he said, has also “made oversight and compliance much more effective than a year ago,” and has set up a Conduct Management Office with companywide responsibility for investigations and complaints.
Of the later probe that found 1.4 million more fake accounts, boosting the total to potentially 3.5 million, Sloan said, “it is important to note that these are not ‘new’ instances of possible misconduct since last fall; they are newly revealed instances of possible misconduct based upon our own expanded investigation of the years before 2017.”
Of the total of 3.5 million accounts, he said, approximately 190,000 incurred fees and charges.
Wells Fargo, he stated, “will provide a total of $2.8 million in additional refunds and credits on top of the $3.3 million previously refunded as a result of the original account review. Our commitment is to refund all fees and all charges imposed with respect to any accounts and services that proved to be unauthorized.”
But the senators were also up in arms about the bank’s use of mandatory arbitration, which Sloan said the bank would continue to use.
Sen. Sherrod Brown of Ohio, the top Democrat on the committee, stated that Wells Fargo used mandatory arbitration to hide the scandal.
“Many of your competitors have committed to stop the practice of forced arbitration,” Brown said, and then asked Sloan if he would “commit to the committee today that Wells Fargo will quit using forced arbitration?”
Sloan responded: “No, I won’t, Senator. When I hear the word arbitration, what I hear is the word failing.”
Sen. Jon Tester, D-Mont., asked Sloan if he would “commit to not use forced arbitration on accounts that were not set up with the consent of the customer?”
Sloan replied: “Yes. If we have set up an account that was inappropriately or fraudulently set up, we’re going to make it right by them.”