Wells Fargo CEO faces bipartisan scolding, defends bank’s reputation

Wells Fargo Trails Bank Rally Before Tim Sloan's Big Day in Congress

Both Democratic and Republican lawmakers pressed Wells Fargo & Co Chief Executive Tim Sloan for more proof that the bank has moved past its customer abuse scandals in a tense hearing in Congress on Tuesday.

Sloan is testifying before the House Financial Services Committee, led by Rep. Maxine Waters (D-CA).

"You will hear bipartisan criticism of the actions you have taken and the failures that you have overseen under your watch", he said.

On the issue of Wells Fargo's relationship with the private prison industry and the Trump administration's child detention policy, Ocasio-Cortez asked sharply: "Mr. Sloan, why was the bank involved in the caging of children?"

"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", a spokesperson for the Office of the Comptroller of the Currency told CBS MoneyWatch by email. He also said the bank had paid back all customers hit by improper mortgage rate-lock fees and gave a similar answer about auto insurance remediation.

Sloan's prepared testimony is a strong start, "but what really matters is how he responds to the attacks that will be coming (Tuesday)" Jaret Seiberg, a Washington, D.C., bank analyst with Cowen and Company, wrote in a report Monday. Within risk, the company has three "lines of defense" - front-line risk, independent risk management, and audit - to ensure multiple layers of review and to improve internal oversight. Sloan said the bank was not involved in the caging of children although it had provided financing to a company that engaged in prison construction.

Following the revelation that employees opened millions of accounts without customers' permission to meet sales goals, issues have emerged in consumer-lending, wholesale and wealth-management units.

"Wells Fargo's ongoing lawlessness and the failure to right the ship, suggests the bank ... is simply too big to manage", she added, saying later in the hearing that Sloan should step down.

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Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) have both introduced legislation that would break up Wells Fargo, and Warren has been calling for Sloan to be fired since the fake-account scandal broke in late 2016.

Sloan received some backup from Rep. Roger Williams (R-Texas), who said Waters was advocating for "socialism" that would transform the United States into "Venezuela".

Republicans and Democrats alike blasted Sloan and the bank.

Additionally, Wells Fargo's chief technology officer, Scott Dillon, is due to leave the bank at the end of the month. She called Wells Fargo "a recidivist financial institution".

He said one exit was finalized and the other was still pending, but he couldn't remember which was which.

Sloan was the first bank executive to be grilled by the Committee since it was taken over by Democrats. He thanked lawmakers for letting him discuss "the progress we are making as we work to become the most customer-focused, efficient and innovative Wells Fargo ever". "We provide financing to the company that is operating the company", Sloan answered.

The Consumer Financial Protection Bureau ordered Wells Fargo to pay $185 million in penalties and fines in 2016 for creating those unwanted accounts. The committee is also expected to hold a separate hearing with the CEOs of other big banks, such as Jamie Dimon of JPMorgan Chase, soon.

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