It's safe to assume that the new CEO of Wells Fargo (NYSE: WFC), Tim Sloan, isn't looking forward to a relaxing weekend.
Continue Reading Below
On Tuesday, Sloan is set to testify before the Senate Banking Committee. The hearing, titled "Wells Fargo: One Year Later," will focus on the progress that the bank has made since it was revealed last year that thousands of its employees had opened up millions of accounts for its customers without their authorization to do so.
It's bound to be an uncomfortable experience, if the reception that former Wells Fargo CEO John Stumpf received in the same chambers 12 months ago is anything to go by. To make matters worse, Sloan is still new to the job, and the entire time he's spent in the corner office has consisted of crisis management, so he hasn't developed the outward trappings of confidence that one associates with a leader of an institution of Wells Fargo's size.
But while few people would trade places with Sloan on Tuesday, the hearing is a once-in-a-lifetime opportunity for him to shine as a leader. Leaders become great by leading through adversity, after all.
He will almost certainly face withering criticism, especially from the likes of Elizabeth Warren, the senator from Massachusetts who's essentially called for the entire board of directors at Wells Fargo to step aside in the aftermath of the fake-account scandal.
But Sloan won't be going in empty-handed. He holds the reins to one of the finest and most distinguished brands in the history of American finance. I would even go so far as to argue that it's the single most distinguished brand in American banking.
Continue Reading Below
JPMorgan Chase is obviously in contention, but it was founded decades after Wells Fargo, by John Pierpont Morgan. Also in the running are American Express, which was founded by the same people who started Wells Fargo, and The Bank of New York Mellon, which was founded by Alexander Hamilton.
Yet no bank has an image as iconic as the stagecoach. The other day I was talking with a respected bank executive, who recounted how a rival California bank that he was an executive at decades ago spent years trying to come up with a symbol that could rival Wells Fargo's and the eagle that once graced Bank of America's logo. But the effort was to no avail.
And it isn't just an enduring symbol that Sloan can bring to bear. He also has an opportunity to educate consumers and policymakers about Wells Fargo's rich history of protecting its customers' money through a century and a half of this country's rapid but tumultuous growth.
Wells Fargo's original purpose was to ferry gold safely from California to the East Coast during the California Gold Rush, which spurred a historic human migration to the San Francisco Bay Area and flooded the growing U.S. economy with gold, the principal means of exchange at the time.
The journey was perilous, not only on the stagecoaches, which were vulnerable to robbery, but also on the steamships that plied back and forth between the coasts. And while Wells Fargo wasn't the biggest or oldest stagecoach in the area at the time, it is the only one that would even remotely ring a bell in the minds of Americans today.
The reason its competitors were forgotten is because they failed in 1855, three years after Wells Fargo's founding. There had been a drought in the area the previous year that made placer mining for gold impossible, which in turn caused an acute economic crisis in the region. Of the three major stagecoach lines in the area, only Wells Fargo survived.
To anyone versed in the history of banking, and of Wells Fargo in particular, this event symbolizes the strength of the Wells Fargo brand. Over the following century and a half, the United States experienced 17 major banking crises, claiming the lives of over 17,000 banks.
The most recent example was the financial crisis of 2008-09, from which Wells Fargo not only emerged in one piece, but actually gained strength through its acquisition of its larger East Coast rival Wachovia. And that acquisition didn't rely on government support, as would have been the case had Citigroup prevailed in its attempt to buy the bank.
The point is, Sloan has a lot of ammunition to bring to bear about how much Wells Fargo has done for the United States since its founding 165 years ago. It's kept customers' money safe, and it's fueled the growth of countless consumers and businesses throughout the years.
Don't get me wrong: Sloan must be repentant and humble when he testifies. But he should use this opportunity to emerge as a genuine leader by putting Wells Fargo's recent sales scandal into perspective for policymakers and anybody watching.
The bank made a monumental error -- there's no doubt about that. And the bank can no longer afford to be arrogant and holier-than-thou, as it has come to be known in the bank industry. But this past year is an anomaly in Wells Fargo's long and otherwise distinguished history.
We'll see on Tuesday if Sloan can repair the bank's image, but that's what stakeholders in the company, including employees and investors, should be watching for.
10 stocks we like better than Wells Fargo
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Wells Fargo wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of September 5, 2017