Wells Fargo CEO Defends Bank on Capitol Hill -- Update

By Emily Glazer and Andrew AckermanFeaturesDow Jones Newswires

Wells Fargo & Co. Chief Executive Timothy Sloan defended the bank as U.S. senators pressed him for details about its sales scandal and more recent consumer problems.

Mr. Sloan ticked off a variety of changes Wells Fargo has made to its business over the last year, including those affecting management and customer practices, testifying in front of the Senate Banking Committee on Tuesday.

Continue Reading Below

But it wasn't enough to satisfy some of the bank's most vociferous critics. Sen. Elizabeth Warren (D, Mass.), told Mr. Sloan he "should be fired," calling him "incompetent" and "complicit" during the sales practices scandal for not investigating the problems sooner.

"Wells Fargo needs to start over; that won't happen until the bank rids itself of people like you," she said.

Mr. Sloan apologized for the bank's conduct while defending his role as CEO, pointing to the changes that he's made leading the company over the past year. Though he's a 30-year veteran of the bank, he hasn't worked in the retail and consumer-lending units facing problems.

In a later exchange between the senator and Mr. Sloan, the bank executive said he "couldn't disagree more with almost everything Sen. Warren said," adding that she took statements out of context.

Republican senators questioned Mr. Sloan over more details around the scope of the sales practices problems, largely rehashing what happened. Some senators across the aisle acknowledged Mr. Sloan's visits to their offices in recent days before the hearing, a change of tone from the bank's hearings last year.

Wells Fargo is no stranger to congressional hearings, having endured two last year during its sales practices scandal. But it was Mr. Sloan's first time in front of the committee, housed Tuesday in a packed room of about 75 people in the Dirksen Senate Office Building.

Mr. Sloan replaced former chief John Stumpf after the former executive abruptly retired about a year ago. During Tuesday's hearing, he addressed questions on topics including forced arbitration, which deals with the legal forum that handles customer claims against the bank.

The Senate hearing largely focused on the bank's sales practice problems, which led to the opening of potentially 3.5 million accounts for customers without their knowledge. Questions focused on how such a thing could happen and why executives didn't act sooner.

Mr. Sloan also said during the hearing the bank is reaching out to 108,000 customers for refunds over separate mortgage problems. Wells Fargo in recent months has disclosed problems around certain mortgage services as well as auto-insurance charges to customers resulting in refunds of around $80 million.

Sen. Warren was among Mr. Sloan's toughest interrogators, following up on her rhetoric after the scandal broke last year. Then, she said Mr. Stumpf should be fired. Now, she says Mr. Sloan made remarks to investors over the years that she claims were "pumping up the stock price, bragging about a record number of new accounts."

Sen. Warren was the only senator to call for Mr. Sloan's firing. Other Democratic senators asked if Wells Fargo would commit to no longer using forced arbitration clauses, which limit consumers to using arbitration to resolve disputes over financial services. Mr. Sloan did say he'd try to minimize the number of customer disputes that go to arbitration.

"Limiting the number of times is good, but give them their day in court, " Sen. Sherrod Brown (D, Ohio) said.

The debate around Wells Fargo's arbitration policies are part of a Senate fight over a Consumer Financial Protection Bureau rule approved in July barring fine-print requirements over forced arbitration.

Democrats are fighting GOP-led efforts to use legislation to kill the rule, saying forced arbitration diminishes legal protections for everyday people and prevents them from joining together to bring class-action lawsuits.

Critics in the financial industry and Republicans in Congress say arbitration provides a faster and more cost-effective way to resolve disputes with consumers.

Write to Emily Glazer at emily.glazer@wsj.com and Andrew Ackerman at andrew.ackerman@wsj.com

(END) Dow Jones Newswires

October 03, 2017 13:57 ET (17:57 GMT)