Call it a movie that features a less than-thrilled-to-have-top-billing star.
Call it Mr. Sloan Goes to Washington.
As has been widely reported, the scandals engulfing Wells Fargo have stretched out over two years, focused on fake accounts, mortgages, auto loans and seemingly no end of scrutiny on Capitol Hill.
That all may came to a head, or at least was in the spotlight, as CEO Timothy Sloan appeared on Tuesday (March 12) before the House Financial Services Committee, which as The Wall Street Journal reports has now come under control of the Democratic Party, with “a decidedly populist tilt.”
Sloan’s appearance was be solo, and the testimony touched on the aforementioned scandals, which touch on pretty much all aspects of the company’s business. The regulatory actions against Wells are likely to continue, as a “person familiar with the matter,” — thus, an unnamed source — told the Journal that the Office of the Comptroller of the Currency (OCC) may force out additional executives or directors of the company. To add a price tag to it all, the WSJ notes that the OCC has spent “so much time” on Wells that a “special fee” may accompany those actions. As reported, Hope Hardison, chief administrative officer, and David Julian, chief auditor, were placed on leave toward the end of 2018.
And the staffing shuffle, we think, that may be a bit of a wild card, and where speculation may loom that Sloan’s own perch may be less than secure. After all, the OCC has the ability, drawn from enforcement action taken last year, to replace the bank’s top ranks, and the unnamed source has said “it may consider using” that power (though no definitive conclusion is in the offing).
For now, testimony that Sloan prepared ahead of the hearing stated that the bank is tackling the “root causes” of the issues surrounding the bank, and Wells now exists as a “better bank” than has been seen in the past, before he took his top spot at Wells in 2016.
In what was termed a “rare” rebuke, the OCC said through a spokesperson’s written statement, as reported by the financial publication, that “We continue to be disappointed with [Wells Fargo’s] performance under our consent orders and its inability to execute effective corporate governance and a successful risk management program. We expect National Banks to treat their customers fairly, operate in a safe and sound manner, and follow the rules of law.”
If Wall Street is an indication, at least some observers remain unimpressed, as the stock has been flat while other bank stocks have soared by tens of percentage points. And, the news outlet noted, government actions have continued against the company, as the Fed limited Wells’ ability to grow its asset base, and that mandate will be in place at least through the end of 2019. Elsewhere, the Consumer Financial Protection Bureau, in tandem with the OCC, levied a $1 billion fine on Wells in the wake of deficiencies in process and risk management tied to auto and mortgage lending, and where the bank charged inappropriate fees on hundreds of thousands of clients.