Wells Fargo chief executive Charles Scharf sought to convince lawmakers Tuesday that he could turn around the scandal-ridden bank after years of regulatory lapses, bipartisan outrage and billions of dollars in fines and settlements.
Scharf, the bank’s fourth CEO since 2016, told the House Financial Services Committee that he is working tirelessly to transform a bank that abused its customers and failed to abide by orders from regulators to overhaul its internal controls.
“The things that I have done since I have come to Wells Fargo are in stark contrast to how we’ve approached some of the issues in the past,” Scharf said.
“The sense of urgency that people are working with inside the company is very different today than it was four months ago,” Scharf continued. “We’ve not done what’s necessary to be done, but it is possible to do it.”
Scharf’s testimony came on a dramatic day, with House Financial Services Chairwoman Maxine Waters (D-Calif.) referring one of his predecessors, ex-CEO Timothy Sloan, to the Department of Justice (DOJ). Waters called on the DOJ to investigate whether Sloan violated federal law and lied to Congress when he testified over the bank’s oversight failures.
Lawmakers largely spared Scharf, who joined Wells Fargo in October, from the wrath faced by his two predecessors. Both of Wells Fargo’s former chief executives spent decades at the bank overseeing the sales practices that landed the company in unprecedented legal and political trouble, misleading lawmakers and regulators along the way.
Even so, Democrats and Republicans made clear that Scharf must answer for four years of building bipartisan rage among lawmakers — some of whom called for Wells Fargo to be broken up, its directors to resign and his predecessors to be prosecuted.
“I will note that each time a Wells Fargo CEO has testified before this committee, he has resigned soon thereafter,” warned Waters.
“While I certainly wish you luck, it is clear to this committee that the bank you inherited is essentially a lawless organization that has caused widespread harm to millions of consumers throughout the nation.”
Scharf’s appearance comes less than a week after Democrats and Republicans on the Financial Services committee each issued dueling reports blasting Wells Fargo for failing to satisfy the demands of regulators and showing little urgency to prove the bank could be trusted.
Wells Fargo has been forced since 2018 to comply with consent orders issued by the Federal Reserve Board, Consumer Financial Protection Bureau and Office of the Comptroller of the Currency. The regulators ordered Wells Fargo to overhaul the bank’s process for repaying the consumers it harmed and overseeing its sales practices for fraud and abuse.
Former CEO Sloan assured lawmakers in March 2019 that the bank was in compliance with those orders and making substantial internal changes. But emails obtained by the committee showed that Wells Fargo executives repeatedly submitted incomplete plans to regulators, waived off their reprimands, and misled Congress about the bank’s progress.
Two Wells Fargo directors criticized in the reports — who are due to testify Wednesday — have since resigned.
“I am cautiously optimistic that you are the right man for the job to bring the bank into compliance and put these scandals to rest,” said Rep. Ann Wagner (R-Mo.). “What makes you different from your predecessors, to adequately address and resolve these deep-seated issues within Wells Fargo?”
Scharf said that the conduct outlined in the reports “should have never happened at the company” and were a “direct result of us not managing the company properly.”
Scharf touted his hiring of a chief operating officer from outside the company to oversee a centralized team focused on complying with regulators among his moves to steer the bank toward the good graces of Washington. He also pointed to efforts to centralize oversight of the bank’s divisions, change company culture through staff and compensation, and reimagine the ways it can repay its customers for wrongdoing.
“As we sit here today, we have not yet re-earned the trust that would like the Wells Fargo name to represent,” Scharf said. “We in fact can do that.”
Scharf’s sober testimony and distance from Wells Fargo’s old regime shielded him personally from the anger of most lawmakers. While his predecessors often fielded calls for their resignation when appearing before the committee, Scharf was repeatedly asked why he even bothered to take the job.
Instead, most of the sharpest rebukes thrown by lawmakers Tuesday were toward each other.
As Democrats argued that Wells Fargo could be too big to manage, Republicans accused the committee’s majority of using the bank’s offensive conduct to smear big competitor banks with clean records. The panel also engaged in side debates over the growing pressure from the left on banks to refuse service to the firearms and fossil fuel industries.
Waters and Rep. Patrick McHenry (N.C.), the panel’s top Republican, clashed over the findings and timing of their dueling reports
“They tried to rush a report out before we got ours out. This ranking member would like to have it both ways” Waters said to McHenry.
“We can have this debate in front of everyone or we can get on with it,” McHenry replied. “Don’t take shots at me without giving me a chance to respond.”
Updated at 3:09 p.m.