03/10/2020 - Holding Wells Fargo Accountable: CEO Perspectives on Next Steps...- (EventID=110665)
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Tuesday, March 10, 2020 (10:00 AM) - Holding Wells Fargo Accountable: CEO Perspectives on Next Steps for the Bank that Broke America’s Trust
The witness for this hearing is:
• Charles W. Scharf, Chief Executive Officer (CEO) and President, Wells Fargo & Company
In 2016 and 2018, Wells Fargo Bank, , and its holding company, Wells Fargo &
Company (collectively, “Wells Fargo”) entered into five consent orders with the Consumer
Financial Protection Bureau (“CFPB”), the Office of the Comptroller of the Currency (“OCC”),
and the Federal Reserve System (“Federal Reserve”) to settle the regulators’ allegations of
widespread consumer abuses and compliance failures within Wells Fargo. In February 2019,
Chairwoman Waters, initiated an investigation into Wells Fargo’s progress toward designing and
implementing the risk management reforms and customer remediation programs required by the
five consent orders, which remain open as of the date of the investigative report.
Specifically, the Committee staff’s investigation examined Wells Fargo’s compliance with
the CFPB’s and OCC’s September 8, 2016 sales practices consent orders (collectively, “2016 Sales
Practices Consent Orders”); the Federal Reserve’s February 2, 2018 risk management consent
order (“2018 Federal Reserve Consent Order”); and the CFPB’s and OCC’s April 20, 2018
compliance risk management consent orders (collectively, “2018 Compliance Risk Management
On February 25, 2019, Chairwoman Waters formally scheduled Wells Fargo’s then- CEO
and President, Timothy J. Sloan, to testify before the Committee on March 12, 2019. Chairwoman
Waters specifically requested that Sloan’s testimony cover, among other things, “Wells Fargo’s
efforts to remediate consumers affected by its various instances of wrongdoing,” and “Wells
Fargo’s varied engagements with its regulators, including the bank’s compliance with its
outstanding consent orders” with the CFPB, OCC, and Federal Reserve.
During the March 12, 2019 Committee hearing, Mr. Sloan made several comments regarding Wells Fargo’s efforts to comply with the 2016 and 2018 consent orders. For example, in response to Chairwoman Waters’ question about the statuses of the remediation plans that Wells Fargo must submit for the CFPB’s and OCC’s approval under the 2018 Compliance Risk Management Consent Orders, Mr. Sloan, testified, “We are in compliance with those plans” (emphasis added).
Additionally, in response to a question from Representative Nydia Velázquez regarding the status of the bank’s compliance with the 2018 Federal Reserve Consent Order, Mr. Sloan suggested that Wells Fargo had completed the governance reforms required by the Federal Reserve, stating, “[a]s part of the consent order with the Fed, they want us to improve the Board governance and oversight, which we have done (emphasis added).”
Immediately following Sloan’s testimony, the OCC issued a written statement expressing its dissatisfaction with Wells Fargo’s progress towards complying with its consent orders.
According to the Wall Street Journal, the OCC wrote:
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.
On March 13, 2019, the day after Sloan’s testimony before the Committee, Wells Fargo announced in its annual proxy statement that the Company’s board had awarded Mr. Sloan $ million in compensation for 2018, including a $2 million performance bonus.
Following Wells Fargo’s announcement, the Federal Reserve issued an emailed statement stating, “[t]he Federal Reserve does not approve pay packages. We expect boards of directors to hold management accountable.” Wells Fargo’s board’s decision to award Mr. Sloan a performance bonus for 2018—a year in which the Federal Reserve capped the Company’s growth and other