(The Hill) -- House lawmakers on Tuesday skewered the head of Wells Fargo as he argued that the bank has made vast improvements and turned the page in the aftermath of scandals that led to a slew of lawsuits and unprecedented federal and state penalties.
Wells Fargo President and CEO Timothy Sloan told members of the House Financial Services Committee that the company has improved its internal oversight, overhauled its management and compensated customers harmed by misconduct across almost every line of its business in the three years since the scandals.
“Wells Fargo is committed to making things right with our customers and earning back the public’s trust. We are dedicated to compensating every customer who suffered harm because of our mistakes,” Sloan said at the hearing.
But his testimony did little to appease lawmakers in both parties just days after The New York Times reported that Wells Fargo employees are still breaking rules to meet performance standards tied to sales goals.
Rep. Maxine Waters (D-Calif.), the head of the committee, called Wells Fargo a “recidivist financial institution that created widespread harm with a broad range of offenses,” and suggested the bank could be “too big to manage.”
“All the changes that you said you have made are not evident,” Waters said.
“Why should the bank continue to be the size that it is?”
Sloan blamed Wells Fargo’s woes on a decentralized risk management structure and the bank’s previous “incentive plan that was much too focused on selling products as opposed to providing good service and advice.”
He said the company has made “fundamental” upgrades to its oversight and compliance efforts by hiring more than 3,000 risk management professionals.
Wells Fargo has replaced seven of the 10 board members who led the bank in February 2016, and it hired new chief risk and compliance officers.
“We have more work to do,” Sloan added, insisting the bank would “act with honest, integrity and accountability.”
Sloan though faced anger from both sides of the aisle.
Rep. Patrick McHenry (R-N.C.), the panel’s top Republican, criticized the company for its performance record.
"Each time a new scandal breaks, Wells Fargo promises to get to the bottom of it. It promises to make sure it doesn’t happen again," he said. "But a few months later, we hear about another case of dishonest sales practices or gross mismanagement.”
McHenry told Sloan he wanted to hear about “your commitment that you will do what is necessary to make sure this won’t happen again.” He asked Sloan if “your customers are going to hear more of the bad actions taken by your company.”
Sloan replied, “I can’t control the media,” while adding that “the changes that we’ve implemented since I’ve become CEO are going to prevent them from occurring as best we can.”
Rep. Ann Wagner (R-Mo.) said Wells Fargo “betrayed” the trust and “took advantage of customers in order to meet sales performance goals and fraudulently improve earnings and share prices.”
Wells Fargo’s troubles began in September 2016 when the Consumer Financial Protection Bureau (CFPB) fined the bank $185 million for opening and charging fees on more than 1 million accounts for customers without their consent.
Former CEO John Stumpf retired in October 2016 and was replaced by Sloan, a 32-year veteran of Wells Fargo.
Sloan pledged to reform the bank and its image as the company faced scrutiny from federal and state regulators. That task became substantially harder in January 2018 when the Federal Reserve banned Wells Fargo from expanding its operations.
The Fed ordered Wells Fargo to conduct an internal probe into its internal oversight and risk management and explain how it planned to prevent future scandals.
Those restrictions, among the toughest on a bank since the financial crisis, remain in place.
The bank has paid over $1.5 billion in penalties to state and federal regulators and over half a billion to settle lawsuits.
But Wells Fargo has struggled to move past its troubles.
The company landed in hot water again in April 2018 when the bank paid $1 billion to the CFPB and Office of the Comptroller of the Currency to resolve allegations it had charged mortgage borrowers inappropriate fees and forced loan customers to purchase unnecessary auto insurance.
The bank said hundreds of customers who were unable to pay those higher costs lost homes and automobiles to foreclosure.
Sloan's hearing was also a preview of the tough oversight Waters has vowed to enforce on the nation's financial institutions since taking over the panel.
Waters has also promised hearings on Deutsche Bank and its dealings with President Trump's businesses and credit reporting firm Equifax which suffered a massive data breach.
