John Stumpf resigned as chief executive of Wells Fargo weeks after the Senate hearing on the bank’s unauthorized accounts. Timothy Sloan, his replacement, appeared before the House Financial Services Committee three years later to describe the repairs. The chairwoman began with whether the regulators had actually signed off.
Confidential supervisory information
WatersHas the OCC indicated its non-objection to the bank's compliance audit on customer remediation plans? Has the Consumer Bureau indicated its non-objection?
SloanMadam Chairwoman, I can't respond specifically to your question, because that would mean that I would be disclosing confidential supervisory information that has been shared with us by both the OCC and the CFPB. But I can assure you that we are working very constructively with what we have in place and we are executing that plan that reflects the fundamental changes that I have made since I have become the CEO.
WatersThank you very much.
WatersFor those who are listening, I am simply asking whether or not the bank is in compliance, based on reviews that are done by the OCC and the Consumer Bureau, and you heard that answer--
SloanWe are in compliance with those plans. Excuse me.
[Hearing transcript, questioning by Chairwoman Waters.]
What he told investors
Representative Porter read back three of Sloan’s own public statements about restoring trust.
PorterMr. Sloan, thank you for your patience during this hearing.
PorterThose statements, to me, are pretty vague. They sound like they might be obscure, empty promises. Do those statements really mean something to you, Mr. Sloan?
SloanThey do.
PorterWhy should we have confidence in those promises, in those statements you have made?
SloanWell, when you look at the changes that I have made since I have become CEO, you see that team members are much more excited about working at Wells Fargo. They like what they do. Team member voluntary turnover is down to its lowest level in 6 years. The feedback we get from our team in terms of the changes that we have made is positive.
SloanWe still have more work to do, I don't mean to suggest that we are done. I don't think we should ever be done. Likewise, our customers are feeling the same way.
PorterOkay. So it is safe to say that the statements you have made mean something to you and that customers and investors can rely on those statements?
SloanThat is correct.
[Hearing transcript, questioning by Rep. Porter.]
What his lawyers told the court
PorterOkay. Then why--Mr. Sloan, if you don't mind my asking--are your lawyers in Federal court arguing that those exact statements that I read are "paradigmatic examples of non-actionable corporate puffery on which no reasonable investor could rely?"
SloanI don't know why our lawyers are arguing that. You asked me a direct question in terms of, do I believe in the statements that I have made--
PorterWell, I understand that is convenient--
Sloan--and the answer was absolutely correct.
PorterMr. Sloan, you are a personally named defendant in Purple Mountain Trust v. Wells Fargo and Timothy J. Sloan. Are you lying to a Federal judge or are you lying to me and this Congress right now about whether we can rely on those statements?
SloanNeither.
PorterIt is convenient for your lawyers to deflect blame in court and say that your rebranding campaign can be ignored as hyperbolic marketing. But then, you come to Congress, and you want us to take you at your word. And I think that is the disconnect, that is why the American public is having trouble trusting Wells Fargo.
[Hearing transcript, questioning by Rep. Porter.]
Three hundred and fifty dollars
PorterWhy then are you fighting tooth and nail in Federal court to avoid returning about $350 to each of 50 auto loan customers in Southern California? And the money I am talking about, to be clear, is loans these customers paid off early, meaning they are now entitled to a partial refund of their GAP insurance.
SloanBecause it is not our responsibility to ensure that customers receive those refunds from the dealers who receive that money. It never went through Wells Fargo.
PorterYour salespeople sold them that GAP insurance. It was part of the transaction when those customers took out the automobile loans.
SloanThat is incorrect. The transaction occurred between the auto dealer and the customer. Wells Fargo was not involved. We never sold GAP insurance.
PorterYou never sold GAP insurance. Do you profit from the sale of GAP insurance?
SloanNo.
[Hearing transcript, questioning by Rep. Porter.]
Sloan resigned as chief executive of Wells Fargo three weeks after this hearing.