Published: Fri, March 15, 2019
Money | By Ralph Mccoy

Wells Fargo CEO avoids major stumble at heated congressional hearing

Wells Fargo CEO avoids major stumble at heated congressional hearing

Rep. Alexandria Ocasio-Ocasio (D-NY) proved once again her verbal interrogation skills on Tuesday as she grilled Wells Fargo CEO Timothy Sloan over the financial giant's dubious investments and won applause for holding his feet to the fire.

Home Monetary Companies Committee Chairman Maxine Waters, D-Calif., introduced Sloan earlier than the panel Tuesday as a part of a broad, four-hour inquiry into widely reported fraudulent misconduct lately by Wells Fargo staff.

"This is an important hearing and you will hear bipartisan criticism of the actions you have taken and the failures that you have overseen under your watch", he said. "This is an ongoing commitment by all 260,000 team members - starting with me - to put our customers' needs first; to act with honesty, integrity and accountability; and to strive to be the best bank in America".

After citing a litany of Wells Fargo's abusive practices, Waters told Sloan "this conduct appears to persist".

Wells Fargo options prices imply a 1.6 percent move in the share price by the end of this week, according to data compiled by Bloomberg.

Sloan appeared to be caught off guard by the question and didn't answer it directly.

Questioning Sloan about its financing of companies that build pipelines including the Dakota Access Pipeline (DAPL) in South Dakota and the Keystone XL Pipeline, Ocasio-Cortez asked whether his bank should be held responsible for the environmental havoc wreaked by its investments. Within risk, the company has three "lines of defense" - front-line risk, independent risk management, and audit - to ensure multiple layers of review and to improve internal oversight.

Sloan answered, "For a period of time, we were involved in financing one of the firms - we're not anymore and the other".

"It doesn't feel like they've changed much of anything, to be honest", one of the employees, Meggan Halvorson, said in a statement.

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"Because we don't operate the pipeline", Sloan replied. Sloan promised that he has made "fundamental changes" at the bank and its problems have been "fixed".

"It's fixed", Sloan told Congressman Sean Duffy (R-WI) responding to a question about the fake accounts scandal.

On Tuesday, Rep. Katie Porter (D-Calif.) flagged these quotes from filings in an ongoing class-action lawsuit against Wells Fargo that alleges the company hurt shareholders by hiding its auto repossession scandal from the public in the months after the fake-account scandal.

"The headlines generated by this week's hearing will undoubtedly be negative for Wells Fargo", KBW's Brian Gardner wrote in a note, as even some Republican committee members are likely to criticize the bank.

Sloan firmly rebuffed claims by Waters that Wells Fargo should be broken up.

The committee's ranking Republican, Patrick McHenry of North Carolina, said his party wouldn't show any sympathy for Wells Fargo. In 2012, Wells Fargo paid $175 million to settle allegations from the Justice Department that it had engaged in "systemic discrimination" involving more than 34,000 minority customers.

Such abuses caused the Federal Reserve to impose an unprecedented cap on Wells Fargo's growth a year ago, a restriction that remains in effect.

Other scandals engulfing the biggest U.S. mortgage lender have included selling auto insurance and other financial products to customers who didn't need them; charging service members higher rates on loans than allowed by law; and improperly selling complex financial products to retail investors. Tim Sloan, chief executive officer (CEO), is slated to testify before the US Congress.

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