Wells Fargo Chief Calls Bank's Conduct 'Disturbing' -- WSJ
March 11 2020 - 3:02AM
Dow Jones News
By Ben Eisen
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 11, 2020).
Wells Fargo & Co.'s new CEO told Congress on Tuesday that
the troubled bank engaged in "deeply disturbing conduct" but is
charting a new path to move past its yearslong sales-practices
scandal.
Chief Executive Charles Scharf sought to reset the political
tone around the bank. He noted that he is putting in place a new
management structure that increases oversight of each business
line. He also said the bank has far more risk and compliance
controls than when it was fined by regulators in 2016 for opening
perhaps millions of fake accounts.
But Wells Fargo is still dealing with a mountain of regulatory
problems, including an extraordinary cap on its growth.
"We need to run the company fundamentally differently than we
have in the past," said Mr. Scharf, a company outsider who was
brought in less than five months ago and has bluntly and repeatedly
criticized the way the bank was run.
Both Democrats and Republicans in the House Financial Services
Committee appeared to give him the benefit of the doubt for most of
the hearing. Few committee members expressed skepticism of his
strategy and many allowed him to respond to questions by saying he
was too new to the job to fully answer.
Toward the end of the hearing, some committee members took a
harsher tone with Mr. Scharf. Rep. Katie Porter (D., Calif.)
suggested the bank should do more to lift wages for bank tellers.
Rep. Joyce Beatty (D., Ohio) urged Mr. Scharf to commit to more
diversity on its board. Rep. Rashida Tlaib (D., Mich.) said he
should take more ownership of what the bank did before he
arrived.
"You cannot come here and continue to say 'I'm new,'" Ms. Tlaib
said.
Still, Mr. Scharf's treatment was in stark contrast to Capitol
Hill appearances by the previous two Wells Fargo CEOs, both of them
longtime company veterans. Both stepped down shortly after
appearing before Congress, where lawmakers including Sen. Elizabeth
Warren (D., Mass.) blasted them for the fake-accounts scandal.
Several members of Congress offhandedly said Tuesday they couldn't
imagine why anyone would want the CEO job at Wells Fargo.
Still, both Democrats and Republicans released reports last week
saying the bank mishandled its obligations to fix the scandal. Mr.
Scharf said the reports' allegations, which generally predate his
arrival, were "beyond disappointing."
In the days ahead of the hearing, Wells Fargo announced a series
of initiatives, including lifting its minimum wage in many markets
and announcing a no-overdraft account, that were well received by
some lawmakers.
"Just because the company has not been well run does not mean it
can't be well run," Mr. Scharf told Congress.
Elizabeth Duke, the former board chairwoman, and James Quigley,
another former board member, are expected to testify Wednesday.
Both resigned after the release of the congressional reports, which
accused them of a lack of urgency in addressing regulatory
issues.
Wells Fargo shares rallied 8% Tuesday, their biggest one-day
gain since 2011. The stock benefited from a broad rally that pushed
the S&P 500 up 4.9% and also topped the KBW Nasdaq Bank Index's
7.3% rise. It was the second-best performer among the six major
U.S. banks, after Citigroup Inc.
Write to Ben Eisen at ben.eisen@wsj.com
(END) Dow Jones Newswires
March 11, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Apr 2023 to Apr 2024