This piece has been updated.
Wells Fargo CEO Tim Sloan would have us believe he’s running a changed bank. How seriously we should take him is another matter entirely.
At a House Financial Services Committee hearing on Tuesday on the bank’s practices, one representative after another took their five minutes to blast Sloan and his bank’s business practices. But let’s give a hand to freshman Rep. Katie Porter (D-Calif.), who elicited the most damning detail. She pointed out that the bank’s own lawyers say Sloan’s past statements indicating a commitment to restoring customers’ trust are mere “corporate puffery.” Sloan’s response? “I don’t know why our lawyers are arguing that.”
This is the second get for Porter in a short period of time — last week, she handed Consumer Financial Protection Bureau head Kathy Kraninger a calculator, and revealed to the world that the nation’s chief personal finance watchdog wouldn’t calculate or didn’t know how to calculate an APR, better known as an annual percentage rate, something vital to understanding how payday loans can negatively impact borrowers. This has not stopped Kraninger from beginning the process of rolling back protections on these dodgy, high-interest loans, making it easier for unscrupulous lenders to hide from financially desperate consumers what they are up against when they borrow such money.
Once upon a time, such answers, discoveries and failure to take responsibility by the people at the top of the decision-making food chain would have been a scandal with a capital S. But now, when Wells Fargo and Consumer Financial Protection Bureau critics are competing against what is the most corrupt presidential administration in modern history (not to mention the news that celebrities and corporate executives allegedly bribed their children’s way into elite colleges), the public barely noticed Sloan’s or Kraninger’s damning admissions. The most they got was a few moments of Twitter hate. This is, to say the least, unfortunate.
Remember, in 2016 Wells Fargo admitted that its employees, under pressure to meet absurdly unrealistic sales goals, opened up millions of fraudulent accounts on behalf of unknowing customers. Despite the fact Wells Fargo has since been fined billions of dollars by various state and federal regulators, and is operating with asset caps placed on it by the Federal Reserve, the bank, as a therapist might say, still has issues.
Within the past week alone, it has been revealed that Wells Fargo agreed to refund customers more than $17 million for selling them on high-fee mutual funds while neglecting to adequately inform them about less costly options. (The firm was one of nearly 80 firms agreeing to repay more than $125 million to clients.) A New York Times investigation published Saturday detailed how bank employees are still challenged to meet sales quotas. This comes on top of such additional revelations as the fact that Wells Fargo improperly foreclosed on several hundred homes, and saddled unwitting customers with pet insurance.
Anything for a sale, I guess.
As for the CFPB, it was the subject of a semiannual review in the Senate on Tuesday, one taking place at the same time House members were grilling Sloan. The agency that once brought Wells Fargo to public attention is now, under the Trump administration, all but gutted. The anodyne personal advice it puts on Twitter cannot begin to compensate for the sharp reduction in its enforcement actions and fines against predatory financial actors.
One of Kraninger’s interrogators: Sen. Elizabeth Warren (D-Mass), who first proposed the CFPB. She told Kraninger, “If you had any decency, you’d either do your job or resign.” It’s hard to disagree. Then again, if Kraninger had any decency, she probably wouldn’t have taken the position at all. When President Trump appointed her to the position last year, it was obvious that she lacked even a cursory knowledge of financial services — though that failing barely stands out in an administration where first son-in-law Jared Kushner is one of the top people on Middle East policy and daughter Ivanka Trump speaks out on tax policy. The same lack of decency could be attributed to Sloan: After more than two years on the job, he either lacks control of his organization, is less than concerned about fixing its continuing problems or both. His performance Tuesday morning was so pathetic, even the Office of the Comptroller of the Currency chimed in, releasing a statement at the conclusion of the hearing saying it was “disappointed” in the company’s failure “to execute effective corporate governance.” But such critiques don’t seem to matter to Wells Fargo — if they did, surely the bank would have cleaned up its act by now.