(Reuters) – New Wells Fargo & Co (WFC.N) Chief Executive Charlie Scharf testified on Tuesday that substantial change was underway at the bank as lawmakers grilled him on the status of its remediation efforts and contingency plans related to coronavirus.
“We are putting a substantially different group of people in charge of these issues,” he told members of the House Financial Services Committee.
Since taking over the scandal-plagued bank late last year, Scharf has shaken up its leadership and overhauled the bank’s business lines, winning over some regulators in the process.
Last week the Office of the Comptroller of the Currency, the bank’s top regulator, said it was encouraged by the new leadership. Many lawmakers were cautiously optimistic that Scharf was the right person for the job but said righting the bank would be a tall task.
“While I wish you luck, it is clear to this Committee that the bank you inherited is essentially a lawless organization that has caused widespread harm to millions of consumers throughout the nation,” Democratic House Financial Services Committee Chair Maxine Waters said in her opening remarks.
Waters, a fiery bank-basher, on Thursday had told reporters that despite meeting with Scharf, she had no indication that he had a compelling plan for turning around the bank.
In a report released last week, the committee unearthed documents and emails that appeared to reveal complacency on the part of the bank’s directors and management, including board Chair Betsy Duke, regarding its various regulatory issues. Duke resigned on Monday.
When pressed for details on the status of the bank’s remediation efforts and a timeline for getting over the bank’s regulatory hurdles, Scharf was light on specifics but was clear that his management team was committed to working through the banks issues with a fresh sense of urgency.
Waters and others on the committee, which is responsible for overseeing financial firms and their regulators, quizzed Scharf on the health of the banking system amid turmoil in global markets, and on social issues like gun financing and lending to minority groups.
Bank stocks have been hurt more than other sectors as the quickly spreading coronavirus has lead to a lower interest rate environment and raised concerns about future credit costs as businesses are squeezed, according to analysts.
“We understand the seriousness of concerns felt by customers and employees about the coronavirus,” Scharf said in prepared remarks, but during the hearing he declined to provide specifics on how the bank planned to help consumers and clients who are facing hardships due to the pandemic.
When Scharf took the reins in October, he inherited a bank that was under federal investigation, subject to more than a dozen consent orders and hindered by an unprecedented Federal Reserve cap on its balance sheet growth. Sources inside the bank say that he has been laser-focused on efficiently tackling the bank’s problems by cutting unnecessary meetings and focusing on accountability.
The bank has also recently announced a number of initiatives that would appeal to the Democratic majority committee, like increasing the minimum wage for its employees, rolling out new bank accounts that limit overdraft fees and credit products for DACA recipients.
Prior CEOs John Stumpf and Tim Sloan left the company shortly after similar appearances before Congress.
Waters kept up pressure on Sloan Tuesday, asking the Justice Department to determine if he broke the law in giving “misleading” sworn testimony to her panel one year ago when he told lawmakers the bank was complying with a settlement to remediate customers harmed by its sales practices. Bank regulators said afterwards the bank was still coming up short in its efforts.
The Justice Department declined to comment on the referral, and lawyers for Sloan did not respond to requests for comment.
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