March 12, 2019 / 10:02 AM / 5 months ago

CEO Sloan pitches Wells Fargo turnaround to bank critics in Congress

WASHINGTON, March 12 (Reuters) - Wells Fargo & Co Chief Executive Tim Sloan’s campaign to prove his bank has moved past its scandals will collide on Tuesday with newly empowered Democratic lawmakers who are taking aim at Wall Street.

Sloan will be the first bank executive grilled by the House Financial Services Committee since it was taken over by Democrats following the 2018 congressional election. A nervous Wall Street is keen to see how hostile the panel will be towards the industry.

The hearing could see Sloan clash with panel chair and vocal bank critic Maxine Waters, as well as Alexandria Ocasio-Cortez, a rookie lawmaker and leading voice of her party’s progressive wing. Fellow freshman Katie Porter likewise built her campaign on bashing Wall Street.

Republicans have also criticized Wells Fargo, and will likely want proof the fourth-largest U.S. bank has addressed customer abuses.

The CEOs of Morgan Stanley, Goldman Sachs Group Inc , Citigroup Inc, JPMorgan Chase & Co and Bank of America Corp are expected to appear before the House panel next month.

Stakes are high for 31-year Wells Fargo veteran Sloan, who was appointed CEO when John Stumpf retired soon after the sales practices scandal erupted in 2016. Sloan has faced calls to step down from investors and politicians, including U.S. Senator Elizabeth Warren, a 2020 Democratic presidential contender.

On Tuesday, Sloan will emphasize changes the bank has made to culture, sales practices and risk management, as well as efforts to repay wronged customers.

“Wells Fargo is a better bank than it was three years ago, and we are working every day to become even better,” Sloan, 58, will say, according to testimony published on Monday.

Lawmakers could also ask about the bank’s decision to cut thousands of U.S. jobs, its pledge to boost stock buybacks and its forced arbitration policy for customers.

Spokespeople for Waters and Ocasio-Cortez declined or did not respond to comment requests. Porter said in a statement that Sloan has “a lot to prove” to show Wells Fargo has turned a corner.

If lawmakers are unhappy with what they hear, they could pressure the Federal Reserve to maintain restrictions imposed on the bank’s growth until governance and risk management improve.

Sloan has not appeared before Congress since a 2017 Senate hearing, where he clashed with lawmakers from both parties.

Wells Fargo has since deployed more lobbyists in Washington and launched a public relations offensive, but remains in politicians’ crosshairs.

The 2016 revelation that Wells Fargo created millions of fake customer accounts prompted regulatory probes into mortgage foreclosures, auto insurance sales and its wealth management businesses, resulting in billions of dollars in fines. (Reporting by Pete Schroeder and Imani Moise; Editing by Michelle Price and Meredith Mazzilli)

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