Senators: Wells-Fargo CEO Sloan Isn’t ‘Building Better’ Fast Enough

Timothy J. Sloan didn’t come to the Senate expecting his testimony this week to be like a birthday party. But the CEO of Wells-Fargo might not have bargained for how roughly some members of the chamber greeted him when he testified about how he’s trying to clean up the company’s mess.

“At best you are incompetent,” Sen. Elizabeth Warren, the Massachusetts Democrat, scolded Sloan. “At worst you were complicit. Either way you should be fired.”

And Sen. Sherrod Brown, the Ohio Democrat, scored Sloan for not overhauling Wells-Fargo extensively enough in his year at the helm, finding his efforts “not sufficient to reform a corporate culture that is willing to abuse its customers and employees in an effort to pad its numbers and increase its executive compensation.”

That’s what you get when you lead a company whose retail-bank employees set up as many as 3.5 million fraudulent new accounts over several years to reap financial incentives, And when you’re the guy who promised he had swept the place clean since replacing former CEO John Stumpf – only to see more scandal unfold during Sloan’s tenure.

“Wells Fargo is a better bank today than it was a year ago,” Sloan insisted in his Senate testimony. “And next year, Wells Fargo will be a better bank than it is today. That is because we have spent the past year determined to earn back the public’s trust.”

Sloan came to the chief’s job from other parts of the bank than the retail and consumer-lending units that faced problems, so no senator could credibly blame him for them.

But Sloan has a long way to go to be able to claim Wells-Fargo has earned back public trust. For one thing, he is very susceptible to the charge of having taken victory laps too soon in the clean-up process.

Last spring, for instance, he said that Wells-Fargo was going to survey employees so leaders could “foster an ethical, inclusive and customer-focused culture.” Around the same time, he authorized the Wells-Fargo marketing department to launch a big new marketing campaign under the tagline “Building Better Every Day,” which among other things skipped any sort of broad mea culpa to Wells-Fargo’s customers.

“It’s going to take us time to restore all the relationships and trust in those relationships,” Chief Marketing Officer Jamie Moldafsky told Chief Executive in April, “but we’re making good headway because we’re head-on confronting some of the issues we had that made us less than ideal for some customers and stakeholders.”

Problem was, Wells-Fargo’s culture, practices and employees at various levels apparently were still doing things to abuse that trust, some on Sloan’s watch.

For example, in August the bank said it had found an additional total of 1.4 million potentially fake bank and credit-card accounts, on top of the earlier tally of 2.1 million accounts that had brought about Stumpf’s retirement.

And Wells-Fargo found another problem: that as man as 528,000 customers also were enrolled in online bill payment, without their OK. Other recently revealed scandals included auto-insurance customers being charged excess fees, and active-duty service members having their cars seized.

At least, while promising Wells-Fargo would be even better, Sloan was clear about apologizing for a toxic culture that he’s still trying to purge.

“I am deeply sorry for letting down our customers and team members,” he said. “I apologize for the damage done to all the people who work and bank at this important American institution. When the challenges at Wells-Fargo demanded decisive action, the bank’s leader acted too slowly and too incrementally. That was unacceptable.”

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Dale Buss

Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other top-flight business publications. He lives in Michigan.