Senator Warren to Wells Fargo CEO: "You should be fired."
As CFO During Fake Accounts Scam, Sloan Bragged to Investors About Bank's Ability to Open New Accounts for Existing Customers; Warren Asks if Wells Fargo Cuts Will Result in Firing of Frontline Employees
Washington, DC - At today's Senate Banking Committee hearing, United States Senator Elizabeth Warren (D-Mass.) asked Wells Fargo CEO Tim Sloan about his record at the company, including his actions as CFO during the fake accounts scandal. She also pressed him on his plans to cut $4 billion in expenses over the next several years, and whether those cuts would result in the firing of thousands of frontline Wells Fargo employees.
Senator Warren questioned Mr. Sloan, a Wells Fargo employee for thirty years, about his ability to reorient the company in the wake of the fake accounts scandal. Mr. Sloan served as CFO during a portion of the scandal, during which he aggressively promoted Wells Fargo's ability to open up new accounts for existing customers, according to transcripts from investor calls.
During her questioning, Senator Warren noted a 2013 article detailing the relentless pressure imposed on Wells Fargo employees to open new accounts. At the time, Mr. Sloan said he was "not aware" of any problem, and did not launch an investigation into the matter. Wells Fargo's own report noted that he was aware of the issues with sales practices at the time of the interview. The Senator also highlighted a 2016 interview during which Mr. Sloan, then the COO, was asked whether the bank had pushed sales goals and cross-selling too far and he responded "No" and "the fundamental strategy that we have is not going to change."
"You knew there was a problem and when you were asked about it, you lied. This is about personal responsibility. Wells Fargo cheated millions of people for years. The Federal Reserve should remove all of the current board members who served during the fake accounts scam. And Mr. Sloan, you say you've been making changes at Wells Fargo for thirty years, but you enabled this fake account scam, you got rich off it, and then you tried to cover it up," said Senator Warren. "At best you were incompetent, at worst you were complicit. Either way, you should be fired. Wells Fargo needs to start over and that won't happen until the bank rids itself of people like you, who led it into this crisis."
During a second round of questioning, Senator Warren pressed Mr. Sloan on the bank's new financial plan, which calls for $4 billion in cuts over the next several years. Senator Warren ran through the numbers, noting that in order to make the 8% reduction in non-interest expenses, Wells Fargo would likely have to fire as many as 20,000 of its 270,000 employees, whose compensation and benefits account for 60% of the bank's expenses.
"Given your statements about how much you value your employees, can you tell us today that you will not be firing any employees as part of this $4 billion cut?" asked Senator Warren. "I cannot," replied Mr. Sloan.
Senator Warren also noted that Mr. Sloan was calling for a $4 billion cut in expenses - and potentially firing thousands of employees - while simultaneously committing to spend $11.5 billion over the next year on stock buybacks.
"Now that the fake accounts scandal has tanked Wells Fargo's reputation, your way of pumping up the bottom line and keeping Wall Street investors happy is to slash costs by firing low level employees," said Senator Warren. "In these corporate scandals, it is almost always the frontline workers who pay the price - not the executives. The only way we're ever going to stop these scandals is to hold executives personally accountable - to fire the people who are responsible and, when they break the law, to march some of them out of the building in handcuffs. Until we do that, these scandals are going to continue, and working people are going to continue to take the brunt of it."
Watch video of Senator Warren's questioning of Mr. Sloan's record here. Watch the exchange over employee cuts here.
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