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S. HRG. 115–128 

WELLS FARGO: ONE YEAR LATER 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

ON 

EXAMINING WELLS FARGO BANK’S CULTURE, ORGANIZATIONAL STRUCTURE, AND MANAGEMENT’S MONITORING AND RESPONSIVENESS, AS 

WELL AS THE REFORMS INSTITUTED BY THE COMPANY IN MAKING 

CUSTOMERS WHOLE AGAIN 

OCTOBER 3, 2017 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.govinfo.gov/ 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

MIKE CRAPO, Idaho, Chairman 

RICHARD C. SHELBY, Alabama 

BOB CORKER, Tennessee 

PATRICK J. TOOMEY, Pennsylvania 

DEAN HELLER, Nevada 

TIM SCOTT, South Carolina 

BEN SASSE, Nebraska 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

DAVID PERDUE, Georgia 

THOM TILLIS, North Carolina 

JOHN KENNEDY, Louisiana 

SHERROD BROWN, Ohio 

JACK REED, Rhode Island 

ROBERT MENENDEZ, New Jersey 

JON TESTER, Montana 

MARK R. WARNER, Virginia 

ELIZABETH WARREN, Massachusetts 

HEIDI HEITKAMP, North Dakota 

JOE DONNELLY, Indiana 

BRIAN SCHATZ, Hawaii 

CHRIS VAN HOLLEN, Maryland 

CATHERINE CORTEZ MASTO, Nevada 

GREGG RICHARD, Staff Director 

MARK POWDEN, Democratic Staff Director 

ELAD ROISMAN, Chief Counsel 

JOE CARAPIET, Senior Counsel 

BRANDON BEALL, Professional Staff Member 

ELISHA TUKU, Democratic Chief Counsel 

LAURA SWANSON, Democratic Deputy Staff Director 

COREY FRAYER, Democratic Professional Staff Member 

DAWN RATLIFF, Chief Clerk 

CAMERON RICKER, Deputy Clerk 

JAMES GUILIANO, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

(II)

C O N T E N T S 

TUESDAY, OCTOBER 3, 2017 

Page 

Opening statement of Chairman Crapo ................................................................. 1 

Opening statements, comments, or prepared statements of: 

Senator Brown .................................................................................................. 2 

WITNESS 

Timothy J. Sloan, Chief Executive Officer and President, Wells Fargo & 

Company ............................................................................................................... 4 

Prepared statement .......................................................................................... 40 

Responses to written questions of the Senate Banking Committee ............. 43 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Letter submitted by Americans for Financial Reform and Public Citizen .......... 124 

Economic Policy Institute report ............................................................................ 128 

Letter submitted by Economic Policy Institute Policy Center ............................. 130 

Wells Fargo Financial Overview report ................................................................. 133 

(III)

(1) 

WELLS FARGO: ONE YEAR LATER 

TUESDAY, OCTOBER 3, 2017 

U.S. SENATE, COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, Washington, DC. 

The Committee met at 10:01 a.m., in room SD–538, Dirksen Senate Office Building, Hon. Mike Crapo, Chairman of the Committee, 

presiding. 

OPENING STATEMENT OF CHAIRMAN MIKE CRAPO 

Chairman CRAPO. This hearing will come to order. 

Before we begin today, let me acknowledge that our Nation is 

still mourning and remembering the lives lost in Las Vegas. Our 

condolences go out to the families affected by this heinous crime, 

and our thanks go to the courageous first responders and police 

and citizens who put their lives on the line to save others. 

Two Members of this Committee, both of the Senators of Nevada, 

are absent today because they are in Nevada, and I know that Senator Heller and Senator Cortez Masto are currently doing all they 

can there. And we will remain united in prayer and support with 

them during this difficult time. 

Today we are going to hear testimony from Wells Fargo chief executive officer and president Tim Sloan. Welcome, Mr. Sloan. 

Mr. SLOAN. Thank you. 

Chairman CRAPO. Just over a year ago, former Wells Fargo 

chairman and chief executive officer John Stumpf testified in front 

of this Committee on the bank’s fake-account scandal and his handling of its fallout. 

Of the many issues emphasized by the Committee Members during that hearing, one was the need to hold executives accountable 

and to ensure that customers impacted would be made whole. 

Mr. Stumpf repeatedly committed that the bank would take necessary actions to make it right and to restore the public’s and the 

investors’ trust in the company. 

Incidents like these remind us of how critically important it is for 

companies to institute policies and procedures that foster customer 

protection, promptly identify and address problems, and treat customers fairly. 

Since that hearing, Wells Fargo has made changes to its corporate and managerial structure in an effort to address the concerns raised by this incident. However, new developments and disclosures at the bank during the last year merit new scrutiny. 

On August 31, 2017, Wells Fargo announced the results of an expanded review of retail banking accounts, which included accounts 

2 

opened between January 2009 and September 2016. The expanded 

review found the number of potentially unauthorized accounts was 

3.5 million instead of 2.1 million. 

Separately, the company discovered problems with respect to its 

auto Collateral Protection Insurance, or CPI, program and self-reported these issues to its regulators. 

In response to complaints, Wells Fargo reviewed policies purchased on behalf of customers between 2012 and 2017 and found 

that up to 800,000 customers may have been harmed by Wells Fargo’s CPI practices. The end result was that customers were charged 

for car insurance that they did not need, and some had their vehicles wrongfully repossessed. For families, having your car repossessed or credit compromised is devastating. 

These new developments raise a number of questions that Wells 

Fargo must answer, including: 

What has Wells Fargo done to ensure that customers affected by 

any of these issues are or will be made whole? 

In more complex cases where customers’ credit scores were negatively affected, how is Wells Fargo working with other parties to 

restore those credit scores and return amounts in those instances 

where customers experienced higher borrowing costs? 

What structural and cultural changes has Wells Fargo made in 

the last year to address both past issues and new revelations? And 

what evidence is there that new policies and procedures are effective? 

And, finally, as Members asked last year, what has been the involvement of regulators since the initial incident and in response 

to the new disclosures? 

We welcome your comments on these matters, Mr. Sloan. And 

before we get to the testimony, Senator Brown. 

OPENING STATEMENT OF SENATOR SHERROD BROWN 

Senator BROWN. Thank you, Mr. Chairman. I would echo your 

comments about the citizens of Las Vegas and those many visitors 

that also lost their lives or were injured in that terrible shooting. 

Our hearts go out to all of them and their families. Special concern 

also to Senators Heller and Cortez Masto on this Committee. After 

every tragedy we always say our hearts and minds go out to those 

victims and their families. I hope that the U.S. Senate will actually 

do something about this for a change. 

A year ago, then-Wells Fargo CEO John Stumpf sat in this hearing room attempting to explain the inexplicable. The bank’s punitive sales goals had pressured its employees into opening over 2 

million fraudulent checking and credit card accounts. 

In written follow-up questions for the record, Committee Democrats asked Mr. Stumpf if he was confident that this type of fraudulent activity existed in no other part of Wells Fargo. We asked 

about a variety of products, including insurance. 

On November 15, 2016, Wells Fargo responded, ‘‘We believe that 

the activity at issue here was limited to certain team members 

within the Community Banking Division.’’ 

We have learned over the past year that the problems at Wells 

are much larger and more systemic than the bank originally disclosed. 

3 

Before being forced to come clean by a multi-agency investigation, Wells Fargo went to great lengths to bury—to bury—this 

scandal. It subjected customers to forced arbitration, preventing 

them from their day in court, further concealing the fraud. Let me 

give examples. Employees who tried to alert senior management to 

the treatment of Wells Fargo customers were silenced or fired. 

In 2013, a California customer sued, claiming Wells had opened 

several unauthorized accounts in his name. Wells Fargo forced— 

forced—that case out of the courts and into nonpublic arbitration, 

claiming that the terms of a real account should govern the fake 

ones. 

Think about that. Using forced arbitration, Wells forced that case 

out of the courts and into nonpublic arbitration claiming that the 

terms of a real account should govern the fake ones. 

In 2015, another customer in California filed a class action 

against Wells for the same practices, and the bank again used its 

fine-print legalese to fight to keep the case under seal—again, 

using forced arbitration. 

Has the company changed? Just 2 months ago, Wells used its 

forced arbitration clause again to argue that it should not have to 

pay customers it cheated on overdraft fees. 

In August of this year, Wells finally disclosed that the number 

of fraudulent accounts was at least 3.5 million—70 percent higher 

than it originally reported. The bank also revealed that it had 

stuck 800,000 customers with auto insurance policies, as Chairman 

Crapo said, without telling them or checking to see if they already 

had insurance. 

The bank was aware of these problems in its auto loan division 

in July 2016. Yet Wells’ CEO told this Committee that fraudulent 

sales practices were limited to the Community Bank. 

Mind you, this was not a casual response to a question that 

caught somebody off guard in a hearing. It was a written response 

that was undoubtedly approved by lawyers and others at the bank. 

Maybe even you, Mr. Sloan, were among those who saw the response before it was sent to Congress. 

A week after last year’s hearing, the Board of Directors initiated 

its independent review of the company’s sales practices. The report 

to the board, whose members, I might add, are paid an average of 

$370,000 for a part-time job—$370,000 to prepare for and attend 

several meetings a year, found that the fault lay elsewhere. 

That is cold comfort to the thousands of employees—who make 

perhaps one-tenth of what these board members make—who were 

fired for failing to generate enough new accounts. 

The board chose to limit the scope of the review to the Community Bank, which is troubling. It should have known, or should 

have wanted to know, that additional problems existed in other divisions. 

The changes that Mr. Sloan and his team have made are not sufficient to reform a corporate culture that is willing to abuse its customers and its employees in an effort to pad its numbers and in 

an effort to increase executive compensation. 

In light of the millions of Americans defrauded by Wells Fargo, 

the recent Equifax breach that compromised 145 million—the number seems to be growing—145 million Americans’ personal financial 

4 

information, and the SEC breach that led to insider trading, it is 

no wonder the public does not trust our financial system. 

We need strong rules to guard against abuses in forced arbitration, in payday lending, in debt collection, in mortgage servicing, 

and credit reporting accuracy. 

Rather than working to roll back consumer protections, as this 

Committee seems to want to do, we should be supporting the Consumer Financial Protection Bureau. We should be supporting other 

financial watchdogs that stand up for hardworking Americans 

when big companies take advantage of them. 

Thank you Mr. Chairman. 

Chairman CRAPO. Thank you, Senator Brown. 

We will now proceed to testimony from Mr. Tim Sloan, the chief 

executive officer and president of Wells Fargo & Company. Mr. 

Sloan, your written statement will be made a part of the record in 

its entirety, and you may proceed with your oral remarks. 

STATEMENT OF TIMOTHY J. SLOAN, CHIEF EXECUTIVE 

OFFICER AND PRESIDENT, WELLS FARGO & COMPANY 

Mr. SLOAN. Chairman Crapo, Ranking Member Brown, and 

Members of the Committee, my name is Tim Sloan, and I am the 

CEO of Wells Fargo. I want to thank you for the invitation to this 

hearing on ‘‘Wells Fargo: One Year Later’’. 

This was a year of disappointment and transition at Wells Fargo. 

When my predecessor testified here last year, we had not fully 

grappled with the damage the sales practices scandal had done to 

our customers, our team members, and their trust in our bank. We 

recognized too late the full scope and seriousness of the problems 

in our Community Bank. We did not come to Congress with a good 

plan, and we deserved your criticism. 

But I heard you, and I heard our customers and our team members. I heard them loud and clear. You expect us to do better, and 

so do we. 

So let me be very clear: I am deeply sorry for letting down our 

customers and our team members. 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, we acted too slowly and too incrementally. That was unacceptable. 

I also want to be clear about another thing: Wells Fargo is a better bank today than it was a year ago. 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. 

Since I became CEO 11 months ago, my team and I have been 

focused on three tasks we are here to discuss today. 

First, in response to the sales practices problems announced in 

2016, we are transforming our Community Bank. Our retail bank 

has a strong new leader. Oversight, compliance, and human resources are much more effective than a year ago and have far 

greater visibility and accountability across the entire company. We 

have revamped the incentives for our retail team members by 

eliminating product sales goals. Today Wells Fargo rewards teamwork and excellent customer service, not just selling products. Our 

5 

Community Bank is a fundamentally different organization from 

the one that existed in 2016. 

Second, we are reviewing operations and increasing accountability across the entire company. Now when a concern emerges, 

we identify it quickly, we escalate it promptly, we disclose it appropriately, and we address it fully. We will demand individual executive accountability. We have clawed back $180 million in senior executive compensation, and we have fired senior retail, mortgage, 

and auto lending executives for not performing up to the standards 

our customers deserve. 

Third, we are compensating every customer who has suffered because Wells Fargo made mistakes. Last year, we reviewed 93 million accounts opened between 2011 and 2015. This year, we went 

back and took an even closer look at 165 million accounts opened 

between 2009 and 2016. Just as we expected, we found more accounts that should not have been opened. This was not new potential misconduct since last year. It all happened before 2017. But it 

is a very serious issue all the same, and we are completely committed to fixing it. 

Of the 3.5 million potentially unauthorized accounts, about 

190,000 incurred $6 million in fees and charges. Wells Fargo is refunding every nickel, and we are paying $142 million to compensate all affected customers, including for increased borrowing 

costs from credit score impacts. 

Apart from these formal reimbursement mechanisms, I want to 

be very clear that Wells Fargo is committed to addressing any concern that any of our customers may have about an unwanted product or service, no matter where or when it may have occurred. If 

there is a problem, we want to hear about it. 

This past year has been humbling and challenging. My number 

one job as CEO is to make sure that nothing like this happens 

again at Wells Fargo. Fortunately, joining me in this big task are 

270,000 outstanding Wells Fargo team members. I am proud of 

their hard work and want to thank them for their commitment to 

making things right. 

I see improvement every day, and so do our team members. I 

think our customers have noticed the improvement, too. I pledge to 

you that we will not stop until we restore our customers’ trust and 

make Wells Fargo the finest and most ethical company it can be. 

Thank you again for the opportunity to address the Committee. 

I look forward to your questions. 

Chairman CRAPO. Thank you, Mr. Sloan. 

In our hearing last year, Members of this Committee asked many 

questions about how customers and consumers whose credit scores 

were impacted would be made whole. In cases where customers’ 

credit scores were negatively affected, how is Wells Fargo working 

with other parties to restore those credit scores and, in cases where 

customers experienced higher borrowing costs, reimbursing those 

costs? 

Mr. SLOAN. Chairman Crapo, we are doing that in a few ways. 

First and foremost, we went to the credit bureaus and provided the 

names of our customers whose accounts could have been inappropriately opened. Unfortunately, because of regulation, the credit 

6 

bureaus could not provide us with the detail of those customers 

back to us. 

What we saw when we looked at that is about 40 percent of 

those customers had no use of the trade lines within a year, so 

their credit was not impacted. Of that remaining 60 percent, about 

25 percent had no impact on their credit scores. We found that the 

median impact—or, excuse me, the mean impact was about 4 

points. But numbers are just numbers because certainly more customers were impacted, and some could have been impacted in credit scores by more than 4 points. 

So then what we did is we reached out to 43.5 million small businesses and consumers and said, ‘‘If you have an issue, come into 

Wells Fargo and see us, and we will make it right.’’ Approximately 

41,000 customers have come in. Based upon that, about half had 

credit-related issues, and we have made it right for those customers. 

In addition, as part of the $142 million settlement that I mentioned, the lion’s share of those funds are going to go to customers 

whose credit scores have been impacted. So we are going to be 

working with the experts that the attorneys for the class have provided. We are going to provide them with whatever information 

they want. We are reaching out to those 43 million customers 

again, as well as tens of millions of former customers, to make sure 

that they know about the class action settlement so that they can 

be made whole as part of that settlement for any credit impacts. 

Chairman CRAPO. Thank you. And some of the actions required 

by regulators as a part of your September 2016 settlements include 

the establishment of a compliance committee carrying out an enterprise-wide risk review of sales practice risk and maintaining enterprise-wide sales practice risk management and oversight. 

What has been the involvement of regulators since the initial incident, including in response to the new disclosures about the increased amount of unauthorized accounts as well as the CPI 

issues? 

Mr. SLOAN. Sure. We have an active dialogue with our regulators—the Federal Reserve, the OCC, and the CFPB—when we 

are talking about bank-related issues. So there is a tremendous 

amount of dialogue. For example, as it relates to the Collateral Protection, or CPI, issue, when that got escalated in the third quarter, 

we reported it to our regulators on a real-time basis, and we have 

been working with them not only to keep them apprised of those 

issues, but also in particular with the OCC, working with them to 

make sure that the remediation plan we had for any customer that 

was impacted by CPI is acceptable. 

As it relates to the fundamental changes that I have made since 

I became CEO to our compliance, we have done the following 

things: 

First and foremost, we have centralized all of our enterprise risk 

control activities. That was one of the failings that the report from 

the independent board of directors found, and we agree with that. 

So those have been centralized. 

We are hiring a new compliance officer. We have completed and 

devised a new compliance plan. We have created a Conduct Office 

in the Centralized Risk Group that independently brings up comVerDate Nov 24 2008 09:21 Feb 21, 2018 Jkt 046629 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 L:\HEARINGS 2017\10-03 WELLS FARGO - ONE YEAR LATER\HEARING\100317.TXT JA
7 

plaints, ethics line issues, any sort of team member turnover, so 

that we can connect the dots better than we did a year ago. 

Chairman CRAPO. Thank you very much. 

Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. 

I do not think we have a good answer yet, Mr. Sloan, as to how 

and why this activity went on for so long in your bank. The company first blamed rogue employees who were trying to meet unrealistic sales goals; then blamed Carrie Tolstedt, the senior executive 

vice president for community banking, who earned $9 million in 

2015; then finally, John Stumpf, the chairman and CEO, who 

earned $19 million that year. 

You have been at Wells Fargo for a long time, 30 years. You have 

been COO, CFO, chief administrative officer, head of the Wholesale 

Bank, which includes overseeing insurance. Was there no point, 

Mr. Sloan, prior to 2015 with the lawsuits and the terminations 

and the whistleblowers, was there no point that you saw a problem 

in the bank that required action? 

Mr. SLOAN. Senator, that is incorrect. In fact, I have been very 

public and have made this statement on a number of occasions, and 

also it was a finding of the board’s report that in 2013, when the 

sales practices issues were elevated to the Operating Committee, I 

sat on that Operating Committee, you are absolutely correct, in my 

role at that time as CFO, that it was elevated to that group. We 

took action, but in hindsight, Senator, we took action that was insufficient, as I said in my opening statement. And I am angry 

about how we handled the problems historically. I am disappointed 

in how we have done—how we handled those. But the fundamental 

changes that I have made since I have been CEO are addressing 

the failings that the board report pointed out, our regulators pointed out, and the mistakes that I saw in my prior roles. 

Senator BROWN. All right. That is an answer, but as the CFO, 

as a long-time employee of that company, as having a strong, I understand, close relationship with Mr. Stumpf, it still perplexes me 

why your anger now or speaking out about it 4 years ago could not 

have had more impact, but let me turn to another issue. 

You have testified about how Wells has changed, but I think actions speak louder than words. For years, your bank used forced 

arbitration to hide cases where customers alleged fake accounts 

had been opened in their names. I mentioned in my opening statement the 2013 lawsuit, the 2015 lawsuit that Wells was able to 

squelch because of the forced arbitration clause. Not only did you 

use forced arbitration to keep the fraud hidden—that is what it 

did—but your bank has also taken the position that the fine print 

on a real account should apply to a fraudulent one. Though you 

have settled with some customers on that issue, your bank was still 

making that argument as recently as last month against customers 

in Utah. 

To top it off, in August you asked a court to toss out a class action on a completely different scandal that also goes back several 

years, again, based on the forced arbitration clauses, the arbitration clause you force your customers to sign. 

Many of your competitors are starting to eliminate or have eliminated the practice, have stopped the practice of forced arbitration. 

8 

Would you commit to the Committee today that Wells Fargo will 

quit using forced arbitration? 

Mr. SLOAN. No, I will not, Senator. When I hear the word ‘‘arbitration,’’ what I hear is the word ‘‘failing.’’ And when we have to 

resort and have to have a conversation with our customers about 

arbitration, it means that we do not have the right product; we 

have not provided it in the right way; we have not responded to 

their complaint; and we have not made it right to them. So let me 

describe what we have done to change that. 

First and foremost, we are doing a thorough review of all of our 

products and services to make sure that they are the right products 

and services for our customers. In some situations we have stopped 

providing certain products because we did not believe that we could 

provide them in the appropriate way. 

Second, we are improving how we train our people and our team 

members to sell our products, to provide the right advice, to provide the right service. 

Third, when a customer comes in, we are trying to resolve the 

complaint completely. One important change that we have made in 

our Community Bank—and in my opening statement I mentioned 

we have made fundamental changes in our Community Bank—now 

when you come into one of our branches, one of our bankers or tellers does not say, ‘‘I cannot handle your problem. Call this 800 number.’’ We settle it right then and there. 

In addition to that, fourthly, as part of resolving the sales practices issues, we have expanded to a nationwide mediation. So we 

pay for a mediator to work with on behalf of our customers—it is 

an independent mediator, to work on behalf of our customers to resolve complaints. I am happy to say that of the 43.5 million customers that we reached out to in the fourth quarter, those ones 

that came back—— 

Senator BROWN. I am going to cut you off. I apologize, because 

I wanted to follow up on that, and I appreciate the long, detailed 

answer, and I think it was made in good faith. But I also think 

that forced arbitration clauses always give the advantage to the 

employer, to the bank, as we know. We know that. That is established fact. You are still going to use those forced arbitration 

clauses to take advantage of your customers the way you did with 

the suits in 2013 and 2015 and the case against the customers in 

Utah. 

Why should we believe you are committed to changing your 

bank’s practices and being fair to customers when you continue to 

use that behind-closed-doors arbitration system that clearly does 

not allow customers their day in court? 

Mr. SLOAN. Senator, the reason is because I think we have made 

fundamental changes to the way that we do business so it will limit 

the number of times that that ever becomes an issue. 

Senator BROWN. To limit the number of times is good. I appreciate that. But give them their day in court, those that you are not 

able to help or that you are not able to satisfy. 

Mr. SLOAN. Senator, I look at the CFPB’s own study, and the 

CFPB’s own study said that arbitration is fast and efficient for consumers. And the CFPB’s own study said that consumers have better returns, higher resolutions with institutions—— 

9 

Senator BROWN. That is a selective reading of the CFPB’s study, 

but keep in mind where the CFPB ultimately came out on that 

question. 

Thank you, Mr. Chairman. 

Chairman CRAPO. Senator Kennedy. 

Senator KENNEDY. Thank you, Mr. Chairman. Good morning, Mr. 

Sloan. 

Mr. SLOAN. Good morning, Senator. 

Senator KENNEDY. Thank you for being here. 

Mr. SLOAN. Thank you. 

Senator KENNEDY. Like you, I believe in the free enterprise system. I think the free enterprise system has lifted more people out 

of poverty than all the social programs put together. I am certainly 

not anti-business. Quite the contrary. We all on this panel talk 

about the importance of jobs. I do not see how you can be for jobs 

if you are against business. 

But what I am curious about is what in God’s name were you 

thinking? I am not against large. I am happy when businesses are 

successful. I am not against big. With all due respect, I am against 

dumb. I am against a business practice which has Wells Fargo first 

and customers second. I think it ought to be customer first and 

Wells Fargo second. I think it is better for the customer and better 

long term for Wells Fargo. 

When did this start? 

Mr. SLOAN. Senator, I completely agree with you. Wells Fargo 

cannot be a successful American institution, we cannot employ 

270,000 of what I think are the best team members, unless we put 

our customers first. And there is no question that in our Community Bank we had an incentive plan that put selling products first 

as opposed to customers first. 

Senator KENNEDY. Nothing wrong with that if it is good for the 

customer. But when did it start? When did it all start? You have 

investigated back to 2009, I believe? 

Mr. SLOAN. Senator, no, the board of directors, the independent 

board of directors, members of the board looked back as far as 

2002, and that is where they found—and I agree with them—that 

they saw instances of inappropriate sales activity under that plan. 

Senator, we should have ended that plan years ago. We made a 

mistake. There is no question about that. We have ended that plan. 

We have rolled out a new incentive plan, to your point, in our Community Bank. That incentive plan rewards good customer service. 

It rewards providing products in the right way. 

Senator KENNEDY. Mr. Sloan, I appreciate that, and I am really 

not trying to be rude. We just have a 5-minute limit, and our 

Chairman enforces it pretty strictly, as he should. 

Can you tell me this: what is the total number right now of fake 

accounts you found? 

Mr. SLOAN. Senator, in our review going back nearly 8 years to 

2009, we found that—because we could not call 165 million people. 

What we did is we used a very conservative set of data metrics to 

look at, and it was done by an independent party, not by—— 

Senator KENNEDY. And what did you come up with in terms of 

the number? 

10 

Mr. SLOAN. There were up to potentially—3.5 million potentially 

unauthorized accounts. 

Senator KENNEDY. And that is back to 2009? 

Mr. SLOAN. That is correct. 

Senator KENNEDY. Did you go back further than that? 

Mr. SLOAN. Senator, we could not go back much further than 

that, and the reason we picked 2009, that is when Wells Fargo and 

Wachovia came together. So as we went back further than that, the 

data starts to deteriorate. 

Senator KENNEDY. How much money did you make off of those 

3.5 million fake accounts? 

Mr. SLOAN. Well, again, Senator, they were potentially unauthorized. There were some legitimate accounts in that number. But let 

us assume that they were all inappropriate. 

Senator KENNEDY. Yes. 

Mr. SLOAN. We found 190,000 accounts that we charged fees, and 

that was approximately $6 million in total, and we have refunded 

that. 

Senator KENNEDY. OK. Was anybody’s credit impacted? 

Mr. SLOAN. Not for those deposit accounts, but for the potentially 

unauthorized credit card accounts, their credit could have been impacted. And we are in the process of working to correct that. 

Senator KENNEDY. And you said you talked to the credit bureaus. 

Are they being cooperative? 

Mr. SLOAN. Yes, they are. 

Senator KENNEDY. You said they were not giving you certain information? 

Mr. SLOAN. Well, when we provide them information about customers, they cannot provide us the detailed credit history without 

the customer’s approval. So what they did is they gave us data 

without the customer name so we could determine—— 

Senator KENNEDY. I thought you could buy it from them? 

Mr. SLOAN. Pardon me? 

Senator KENNEDY. I thought you could buy—— 

Mr. SLOAN. We cannot buy it from them, but we—and that is why it is very important and an important part of the $142 million 

settlement that—and that is really the linchpin of that entire settlement, is to make it right for their credit histories. And so that 

is how they are going to be able to get their credit histories fixed. 

In addition, if they come in to see us, of course, we will go ahead 

and do that. 

Senator KENNEDY. Sure. Thank you, Mr. Sloan. 

Mr. SLOAN. Thank you. 

Senator KENNEDY. Thank you, Mr. Chairman. 

Chairman CRAPO. Thank you. 

Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman. And thank you for 

being here today, Mr. Sloan. 

Let me just go through what we have learned over the last year. 

In September of 2016, we learned that 2.1 million Wells Fargo accounts had been fraudulently set up, credit, checking, debit, unauthorized setting up. 

July of 2017, we learned that Wells Fargo set up 800,000 auto 

insurance policies who did not want or did not need them. 

11 

And then in August of 2017, we learned an additional 1.8 million—that is over and above the 2.1 million—1.4 million accounts 

were set up for unknowing customers. 

If you add all those up, that brings the accounts to 4.3 million 

people either fraudulent accounts or insurance companies, if my 

math is correct. 

Mr. SLOAN. That is correct. 

Senator TESTER. 4.3 million people, by the way, is over 4 times 

the population of the State of Montana. It is a pretty good-size 

chunk of folks. 

The Chairman and Ranking Member of this Committee in their 

opening statements basically asked you: What have you done that 

you can tell us today that has changed this culture? This is not one 

person. This is not tellers on the ground. This has been a culture. 

So what can you tell me concisely that you have done—and I know 

you have talked about, you know, transforming your community 

banks. But what as CEO have you done, or the board or whatever, 

to ensure to us that we are not going to be back here next week 

or a month from now or a year from now talking about something 

else? 

Mr. SLOAN. Senator, I cannot promise you perfection, but I can 

promise you that we are working as hard as we can to get to near 

perfection, and that is, we are reviewing processes and procedures, 

turning over every stone. 

First and foremost, what we had to do and what you criticized 

us for last year—and you were absolutely right—is we had to have 

an executive team that took full responsibility for that. That was 

number one. 

Number two, we needed to reinforce that with our team, so we 

went out and we talked to our team, and we asked them what they 

were concerned about. They were concerned about things like pay. 

They were concerned about things like escalation of issues. They 

were concerned about things like executive accountability. They 

were concerned about things like revamping our equity lines and 

things like that—our ethics lines, excuse me. 

The point is we have listened to our team, and as you are listening to the team, that fundamentally changes the culture. 

Senator TESTER. OK. 

Mr. SLOAN. And, Senator, the proof of the pudding there is that 

our turnover is now down to its lowest level in 41⁄2 years; and, in 

particular, it is down to its lowest level in our Community Bank 

where we had our biggest issues. 

Senator TESTER. OK. So just to let you know, I hope this all 

works, because I think it is absolutely essential that it works. If 

we are doing this again 6 months from now, it is not going to be 

good. 

You talked about the things you have done, reviewing the customers and products, improving training, resolving problems. You 

talked about a nationwide mediator. Who pays for the nationwide 

mediator? 

Mr. SLOAN. We do. 

Senator TESTER. Who chooses them? 

Mr. SLOAN. The customer does. We just go to an independent mediation service, and the customer can do—— 

12 

Senator TESTER. The customer is the one who makes the call to 

the mediator? 

Mr. SLOAN. Yeah. I mean, we provide them with a list of names. 

They can decide who they want to use, and we will pay for it. 

Senator TESTER. OK. Let me talk a little bit about what the 

Ranking Member talked about, and that is forced arbitration. Is it 

true that you are using forced arbitration when it applies to a real 

account on fake accounts? 

Mr. SLOAN. Senator, we have dealt with that issue with the $142 

million settlement. We did not waive our right to arbitration there, 

but what we did is we agreed to that settlement. And we said to 

our customers, ‘‘Come in to see us.’’ We will make it right by them. 

‘‘And if you are not happy, we will provide you with a mediator.’’ 

Senator TESTER. But that was not the question. The question is: 

Were you using forced arbitration from a real account and applying 

it to a fake account that was set up unauthorized? 

Mr. SLOAN. There were instances historically that we did that. 

We are not doing that right—— 

Senator TESTER. Is that happening today? 

Mr. SLOAN. We are not doing that today because we have addressed—— 

Senator TESTER. So will you commit to not use forced arbitration 

on accounts that were set up without the authorization of the customer? 

Mr. SLOAN. Senator, if there is a situation in which a customer—— 

Senator TESTER. ‘‘Yes’’ or ‘‘no’’ would work. 

Mr. SLOAN. Yes. 

Senator TESTER. You commit not to use that, forced arbitration? 

Mr. SLOAN. If we have set up an account that was inappropriately set up or fraudulently set up, without the customer, we are 

going to make it right by them. 

Senator TESTER. And you are not going to use forced arbitration? 

Mr. SLOAN. There is not going to be a reason even to have the 

conversation because we are going to make it right by that customer. 

Senator TESTER. But, Tim, let me point out that that was being 

used 6 months ago. I think my staff whispered in my ear that they 

were using arbitration on fake accounts that were set up on real 

accounts. 

Mr. SLOAN. Senator Tester, I completely appreciate your question, and we are not doing that because—— 

Senator TESTER. OK. And you are not going to do that? 

Mr. SLOAN. If we have set up an account—— 

Senator TESTER. OK, Tim, the only time I get in fights with folks 

who are talking is when they do not give me a ‘‘yes’’ or ‘‘no’’ answer 

when I really ask it. And the question is this, and you can answer 

it another way if you want. But will you commit to not use forced 

arbitration on accounts that were not authorized by the customer? 

Mr. SLOAN. The easy answer for that, Senator, is yes, because we 

have not done that. We are not doing that. 

Senator TESTER. And you are not going to do it moving forward? 

Mr. SLOAN. We are not doing that. 

13 

Senator TESTER. OK. Thank you very much. I used more time 

than I should have. Thank you, Mr. Chairman. 

Chairman CRAPO. Senator Scott. 

Senator SCOTT. Thank you, Mr. Chairman. Mr. Sloan, thank you 

for being here this morning. 

Mr. SLOAN. Thank you, Senator. 

Senator SCOTT. Obviously, the entire Banking Committee is at 

least irritated by what we have uncovered and what you guys have 

discovered over time, and part of it is that from 2011 to 2015 you 

had 2.1 million fraudulent accounts. Then you went back and did 

another search, and from 2009 to 2015, it is now a 70-percent increase. Were all those new accounts from 2009 to 2011, or did you 

miss some between 2011 and 2015? 

Mr. SLOAN. The majority of the increase was in 2009 and 2010, 

and then extending the period to September of 2016. But because 

we used an even more conservative view for the original timeframe 

of 2011 through 2015, we did pick up a few additional accounts. 

Senator SCOTT. So the vast majority of the 70-percent increase 

was 2009 to 2011, and 2015—— 

Mr. SLOAN. 2009—— 

Senator SCOTT. So it was not within that period—— 

Mr. SLOAN. Correct. 

Senator SCOTT. ——you did the first—— 

Mr. SLOAN. So 2009, 2010, the first part of 2011, and then 

through 2016. 

Senator SCOTT. So half a million customers were enrolled in online bank payment, bill pay, without consent; 800,000 customers 

were charged for auto insurance without their knowledge. How 

about homeowners, flood insurance, property insurance? Because 

having spent 15, 16 years in the insurance business, I will say that 

auto insurance is probably the lower tier of what banks actually 

engage in charging customers for not having proper insurance. 

Homeowners, a significantly higher percentage of folks typically 

find themselves being charged by the bank temporarily, and flood 

insurance is another area where you see that happen oftentimes. 

So are the numbers in the homeowners and the flood space just 

insignificant, or do you have a number for that? 

Mr. SLOAN. We have not found any issues there, Senator. 

Senator SCOTT. And here is my thought: If you have to come 

back in 6 months—which I think it might be good for you to come 

back in 6 months to have another opportunity for us to know what 

happened over the same time period more thoroughly. But my 

question is: If you have not found any instances of inconsistencies 

in other insurance-related services, that would be surprising from 

my perspective, having dealt with banks consistently for 20 years 

or so. 

How do we know, how do you know—did you say you have 165 

million customers? 

Mr. SLOAN. No. We said we looked at 165 million accounts for 

that period. 

Senator SCOTT. 165 million. 

Mr. SLOAN. We have over 70 million customers. We serve one out 

of three U.S. households. 

14 

Senator SCOTT. We were talking about that. We did not think it 

was one out of two. So out of those 70 million customers, you are 

confident that 3.5 million is the final number? 

Mr. SLOAN. Of potentially unauthorized accounts? 

Senator SCOTT. Yes. 

Mr. SLOAN. Yes, Senator, I am. 

Senator SCOTT. Let me talk for a second about the corrosive culture. That does not start at local retail locations. It does not start 

with tellers. A corrosive culture starts at the top, and then it seeps 

into the soil conditions. Then it germinates, and then folks feed off 

of that. 

How have you changed the corporate leadership and the corporate culture that will find itself in the soil conditions at retail locations? 

Mr. SLOAN. So, Senator, first we look at what caused the problems in our retail bank. First and foremost, the issue within our 

retail bank was that we had an incentive plan that drove an inappropriate sales culture. That incentive plan has been ended, and 

we have rolled out a new incentive plan. The feedback that we 

have gotten from our team since we have rolled back that plan— 

we have now had two full quarters; we will get the results of the 

third quarter—is that they are overwhelmingly very pleased with 

the plan. As we survey them, they are telling us that they like the 

new conditions at Wells Fargo. They are very happy. We have actually hired back—and we have hired 17,000 new team members into 

our retail bank since September, since we have made these 

changes. Of those, 10 percent, or about 1,700, 1,800, were team 

members that had worked in the retail bank, that left because of 

the old culture there, or were dismissed because they did not meet 

certain sales quotas. And to me, those folks coming back and agreeing to be part of the team reinforce that the changes that we are 

making in the Community Bank are taking hold. 

Senator SCOTT. That is good to hear that some folks want to 

come back. My thought is this: Your sales culture is not driven by 

the sales products. I think Senator Rounds can attest to the fact 

as another insurance guy that ultimately it is not the sales goals, 

it is not the product selection. It is the people. And it is the people 

who are in management positions who put more pressure for results than an average person can get. And so if you have not 

changed the people, it is quite difficult to change the culture. 

Mr. SLOAN. I completely agree with you. That is why I named 

the new head of our Community Bank group who I mentioned, 

Mary Mack, who is doing an excellent job. She has gone through 

each one of the levels of management and had everyone literally reapply for their jobs. We have reduced the number of managers to 

change the span of control. We eliminated a layer. 

But I agree with you. The issue is not just the incentive plan. 

It was that we created a culture of managers that only knew how 

to manage because of that plan. So getting rid of the plan, going 

through and making sure we had the best managers, and then now 

we are in the process of retraining everybody, starting at the top, 

the senior levels, before we get down to the folks in our branches. 

I completely agree with you. 

Senator SCOTT. Thank you, sir. 

15 

Chairman CRAPO. Thank you. 

Senator Warren. 

Senator WARREN. Thank you, Mr. Chairman. 

Mr. Sloan, when you were named CEO after the fake account 

scandal, you were asked why a career as a Wells Fargo insider like 

you, why that made you the right person to fix the fundamental 

problems at the bank, and you said, ‘‘Because I have been making 

change for 29-plus years at Wells Fargo.’’ 

So I want to take a look at your time at Wells Fargo. From 2011 

to 2014, the height of when Wells Fargo was cheating customers 

by opening fake accounts, you served as the chief financial officer. 

And as CFO, you spoke to potential Wells Fargo investors a lot. On 

those calls you aggressively promoted Wells Fargo’s ability to open 

up new accounts, didn’t you? 

Mr. SLOAN. No, I did not. 

Senator WARREN. No, you did not? 

Mr. SLOAN. No. 

Senator WARREN. Well, here are the transcripts from all of the 

investor earnings calls that you participated in from 2011 to 2014. 

I have read through them, and on these calls no one, not even John 

Stumpf, who was the CEO at the time, bragged more about Wells 

Fargo’s ability and commitment to open new accounts for existing 

customers. 

In the April 2011 call, for example—I think I have marked that 

one—you said, ‘‘I cannot wait to get a credit card in every one of 

our creditworthy customers’ wallets.’’ Nothing about whether your 

customers wanted or needed a Wells Fargo credit card. All that 

mattered was opening new accounts. 

So while you were bragging to investors about opening new accounts on these calls from 2011 to 2014, you also personally owned 

roughly 2 million shares of Wells Fargo stock. Is that right? 

Mr. SLOAN. Senator, I do not recall how much stock I owned in 

Wells Fargo. I am a very proud shareholder. 

Senator WARREN. Well, it is actually in your SEC filing. 

Mr. SLOAN. Sure. It is public. 

Senator WARREN. If that is accurate—— 

Mr. SLOAN. It is all out there. 

Senator WARREN. ——then 2 million shares. So it looks like you 

had a really good thing going. Talk up Wells Fargo’s ability to open 

new accounts, get investors excited, and, hey, if the stock goes up 

by a dollar, you make a cool 2 million bucks. 

Then in December 2013, almost 3 years into your time as CFO, 

the L.A. Times published a long article on the relentless pressure 

Wells Fargo put on employees to open new accounts. The article 

was based on a review of internal Wells Fargo documents, court filings, interviews with more than 30 current and former Wells Fargo 

employees. The article specifically said that employees had opened 

fake accounts in response to this pressure. 

Now, you were interviewed for that piece, Mr. Sloan, and you 

said, ‘‘I am not aware of any overbearing sales culture.’’ Hmm, that 

is really interesting phrasing: ‘‘I am not aware of any problem.’’ 

So when the L.A. Times came to you and showed you concrete 

evidence of a terrible problem with fake accounts at your bank, did 

you launch an investigation into the issue before brushing it off? 

16 

Mr. SLOAN. Senator, first, as it relates to my comments in 2011, 

I am proud of the credit card products that we have at Wells 

Fargo—— 

Senator WARREN. That is not the question I am asking. I just 

asked, you brushed it off, you said, ‘‘I am not aware of any problem.’’ Did you open an investigation when someone laid out evidence of fake accounts? 

Mr. SLOAN. Senator, in that interview, to the best of my recollection, with the L.A. Times, they did not provide me with any information. It was soon after that that, as I mentioned, 2013—— 

Senator WARREN. So I take that as a no. So when you were 

asked this question—— 

Mr. SLOAN. That is correct, because by that—— 

Senator WARREN. ——you did not open an interview—you did not 

open an inquiry into it. Is that right? 

Mr. SLOAN. Senator, again, the L.A. Times did not provide me 

with any documentation—— 

Senator WARREN. So you had no clue—— 

Mr. SLOAN. It was a phone call. 

Senator WARREN. All right—— 

Mr. SLOAN. After that time—— 

Senator WARREN. Did you read—did you read the article? 

Mr. SLOAN. I read the article, yes. 

Senator WARREN. And then you opened an investigation immediately? 

Mr. SLOAN. At the same time the article was coming out, that 

was the time when the Community Bank elevated this issue to the 

senior leadership team—— 

Senator WARREN. OK, so let us talk about—— 

Mr. SLOAN. ——and that is the time that we began to take action. 

Senator WARREN. Let us talk about that time. You did not look 

into the fake accounts, but you went right back to pumping up the 

stock price by bragging about Wells Fargo’s record number of new 

accounts on your very next investor call. 

Now let us forward to 2016, 2 months before the fake account 

scandal became public. You were then the chief operating officer of 

Wells Fargo. An interviewer asked you whether you thought the 

bank had pushed sales goals and cross-selling too far, and your answer was, ‘‘No. The fundamental strategy that we have is not going 

to change.’’ That is July of 2016, just before this breaks open. 

According to Wells Fargo’s own investigation, by July of 2016, 

you knew that thousands of employees had been fired for opening 

fake accounts and other sales violations. You knew aggressive 

cross-selling goals were to blame. And, still, you publicly said the 

bank did not have a problem. Right? 

Mr. SLOAN. Senator, that is incorrect. You—— 

Senator WARREN. You did not say this, that your—— 

Mr. SLOAN. Senator, could you read the entire quote? And could 

we go through the entire presentation? Because I think in that—— 

Senator WARREN. Your answer—— 

Mr. SLOAN. Senator, I think in that presentation—— 

Senator WARREN. ——when asked about whether or not—— 

Mr. SLOAN. ——you will see—— 

17 

Senator WARREN. ——you pushed employees too far, your answer 

was, ‘‘No. The fundamental strategy that we have is not going to 

change.’’ And that is a month—— 

Mr. SLOAN. And I was referring to the vision—— 

Senator WARREN. ——before this breaks publicly. 

Mr. SLOAN. I was referring to the vision of our company—— 

Senator WARREN. The vision—— 

Mr. SLOAN. Of our company. 

Senator WARREN. ——including the fake scandals you—— 

Mr. SLOAN. No, Senator—— 

Senator WARREN. ——were being asked about? 

Mr. SLOAN. Every time I give a presentation to our team members, I start with our vision, which is to ground people in the culture of our company, which is that our job is to satisfy our customers’ financial needs and to help them succeed financially. 

Senator WARREN. Mr. Sloan, I am glad—— 

Mr. SLOAN. That is the context that I made that statement. Since 

I have become CEO, I have made fundamental changes to address 

the issues that we are talking about today. 

Senator WARREN. Mr. Sloan, you were asked about pressure on 

employees which caused the fake account scandal. We all know 

that now. It is public. 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 account scam. And, Mr. Sloan, you say you 

have been making changes at Wells Fargo for 30 years, but you enabled this fake account scam. You got rich off it, and then you tried 

to cover it up. At best, you were incompetent. At worst, you were 

complicit. And either way you should be fired. 

Wells Fargo needs to start over, and that will not happen until 

the bank rids itself of people like you who led it into this crisis. 

Thank you, Mr. Chairman. 

Mr. SLOAN. Mr. Chairman, could I respond to that? 

Chairman CRAPO. Yes, you may. 

Mr. SLOAN. OK. 

Senator WARREN. I want an equal amount of time. 

Mr. SLOAN. Senator, a couple things. First—and I will get to your 

criticism of me in a moment, but first let us talk about the board. 

I think the board has taken very important steps in terms of a 

thorough, independent investigation that has been made public. 

That is number one. 

Number two, the board has taken very strong action in terms of 

executive accountability that is unfortunately some of the highest 

in corporate American history. Again, unfortunate. So I do not believe that your criticisms of the board are accurate. 

As it relates to me, again, I think the reason that I am the right 

person to run this company today, notwithstanding your criticism, 

is because I have been making change at this company for 30 

years. I have made mistakes. I certainly have not been perfect. But 

I think having that knowledge of the company, having the ability 

to make the change, the actions that I have taken since I have become CEO 11 months ago have made fundamental change at this 

company. So I am not afraid to make hard decisions when it is 

18 

needed, and I have the support of 270,000 people. That is why I 

think I am the right person. 

Senator WARREN. Can I just make a short comment on this? 

Chairman CRAPO. Very brief. 

Senator WARREN. I know we are over. But you really want to 

say, ‘‘Are you kidding?’’ You know, look, you have been there for 

30 years, and every one of my colleagues on both the Republican 

side and the Democratic side who has spoken so far have talked 

about a broken culture at Wells Fargo, have talked about the fact 

that the problem starts with leadership. The people who were there 

and leading Wells Fargo during the time of a years-long scam and 

multiple scams, as our Chairman pointed out, those people should 

not be left in charge of this business. And when you promoted exactly what was wrong with this bank over and over and over, you 

went to the stock market and you bragged about it. You made 

money personally off it. When you were asked about it, you did not 

tell the truth, and you tried to cover it up. 

Wells Fargo is not going to change with you in charge. 

Chairman CRAPO. Senator Rounds is next, and I do ask the Senators to pay attention to the time limits. 

Senator ROUNDS. Thank you, Mr. Chairman. 

I know that we are not supposed to be in the middle of this. We 

each normally get 5 minutes, and so I am just going to go back because I know that in some cases you do not get the opportunity to 

respond. But I think there was one area here that I want to hear 

your full response to it, and that is, you said that basically, as Senator Warren has indicated, you wanted to see everybody with a 

credit card or at least all of your folks with a credit card. Would 

you please go into what you meant by that statement? 

Mr. SLOAN. Well, sure. I mean, we are in the banking business, 

and one of the products that we provide to our customers is a credit 

card. And any one of our customers that comes in to see us that 

is interested in a credit card, we would like to provide it to them. 

I am proud of the hard work and effort of all of our team members 

that work in our credit card group. We have seen growth in that 

group because customers like using the product. I am not embarrassed about that. Whatever adjective or adverbs are used to describe what I may have said or did that are taken out of context 

is not consistent with the fact that our job is to satisfy our customers’ financial needs. If that financial need means they want a 

credit card and if we have the right product, I would love for them 

to have it. That is what we do. 

Senator ROUNDS. Would you agree that there was a broken culture at Wells Fargo during this time? 

Mr. SLOAN. Senator, I would agree that in our Community Bank 

we had fundamental problems that created serious cultural issues. 

In terms of the rest of the company, there were other issues, but 

I would not say that in the rest of the company it was a broken 

culture. 

Having said that, as CEO, and acknowledging that I have been 

there for 30 years, there are some that do not think I should be 

in this role. We have heard that today. And so what did we do as 

it relates to culture? 

19 

We went out and we asked third parties to help us do new culture surveys to make sure that we were not missing anything, because even though I have been there for 30 years and I have done 

things sometimes good and sometimes I have made mistakes, I do 

not want to be in a position where it is just what I think we should 

be doing. I want to make sure that we are listening to outside experts, we are listening to all of our stakeholders, and we are listening to our team members. So we are making fundamental changes 

in the company to address any sort of cultural weaknesses that we 

have. 

Senator ROUNDS. One area that I think we have got concern with 

in particular is Wells Fargo has—I want to make sure that members of the military, that they really do have some special legal 

protections under the Servicemembers Civil Relief Act, such as the 

protections to the soldier’s credit or property when they are serving 

on active duty. And I want to go into this, but can you please discuss some of the specific ways that Wells Fargo has tried to improve its compliance with the Servicemembers Civil Relief Act, particularly in light of the firm’s sales practice issues? Can you go into 

this a little bit to give us some assurance that there have been 

changes made with regard to how servicemembers are treated with 

regard to their credit activities? 

Mr. SLOAN. Senator, we care about all of our customers, but I do 

not think there is any one customer group that we care more about 

than our service men and women. We created what we call a ‘‘Center of Excellence’’ that looks across the entire company to manage 

SCRA matters. That Center of Excellence is staffed with experts 

that only look at the ways in which we can provide the appropriate 

benefits to our service men and women. We work very closely with 

the Defense Department to make sure that we get on a daily basis 

updates from the Defense Department in terms of which service 

men and women, which of our customers are now on active duty. 

That puts them in a completely different category, and we are very 

proud of the fact that we have made significant improvements. 

We have had historical issues, Senator. There is no question 

about that. But we needed to make fundamental change to create 

a Center of Excellence, to staff it appropriately, and then to make 

sure that they are looking across the company. 

In addition to that, I am very proud of the fact that we have 

8,500 team members who were veterans. I have made a commitment as CEO that we want to hire another 20,000 by 2020. In addition, we have provided financial education services to hundreds 

of thousands of service men and women so that they can manage 

their finances appropriately. And we have donated more than 300 

homes free of charge to wounded veterans so that they can have 

a place to live. 

Senator ROUNDS. You have used a third party to come back in 

and to do the analysis on the accounts and so forth and to find accounts and to identify problems. Are you going to continue to use 

a third party to go back in and to double-check in terms of whether 

or not the proposals that you have laid out and your intents are 

actually being followed through on? 

Mr. SLOAN. Well, as it relates to the 165 million accounts and 

going back the additional 8 years, that is effectively what we did. 

20 

We went back and double-checked the prior period that we had disclosed and expanded that. We have put in additional policies and 

procedures in place right now to be able to address those issues, 

and those are independent of the business line. That was one of the 

issues we had before, when there was an issue historically. 

Senator ROUNDS. My time has expired, but are you going to continue to use a third party to review in terms of due diligence to 

make sure that it is actually—that the changes that are being 

made are actually being implemented? 

Mr. SLOAN. We are bringing in third parties to look at various 

policies and procedures across the entire company, so the answer 

is yes. 

Senator ROUNDS. Thank you. 

Thank you, Mr. Chairman. 

Chairman CRAPO. Thank you. 

Senator Schatz. 

Senator SCHATZ. Thank you, Mr. Chairman. 

Mr. Sloan, the OCC has the statutory authority to revoke a national charter of a bank if the bank is found to violate the National 

Bank Act. Why shouldn’t the OCC consider revoking your charter? 

Mr. SLOAN. Senator, because we provide products and services to 

one out of three American households. We have talked about many 

mistakes that we have made, but today, more oftentimes than not, 

we do that appropriately. The company is growing. The company 

provides jobs to 270,000 people—— 

Senator SCHATZ. So you are too big? 

Mr. SLOAN. No. No, we are not too big at all. I am just reinforcing that every day we have 270,000 team members that go out 

and satisfy the needs—— 

Senator SCHATZ. But that sounds like what you said, is that the 

reason that your charter should not at least be considered for revocation is—the first thing out of your mouth was your size. 

Mr. SLOAN. No. The first thing out of my mouth was our customers, that we serve one out of every three customers. We take 

that responsibility very seriously. When you look at the bank in totality today, we are doing many more things right than we are 

wrong. But I appreciate that today we are talking about Wells 

Fargo 1 year later and the changes that I have—— 

Senator SCHATZ. Sure. I am sorry. I am going to cut you off. 

Mr. SLOAN. I understand. 

Senator SCHATZ. I want to go 5 minutes only. That does sound 

to me like too big. I guess we will allow the members of the panel 

and the audience to make a judgment about whether your answer 

sufficed. 

You know, I am not an expert in banking, so I want you to explain this to somebody back home. You made $21 billion in profits 

last year. You made a nice salary. I do not want to personalize this. 

Your board makes better than a nice amount of money. You were 

COO when a lot of this went down, and now you are CEO. So explain to the man on the street why this is fair. 

Mr. SLOAN. Senator, I am not 100 percent sure—I know what 

you mean by ‘‘this,’’ but let me—— 

Senator SCHATZ. I mean, you get a promotion. I mean, all the 

people in charge get lots and lots of money. And I mean, all the— 

21 

not all the consumers, but lots of consumers get harmed. So just 

explain to me in plain English why this is fair. 

Mr. SLOAN. Senator, I have taken responsibility for the mistakes 

that have been made at the company. I am taking action in my role 

as CEO to make Wells Fargo a better bank than it was a year ago. 

It will be a better bank in the future. We are taking concrete—— 

Senator SCHATZ. I guess I will just point out—— 

Mr. SLOAN. ——action, and we are providing—I am proud of the 

fact that our bank is the largest small business lender, the largest 

home lender. We make a difference to Americans every day. You 

deserve—— 

Senator SCHATZ. Back to your size. 

Mr. SLOAN. You deserve—— 

Senator SCHATZ. Hold on. I only have 2 more minutes. It occurs 

to me that it is only in financial services, only in this industry 

where people can make such massive errors and there does not appear to be accountability, and only because of your size do we not 

understand totally which statutory tools, which regulatory tools, 

which consumer-based tools we have at our disposal to find a remedy. 

At a briefing for our staff, Wells Fargo representatives explained 

that banks would make goodwill payments to customers who had 

their cars repossessed and their credit trashed as a result of auto 

insurance that you bought for them. As I understand it, the bank 

will designate a third-party claim administrator and ask customers 

to send in a form explaining how they were harmed and how much 

money they need to be made whole. According to your representatives, the claims are basically going to be paid up to $2,000 sort 

of no questions asked. 

So then my question is: Why not just cut checks up to $2,000 for 

all of those impacted? Because the only reason I can think of putting the burden on consumers to ask for this goodwill money that 

you have already approved is that you are hoping many of them 

will not do it. So can I have your commitment to go ahead and presumptively push out the money rather than force people to figure 

out that they have this right and that they are likely to be approved up to $2,000, but they have got to go through the paperwork? Can I have your commitment today? 

Mr. SLOAN. No. What you have my commitment is that we are making the $500 goodwill payment to every one of those customers, 

whether they were impacted or not. And you have my commitment 

that we will make sure that we will make it right for those customers to the extent they were impacted. If we need to do more 

than $2,000 to make it right, we will do that. 

Senator SCHATZ. Can you please provide the Committee with a 

list of all legislation that Wells Fargo has lobbied for or against 

since 2010? 

Mr. SLOAN. We will respond to whatever inquiry you would like 

us to respond to. 

Senator SCHATZ. That is my inquiry. If you could respond in writing for the Committee. 

Mr. SLOAN. Sure. 

Senator SCHATZ. Thank you. 

Mr. SLOAN. Thank you. 

22 

Chairman CRAPO. Senator Tillis. 

Senator TILLIS. Thank you, Mr. Chair. Mr. Sloan, thank you for 

being here. 

I just want to go back and make sure I have got the numbers 

right. I think the third party assessed 90 out of 93.5 million accounts that were opened, in about a 41⁄2 year lookback, there were 

about 2.5 million that appeared to be unauthorized; and an 8-year 

lookback was 165 million accounts opened, and I think that was 

about 3.5 million unauthorized? 

Mr. SLOAN. Potentially unauthorized, Senator. 

Senator TILLIS. I have got to go back, because I want to talk 

more about how you focus on the customer and make this very easy 

for them to recover from. I serve on the Veterans’ Affairs Committee, and I got a call from a veteran in North Carolina who 

had—his wife was opening the mail, and she mentioned to her veteran husband, ‘‘Honey, I did not know you were dead.’’ The VA had 

sent a notice that he had somehow got miscategorized and he was 

deemed dead. He thought it was a simple problem. He had his military ID card, called up the VA, and the VA said, ‘‘Well, you have 

got reams of paperwork and several phone calls that you will need 

to make to actually get reinstated and get your veteran’s benefits.’’ 

Now, tell me how in making this right that I am not getting on 

a phone listening to elevator music, getting transferred to several 

different accounts—in other words, how are you maximizing—minimizing the customer’s time and getting this right? And, similarly, 

how are any effects on underlying credit reporting agencies being 

dealt with, too, as a part of getting this right? In other words, is 

it my problem to deal with maybe clearing up those accounts that 

I did not authorize to an Equifax or through the credit agencies? 

Tell me a little bit about that process. 

Mr. SLOAN. So in answer to your first question, Senator, in the 

fourth quarter we reached out to 43.5 million customers via their 

statements and also by email, and we said something very simple: 

‘‘If there is anything about your accounts that you think is not 

right, come in and see us, and we will make it right by you.’’ And 

about 41,000 have come in to see us. Most of those situations have 

been resolved with the customer right there. To the extent that 

they are not pleased with what we have offered, we have offered 

them free mediation services. Again, we pay for them, an independent mediator, and we address their issues. 

One of the other fundamental changes that we have made in the 

company since I became CEO is the customer service element within our branches. Historically, when a customer came in, we had not 

delegated the ability for a banker in one of our branches or a teller 

or a service manager to deal with it on the spot. We said, ‘‘Hey, 

great. You have got an issue. Call our 1–800 number.’’ And that 

was not a very good customer experience, to your point. 

So under the new leadership of our new head of Community 

Bank, Mary Mack, what she has done is she has delegated that authority down to the branches so that when a customer comes in 

and they have an issue, we are trying to deal with as many of 

those as we can. 

23 

In addition, we have increased staffing for our phone bank or 

customer service as well as the customers that come in via online 

or via mobile. So we are trying to do a better job. 

I introduced six goals for our team in March, and the number 

one goal is that we want to provide the best customer service and 

advice in the industry. We have got work to do, Senator. I would 

love to be able to tell you that we are number one right now, but 

we are not. But I am going to make sure that we have enough resources. 

Senator TILLIS. So we are trying to figure out, you know, I used 

the 93 million and 2 million potentially unauthorized, or 165 million, 3.5 million potentially unauthorized. And then it is a fraction 

of those that actually incurred fees or any charges. Is that correct? 

Mr. SLOAN. That is correct. 

Senator TILLIS. OK. So for all the other ones, just as a self-governing matter, I mean, I worked in the banking industry before I 

went into politics. You do not like opening up accounts that have 

no activity because there is an inherent cost of operations that you 

are incurring. So, I mean, there is a natural—I am trying to figure 

out how—where the circuit breaker did not click and whether or 

not all those circuit breakers, in your opinion, have been fired so 

that we are now trying to get to the governance issues that I have 

confidence that you would work on, Wells Fargo would work on. 

But tell me just a little bit more about governance in my remaining 

25 seconds. 

Mr. SLOAN. Well, as it relates to governance for the entire company, the board engaged in an independent investigation. That has 

been made public. The board made some changes based upon that 

in terms of executive accountability, which totaled $180 million of 

compensation that was clawed back or not authorized. There is a 

new CEO. That is me. We have an Operating Committee of which 

5 of the 10 members now have new roles. We have taken the responsibility and the criticism in the board’s independent report 

that said that management did not provide information to the 

board as well as we could have. I completely agree with that. We 

have revamped the way we have done that. So there have been a 

lot of governance changes. 

But most importantly, I think, within the company, it is taking 

the enterprise risk control functions—human resources, compliance, credit, you name it—and centralizing all those so that we 

have a better check and balance between the business lines and 

risk, and then creating a Conduct Office in the risk function to be 

able to independently look at complaints and ethics lines questions 

and all kinds of things that would indicate that we have any issues 

in the company. I get those reports now, and that was not happening a year ago. 

Chairman CRAPO. Senator Van Hollen. 

Senator VAN HOLLEN. Thank you, Mr. Chairman. 

Mr. Sloan, I was listening to your responses to Senator Tester 

about the issue of forced arbitration. A simple question. Who knows 

best what is in a customer’s interest, Wells Fargo or your customer? 

24 

Mr. SLOAN. I think that it frequently is the customer, and that 

is why it is very important from my perspective to get it right so 

that we do not get to the point—— 

Senator VAN HOLLEN. But if your customer knows best, why do 

you deny them the ability to go to court? Why do you require your 

customers, if they know best, to go to mandatory arbitration? 

Mr. SLOAN. Senator, we do not do that for all of our products and 

services. We do that—— 

Senator VAN HOLLEN. Yeah, but why do you do it for some of 

them if your customer knows best? 

Mr. SLOAN. Well, again, I think many—— 

Senator VAN HOLLEN. It is a simple question. If your customer 

knows best, why do you deny them the opportunity to go to court? 

Why do you require arbitration? 

Mr. SLOAN. Because, Senator, most of the independent studies, 

including the ones that was done by the CFPB 2 years ago, indicate—— 

Senator VAN HOLLEN. But if a customer—— 

Mr. SLOAN. ——that it is better—that it is better for the customer—— 

Senator VAN HOLLEN. Mr. Chairman, if the customer makes—a 

customer brings the case, right? Right? So if a customer decides it 

is in his or her best interest, forget about studies. We also know 

what the Consumer Financial Protection Bureau—what they recommended. They recommended that we get rid of forced arbitration. 

You said to Senator Tester that you were not applying forced arbitration with respect to the fake accounts. Remember that answer? 

Mr. SLOAN. Yes, I did. 

Senator VAN HOLLEN. There is an article here, Monday, September 18, 2017, just a short time ago. In a case in Utah, Wells 

Fargo lawyers have actually taken the position that the forced arbitration does apply to those fake accounts. Are you aware of that 

case? 

Mr. SLOAN. I am not familiar with that case, Senator. I apologize. 

Senator VAN HOLLEN. Well, let me read to you from a Reuters 

excerpt, and they reported this on September 18, 2017. It says: ‘‘In 

a motion on Monday, lawyers for Wells Fargo said consumers 

signed agreements to arbitrate disputes when they first opened 

their accounts at the bank, and those agreements also cover other 

accounts allegedly opened without their consent.’’ That directly contradicts your testimony to Senator Tester, doesn’t it? 

Mr. SLOAN. Senator, I will have—I will look into that matter. 

Senator VAN HOLLEN. If that is true—— 

Mr. SLOAN. Senator, I will look into that matter, and I will respond. 

Senator VAN HOLLEN. If that is true, it directly contradicts your 

testimony to this Committee, doesn’t it? 

Mr. SLOAN. Senator, I will look into that matter—— 

Senator VAN HOLLEN. I am not asking you to look into it. I am 

asking you to say if that is true, doesn’t that contradict your testimony? 

25 

Mr. SLOAN. Senator, I am not familiar with the facts of the situation, so I cannot answer that question. But I would be happy to 

look into it and respond to you. 

Senator VAN HOLLEN. Well, if it is true, it violates—it is contradictory—I do not know if you were sworn in today or not, but 

it violates your earlier testimony. 

Let me ask you about your other overdraft fees scandal. When 

it comes to the overdraft fees scandal, you are still exercising your 

right to deny customers the right to go to court. In other words, 

you are enforcing the arbitration agreement. Is that—— 

Mr. SLOAN. Senator, I am not familiar with the overdraft scandal 

that you are referring to. 

Senator VAN HOLLEN. The overdraft fees where you were charging—you were not—where you were charging customers fees on 

overdrafts of fake accounts? 

Mr. SLOAN. Senator, we do not—we charge customers fees when 

they overdraw their accounts, but I am not familiar with an overdraft scandal. If it relates to any unauthorized accounts that were 

potentially unauthorized accounts that could have been part of that 

3.5 million, to the extent that there was any fees charged, we have 

already reimbursed those to the customers. So they have been 

made whole. 

Senator VAN HOLLEN. Well, apparently in a case in the Eleventh 

Circuit Court of Appeals, you are—we will follow up with you, but 

it looks like also—— 

Mr. SLOAN. Please. 

Senator VAN HOLLEN. How about the practice where you were 

selling auto insurance to people who did not ask for it or did not 

want it? That was a situation I think about 500 Marylanders or 

more—actually, about 10,000 Marylanders were affected by that; 

500 had their cars repossessed. It was actually the subject of an 

NPR radio story. Did you have a chance to hear that radio story? 

Mr. SLOAN. I did not, Senator. I listen to NPR, but I did not hear 

that. 

Senator VAN HOLLEN. I would encourage you to do that because 

one of my constituents came out to go to work one morning. His 

name was Michael Feifer. He was heading out in February to his 

job in Maryland at a company that builds guitars. He walked to the 

place where he parked his car. It was not there. He called the police, said he was livid, said he thought someone stole his car. It 

turns out it was not a car thief at all. It was Wells Fargo’s repossessors. He was flabbergasted because his insurance was current. He went to Wells Fargo. The folks at the local branch said, 

you know, ‘‘This is nuts. You are covered.’’ It took them, the employees of Wells Fargo, over 21⁄2 hours just to connect to folks in 

another branch. 

My question is very simple: If it takes the employees of Wells 

Fargo 21⁄2 hours to get in touch with others, if it takes individuals 

having to fight the system by themselves, don’t you understand 

why it makes sense for people to be able to band together to file 

their claims against a big company like yours rather than have to 

fight you one by one? 

Mr. SLOAN. Senator, what I understand is that if we make a mistake, we need to make it right, and we have got to improve our 

26 

processes. What I would like is, to the extent that Mr. Feifer has 

not been made whole by us, I would like to speak with him personally to make sure that we are handling the situation to his satisfaction if we made a mistake. 

Senator VAN HOLLEN. Well, Mr. Chairman, I would just point out 

that you said it yourself. You were informing your customers to 

know about class action settlements so they can be made whole. 

That is the way lots of people can be, you know, made whole at 

once. Mr. Feifer is like one guy fighting Wells Fargo. I find it amazing that you would say your customers come first, and then you 

deny them the choice of how they seek their compensation, how 

they seek justice. 

Thank you, Mr. Chairman. 

Chairman CRAPO. Senator Perdue. 

Senator PERDUE. Thank you, Mr. Chair. Mr. Sloan, thank you for 

being here. 

Mr. SLOAN. Thank you, Senator. 

Senator PERDUE. In how many States does Wells operate today? 

Mr. SLOAN. In all of them. 

Senator PERDUE. Are you regulated in every one of those States? 

Mr. SLOAN. Yes. 

Senator PERDUE. How many Federal regulators do you have 

today? 

Mr. SLOAN. Oh, gosh. 

Senator PERDUE. OCC, Federal Reserve, SEC, CFPB; is that correct? 

Mr. SLOAN. And then, in addition, we have securities regulators, 

too. 

Senator PERDUE. So were you supervised during this period of 

time, 2011 to 2016, were you supervised by the Federal Reserve? 

Mr. SLOAN. Yes. 

Senator PERDUE. Did they in their oversight—and I am sure they 

were quite involved. Did they reveal any material issues during 

that period of time? 

Mr. SLOAN. Oh, they have, but that is confidential information 

that I cannot disclose. But we have an active dialogue in—— 

Senator PERDUE. Relative to this breach of—— 

Mr. SLOAN. In terms of the retail account? 

Senator PERDUE. Yes. 

Mr. SLOAN. No, they did not. 

Senator PERDUE. Were you supervised by the OCC during this 

period of time? 

Mr. SLOAN. Yes. 

Senator PERDUE. Did that oversight reveal any material issues 

relating to this situation? 

Mr. SLOAN. Yes, it did, and the prior Comptroller of the Currency, Mr. Curry, has testified to that. 

Senator PERDUE. Did the CFPB come up with anything, any material issues, during this period of time? 

Mr. SLOAN. Not to my knowledge. 

Senator PERDUE. And in dealing with these regulators, are there 

any outstanding issues today relative to this—— 

Mr. SLOAN. Oh, sure, absolutely. You know, I have a long to-do 

list. 

27 

Senator PERDUE. And how is the company reacting to that list 

of corrections? 

Mr. SLOAN. We are listening. I mean, I think that—— 

Senator PERDUE. I am sure you are implementing, too, right? 

The question I have is—— 

Mr. SLOAN. Well, that is where I was going. We are listening to 

their concerns, and we are making fundamental changes not only 

because I think they make sense as CEO, but because our regulators also believe that there are other changes that we need to 

make. And we are being very responsive. I am sure if they were 

here, they would say that we are not moving as quickly as they 

would like, which I appreciate that. But our commitment to fixing 

anything that is broken and making Wells Fargo the best bank in 

this country is sacrosanct from my perspective. 

Senator PERDUE. Well, I think you would agree, we in a private 

conversation—there is no way to sugarcoat this as a serious issue, 

and I appreciate your handling it the way that you are. 

I want to get to the governance issue, though. You have an internal audit capability inside Wells Fargo today, right? 

Mr. SLOAN. That is correct. 

Senator PERDUE. And as CFO, that was your responsibility. It is 

a sizable organization. Roughly how many people across the country are involved in that internal audit effort? 

Mr. SLOAN. Oh, gosh. Well, first let me correct something. 

Senator PERDUE. Hundreds or—— 

Mr. SLOAN. Senator, the audit group is actually a separate—it reports separate from the financial organization because they have to 

audit the financial organization. So our—— 

Senator PERDUE. To whom do they report? 

Mr. SLOAN. The auditor, the chief auditor, David Julian, reports 

to me, but then has a direct reporting line also to our Audit and 

Examination Committee. 

Senator PERDUE. Right. Also, your board has an external auditor 

as well. 

Mr. SLOAN. That is correct. 

Senator PERDUE. And to whom does that external auditor report? 

Mr. SLOAN. Well, they report to our shareholders. 

Senator PERDUE. Right. 

Mr. SLOAN. And then they also provide independent reports to 

our board on our financial condition and other matters. 

Senator PERDUE. So during this period of time, when these indiscretions were occurring, did any report from either the internal 

audit capability or the external audit capability disclose any of 

these maladies? 

Mr. SLOAN. The internal auditors did, though I would say that 

that was another area they could have done a better job. And I 

think David Julian, our chief auditor, has made fundamental 

changes there. But when it was reported to the senior leadership 

team, we should have taken more aggressive action. 

Senator PERDUE. Has any other breach of operation occurred that 

has not been made public yet? 

Mr. SLOAN. Well, minor breaches, maybe, but that was one of the 

reasons why we went above and beyond the normal standard of 

materiality in our second quarter 10-Q to provide an update on 

28 

things like CPI, on GAP insurance, on hard holds, on OFAC, on 

RMBS, a variety of different matters, because as I have encouraged 

our team, we need to make sure that we are more transparent to 

our stakeholders than we have ever been. 

Senator PERDUE. So going forward, has the scope of the internal 

audit function and the external audit function been expanded relative to this problem? 

Mr. SLOAN. It has expanded, and it has been reorganized to reflect the reorganization that we have done within our company. I 

do not know the answer as to the number of folks from KPMG that 

cover us today, but my guess is there is more than was a year ago 

and the year before. 

Senator PERDUE. Thank you, Mr. Chairman. 

Chairman CRAPO. Thank you. 

Senator Heitkamp. 

Senator HEITKAMP. Thank you, Mr. Chairman. One of the most 

important things that we can accomplish here is to figure out 

whether we actually see and have a sense that there is a culture 

change at Wells, Mr. Sloan. And I have to tell you, I have been listening to the line of questioning, and I think anyone with an open 

mind would question whether we are actually seeing a culture 

change. So let me kind of run through this. 

Senator Warren asked you about the L.A. Times at the time that 

this story broke, and we can all acknowledge that the L.A. Times 

had a huge role in this. And you said, well, you did not have evidence about that, so you did not really respond to it. But then once 

it became a bigger scandal, then we are going to fix it. 

So then we find out when we talk about it, well, we are going 

to fix it. We now realize that this is a problem, and there has been 

mistakes made. 

And then we find out, after the ‘‘we will fix it,’’ that there was 

knowledge of this problem years before the L.A. Times story, that 

upper management knew about this problem and thought that they 

had managed it and fixed it. They did not fix it. 

OK. Then we fire employees who open fake accounts, saying they 

are the problem. It is this Community Bank problem. That is 

where the problem is. 

But you also fired those who refused to play the game, and we 

know that that happened because they have since participated in 

public discussions about how they tried to whistleblow on this. And 

then, again, when we raise these issues, you say, ‘‘Trust us. We are 

fixing it.’’ 

And they come before this hearing—it was not you, Mr. Sloan, 

but come before this body and say, ‘‘Wow, this is all you need to 

know. We now have turned the corner, and it is all going to be 

OK.’’ Only then to have this insurance scandal exposed. But now 

we hear, ‘‘We are going to fix it.’’ 

So, OK, I am, like, that is three times, you know? I know a little 

bit about baseball. It seems like you strike out after three times 

of promising something you do not see. But what I want to say to 

you, because it goes back to your response to Senator Warren about 

the L.A. Times. In the course of just about 15 minutes here, you 

were told about an overdraft problem in the Eleventh Circuit. Now, 

if I ran an organization, I would know if I were in the Eleventh 

29 

Circuit with a discussion on overdraft protection. But you said you 

were not familiar. That sounds familiar. 

Then you were asked about a legal position taken in Utah about 

arbitration, which was in the media. You said, ‘‘I do not know 

about that.’’ I would know about that if I were you. I would know 

about that if I were you, especially coming before this body. 

And then a national news story about Wells Fargo being involved 

in a wrongful repossession of a car, a news story that literally millions of people listened to, and you are not familiar with it. 

This is problematic for us, because we need to see that there is 

actually a culture change, that there is a reaction to these kinds 

of consumer failures. And we do not really hear it here. What we 

hear a lot of is, ‘‘Do not know. Look into it. We really care about 

the customer.’’ 

Now, I would assume that where we are right now is a lot of soul 

searching at the highest ranks—soul searching at the highest 

ranks of Wells Fargo. And correct me if I am wrong. What I heard 

you keep saying is mistakes were made at the Community Bank, 

driven by wrongful incentives that were provided to the employees. 

Right? 

I have not heard you say, other than taking responsibility for the 

incentives, I have not heard you say mistakes were made at the 

highest level of Wells Fargo. I mean, we can say, yes, we have lost 

a CEO and, yes, there has been some punishment and, yes, we are 

moving over. But at the bottom line, I do not hear a level of culture 

change that satisfies me today. And I think that that is something 

that is very problematic for Wells Fargo going forward because ‘‘I 

am not familiar’’ is not an answer we should be getting here. It 

should be, ‘‘Yes, we are aware of that. We are fixing it.’’ And when 

we only hear ‘‘I am not familiar,’’ we wonder what else we are not 

familiar. And I would caution you, when you say this is everything, 

that is what the last CEO told us. And then the insurance scandal 

broke. 

So, you know, it is up to your board to figure out what they are 

going to do. But I hope you take these comments as constructive 

because it is not helpful for you to say you are not familiar. 

Mr. SLOAN. Senator, I appreciate your comments, and in my 

opening statement I was very clear that we take responsibility for 

the mistakes that we have made. And when I say ‘‘we,’’ I mean me. 

I am the CEO of this company. The buck stops with me every day. 

I apologize that I am not familiar with every matter, but to the extent that I am not, we are going to follow up on all of those. 

As it relates to Senator Warren’s comments, she asked me not 

if I was familiar—about the L.A. Times, she talked specifically 

about information that the L.A. Times provided and if I took any 

action. The L.A. Times in that interview did not provide me with 

any information, so I cannot take action if the L.A. Times did not 

provide. 

Having said that, we took action when that information got to 

the senior leadership team. I have taken responsibility for the fact 

that we did not take aggressive enough action. That is why we are 

making the fundamental changes that we are making at Wells 

Fargo to make things right for our customers and our team members and all of our stakeholders. 

30 

But having said that, Senator Heitkamp, I completely appreciate 

your frustration. I am angry about what happened at this company, and I pledge to you that not only are we fixing it, but we 

will fix it. 

Senator HEITKAMP. I just want to again point out that you cannot segregate the top from the bottom, and it seems to me that 

when you say ‘‘we,’’ we did not get any information from the L.A. 

Times, you should not have had to have information from the L.A. 

Times. You should have read the story and said, ‘‘Is this true? Let 

us go find out.’’ 

Mr. SLOAN. And we did. And we did. 

Senator HEITKAMP. Well, you knew it was true because you knew 

about this years before that. 

Mr. SLOAN. No, Senator Heitkamp, I did not. And the board actually conducted an independent investigation where they looked at 

millions of documents, they interviewed hundreds of people, and 

their conclusion was consistent with what I have said publicly here 

and elsewhere in the last year, and that is that the issues within 

the Community Bank were elevated to the leadership team, including me, in late 2013. We should have and could have taken more 

aggressive action. I apologize for that. We have taken that aggressive action right now to fix the things that are broken. 

Senator HEITKAMP. And what year was the L.A. Times story? 

Mr. SLOAN. 2013. 

Senator HEITKAMP. I think that we had a document from the last 

CEO going back to 2008, but I will have to hunt it up. I do not 

have it in front of me. 

Thank you, Mr. Chairman. 

Chairman CRAPO. Senator Cotton. 

Senator COTTON. Thank you, Mr. Chairman. Mr. Sloan, welcome 

to the Committee. Thank you for your appearance here today. 

Mr. SLOAN. Thank you. 

Senator COTTON. I appreciated our visit in my office last week 

as well. We talked about some of the challenges that Wells Fargo 

has faced because of mistakes they made last year, not just for the 

customers but for the tens of thousands of men and women that 

work in your branches all around the country, to include Arkansas, 

who are worried about the future of the company and what it 

means for their ability to put food on their kids’ table and put a 

roof over their heads. 

One of the quickest ways that businesses can see an impact 

whenever they make a mistake like this or they display poor judgment is simply through competition, that your customers can go 

elsewhere, they can go to another bank. But one thing that Jamie 

Dimon has spoken about is the regulatory moat around big businesses, that as it becomes harder for smaller businesses to deal 

with the regulations that Washington has imposed upon them, it 

also gives big businesses less incentives to be responsive and, 

therefore, less choice to consumers. One good example of this is certain airlines that have mistreated their customers on occasions, yet 

there is really very few choices that you can go to if you want to 

fly from one city to the next. 

31 

What kind of market reaction has Wells Fargo seen over the last 

year in terms of losing customers or going elsewhere or at least 

pressure from other of your big competitors? 

Mr. SLOAN. Well, Senator, I think the banking business in the 

U.S.—and, again, I have been involved in the business for 30 

years—is very, very competitive. Big banks, medium size banks, 

small banks, nonbanks provide customers with lots of opportunities 

for good products and services. 

There is no question that since last September, after the retail 

banking sales issues were announced, there was an impact on our 

business. But since then, because of the changes, fundamental 

changes that we have made in the company, we are continuing to 

grow. We are not growing as fast as we were prior to last September, but we are on a good trajectory. And, again, I think that 

is because we have taken responsibility, we have taken executive 

responsibility, we have made changes, we have made changes in 

our products and services and our processes, and our customers are 

seeing that and they are reacting positively to that. We are not 

where we need to be, but we are making progress. 

Senator COTTON. OK. One of the things that has always seemed 

peculiar to me about the controversy over the fake accounts is how 

few of them produced any revenue, so it is not just that they were 

fake, but Wells Fargo sales incentives apparently were rewarding 

employees for accounts that did not produce revenue and the client 

did not even know about. That seems like some misaligned incentives. 

Mr. SLOAN. Oh, I think it was—— 

Senator COTTON. Not even effective at cheating the system. 

Mr. SLOAN. I think it was worse than misalignment. I think it 

was stupid. 

Senator COTTON. Yeah. What were the incentives? I mean, if you 

are not even producing revenues from these accounts, why were 

they created in that way? 

Mr. SLOAN. Our retail banking business was focused on growing 

the number of accounts. They were too focused on growing the 

number of accounts and incented people for just doing that as opposed to good products and services, growing relationships, doing 

it in the right way. In hindsight, it was just stupid. 

Senator COTTON. So you have been on board now for a good bit 

of time to try to clean up everything. What do you think is the risk 

of possible other misaligned incentives inside the organization of 

which you are not yet aware? 

Mr. SLOAN. Well, Senator, I think it is relatively low. Again, I 

cannot promise perfection, but I have told our team we need to get 

as near to it as we can. And so what we have done is, you know, 

as part of our agreements with our regulators, they appropriately 

said, ‘‘Hey, as part of these consent orders, you need to look at the 

incentive compensation structures across a number of your products.’’ As CEO, I said, ‘‘No, we are going to go beyond that.’’ We 

are going to look at the incentive compensation system throughout 

the entire company, and we are not just going to do it ourselves. 

We are going to bring in third parties to do it independently and 

give reports not only to senior management but give those reports 

to our regulators and give those reports to our board so that we are 

32 

very transparent about it. And I am pleased that they have not 

found anything as serious as what we—but we cannot rest. We can 

never let something like this happen again. 

Senator COTTON. I would agree with that. 

Finally, I just want to make a point. We have heard a lot about 

forced arbitration this morning in this conversation. This is in reference to the Consumer Financial Protection Bureau’s new arbitration rule. I would say if we allow that rule to go into effect, we may 

not have forced arbitration but we will have forced class action lawsuits, because without arbitration as an option, then the arbitration system will essentially cease to exist. And I do not think we 

should be forcing consumers to fund the lawsuits of class action 

lawyers. 

Chairman CRAPO. Senator Donnelly. 

Senator DONNELLY. Thank you, Mr. Chairman. 

Mr. Sloan, you just mentioned that the buck stops with you and 

that you are going to make it right by American customers and 

American employees. I am concerned by the outsourcing of call center jobs, and I have learned that Wells Fargo has eliminated several hundred jobs here in this country recently and more in recent 

years. At the same time that you were letting these people go, you 

were adding on positions in the Philippines. 

How is that making it right by your people here that work for 

Wells Fargo? 

Mr. SLOAN. Senator, we employ 270,000 team members. About 

more than 90 percent are here in the U.S., and the reason for that 

is that that is where most of our business is done, in the U.S. 

About 95 percent of our revenues, our customers, are here. 

We hire anywhere between 40,000 and 50,000 people here in the 

U.S., and currently we have 15,000 jobs that are open in the U.S. 

For example, in our retail banking business, since September of 

last year, since I became CEO, more or less, we have hired about 

17,000 people. They are all here in the U.S. 

Senator DONNELLY. Well, let me ask you this: Did you let people 

go that were working in the call center areas and add people in the 

Philippines to the same positions? 

Mr. SLOAN. Senator, we want to make sure that we are providing 

our products and services—— 

Senator DONNELLY. Well, that is an easy one. Did you let people 

go here in the States and then add people in the Philippines? 

Mr. SLOAN. Senator, we did, and generally our track record is 

that we rehire somewhere between 70 and 80 percent of each of 

those folks into another job in Wells Fargo. They generally get a 

preferential treatment and review because we have—we always 

have about 15,000 jobs that are open. 

Senator DONNELLY. What happened to the other 20 percent? 

Mr. SLOAN. Senator, I do not know exact—— 

Senator DONNELLY. Would you make a commitment to figure out 

how you can get them back on the team? 

Mr. SLOAN. Senator, I will make a commitment that we want to 

hire as many qualified team members as we can, because we have 

15,000 jobs that are open right now. 

Senator DONNELLY. Every business wants to do that. What I am 

asking you is for those 20 percent that you talked about that may 

33 

have been let go but not rehired, you know, if it is not for various 

other reasons—I mean, if they were doing their job right, would 

you commit to rehiring them in another position? 

Mr. SLOAN. If we have jobs that are open that they are qualified 

for, of course, I will commit to that. 

Senator DONNELLY. Well, why would you in the first place send 

these jobs to the Philippines if they were being done here? 

Mr. SLOAN. Because frequently, when we look at how to best 

serve our customers, it makes sense to have folks around the world 

so that we can continue to be working through a 24-hour day and 

not run a night shift, for example, somewhere. We think that that 

is an effective way to do—— 

Senator DONNELLY. Do you think Americans are not capable of 

working a night shift? 

Mr. SLOAN. No. 

Senator DONNELLY. I can show you a whole bunch of folks in my 

State who work night shifts. 

Mr. SLOAN. Senator, I do not mean to be critical of anybody that 

works a night shift at all. But I am just saying that in terms of 

how to efficiently and effectively run our business, we want to 

make sure our people are in the right place. 

Again, Senator, we have over 250,000 team members that 

are—— 

Senator DONNELLY. I got that. I guess—— 

Mr. SLOAN. ——here in the U.S. We love doing business in this 

country. 

Senator DONNELLY. I guess what I would say to you is if the 

buck stops with you, I may be patriotic, I may be a flag waver, and 

I stand guilty of both of those. But I would put your folks who are 

working in those jobs up against anybody anywhere else in the 

world. 

Now I just want to ask you about something else. In 2013, you 

said that you sat on the Operating Committee, and you saw problems and you were concerned. And it was around 2015 Mr. Stumpf 

came to my office and was extolling the culture of the company. 

And I do not want to hold it to an exact date because it is 2015, 

2016. If you were concerned in 2013, why didn’t you stop it? 

Mr. SLOAN. Senator, we did take efforts to address the issues, 

but in hindsight—— 

Senator DONNELLY. Did you know there were fake accounts in 

2013? 

Mr. SLOAN. No, I did not. Not in 2013. And we should have and 

could have taken more aggressive action. For example, I think in 

hindsight, what we should have done is not ended that incentive 

compensation plan in our retail bank in the third quarter of last 

year. We should have ended it years earlier. We tried to deal with 

the issue, but we dealt with the issue incrementally. We did not 

deal with the issue comprehensively. And for that we take responsibility. 

Senator DONNELLY. When you saw that in 2013, and you said, 

‘‘We have got problems here, this is not working,’’ did you mention 

that to the board? Did you tell them that, ‘‘We have got problems,’’ 

that things are not the way they—the things that you see are not 

the way they really are? 

34 

Mr. SLOAN. Senator, my recollection, which is consistent with the 

report of the independent investigation that the board did, is that 

those were escalated to the board in 2014 and 2015. I think that 

is another area where management should have escalated that 

more quickly. 

Senator DONNELLY. Did you escalate that to the board at that 

time, saying, ‘‘Hey, look, this is way out of control’’? 

Mr. SLOAN. It was escalated by a number of senior leaders. 

Senator DONNELLY. And the board chose not to take action? 

Mr. SLOAN. The board was overseeing the actions that we were 

taking. We represented that we thought that they would address 

the issues. Again, Senator, in hindsight, we were wrong. And it 

lessened the issue so that the number of accounts, the number of 

team members impacted was declining. But that is not how we 

should have dealt with the issue. The way we should have dealt 

with the issue is to end it permanently, and we did not deal with 

that in our Community Bank until we ended the incentive compensation plan and changed management last year. That was a 

mistake on our part, and it will not happen again. 

Senator DONNELLY. Thank you, Mr. Chairman. 

Chairman CRAPO. Thank you. 

Two Senators have asked for a second round, and so we will do 

that. We do have a few minutes left. Senator Brown and Senator 

Warren have asked for a second round. I may choose to do one myself. But let us go to you, Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. 

In my opening, Mr. Sloan, I talked about Mr. Stumpf’s testimony 

last year that this activity was limited to the Community Banking 

Division. The company, pure and simple, lied to this Committee 

and lied to the public. The company recently disclosed it knew in 

July 2016 that customers had auto insurance policies added to 

their auto loans without their consent—about 800,000 customers, 

roughly the size of the State that Senator Rounds represents. 

Every day since you have become the head of Wells Fargo for the 

last 11 months, every day you have made a decision to not disclose 

this information to the public. Your company knew about the auto 

insurance policy when former CEO Mr. Stumpf testified. When did 

you first become aware of the force-placed auto insurance policy 

problem? And why did you think it was OK to continue covering 

it up? 

Mr. SLOAN. Well, I do not think it was OK to cover it up, Senator 

Brown. In fact, when the issue was escalated to me in 2016, in late 

August, early September, I talked to our team about it, and we decided at that point in time to end and tell our vendor to quit providing that insurance to our customers. And that was effective at 

the end of September. 

We then created an internal group made up of business line experts, legal experts, our auditing function to look at the matter. We 

brought in an independent law firm and an independent consulting 

firm to help us do a comprehensive and third-party review of the 

remediation. We got the results of their report in the first quarter 

of last year. We began to put together the remediation plan, and 

we disclosed that remediation plan in August. And we highlighted 

that—we disclosed the issue in August. We have described what 

35 

our remediation plan is as it relates to those 570,000 customers. 

Those checks have begun to go out, and we reported that in our 

second quarter 10-Q. So we have not been covering it up. 

Senator BROWN. Well, you did not cover it up—— 

Mr. SLOAN. I am sorry, Senator. Could I make one other point? 

We disclosed that to our regulators in the third quarter of last year 

also. 

Senator BROWN. But that it took you, you the company—you personally 8 months, you the company 13 months to disclose such a 

violation of the public trust just makes me incredulous. 

Let me move to something else. You have said several times that 

arbitration is better for consumers. How have consumers fared in 

arbitration with Wells on the average? 

Mr. SLOAN. I do not have the answer to that, Senator. 

Senator BROWN. Well, I do, and I am surprised you do not. On 

average, the CFPB found consumers paid $7,700 in arbitration 

overall, in arbitration cases. Other data says that Wells customers 

paid $11,000 on the average. So they brought you to arbitration— 

or you brought them to arbitration. On the average consumers do 

not do very well in arbitration, suggesting that there is something 

wrong, and also suggesting that arbitration seems to work out well 

for Wells Fargo, not so well for your customers. So it is pretty troubling that you continue to dig in and say arbitration is better for 

customers because it clearly is not. 

Let me ask one—— 

Mr. SLOAN. Senator, could I give you an example of how we are 

changing the company to address those—— 

Senator BROWN. In 20 seconds, because I want to respect the 

Chairman’s 5-minute—— 

Mr. SLOAN. Absolutely. Senator, one of the issues that we disclosed in the 10-Q was rate lock, rate lock extension fees for our 

customers. We are not waiting for our customers to want to arbitrate. What we are doing is we have said that—and I want to make 

this very clear because this is going to come out in the next couple 

of days, so I might as well mention it in front of you all, and that 

is, we are going to our customers, and we are saying the following: 

‘‘If you have a complaint about a rate lock extension fee that you 

paid at Wells Fargo, we will remediate it.’’ 

Senator BROWN. Good, and—— 

Mr. SLOAN. We are going to contact 108,000 customers, and we 

are going to say the following—— 

Senator BROWN. There are some good things you are doing. I am 

not saying you are not. But I am saying that on fundamental 

issues like continuing—Senator Cotton talked about for whatever, 

but he said optional. We are saying it is forced arbitration. It is not 

optional for so many of your customers. 

Last point, right before the scandal broke, CEO compensation at 

Wells Fargo increased from $19 to $21 million. You recently announced you will be increasing the minimum pay for tellers from 

$12 to $13.50 an hour. 

Mr. SLOAN. $13.50 to $17.10 an hour, depending upon where 

they are located. That is a 12-percent increase, and it is 80 percent 

above the Federal minimum wage. 

36 

Senator BROWN. Well, the Federal minimum wage is poverty 

wages plus. So the CEO was overseeing a mass fraud. He gets a 

compensation increase from $19 to $21 million a year, and tellers 

get a raise, making those tellers still eligible for taxpayer subsidies 

to subsidize your employees, subsidies of Medicaid and food stamps 

and Section 8 housing, perhaps in the EITC. I mean, you fight 

class action from employees that you did not pay overtime. It just 

strikes us as hypocritical to be boasting about this minor increase. 

It matters to them. It does matter to them. 

Mr. SLOAN. It does matter to them, Senator, and I think that is 

one of the reasons why—— 

Senator BROWN. But you defend—you defend wage theft—your 

company is defending wage theft in court by fighting these overtime claims by your employees. 

Mr. SLOAN. Senator, I am very proud of the fact that we raised 

the base pay for our lowest-paid team members. I think that is one 

of the reasons why our attrition has gone down, because what they 

are saying is that we are paying them fairly. 

In addition to the base pay, we provide a benefits package to 

those team members that averages between $6,000 and $8,000. We 

provide other benefits to them. What we are seeing is a team member base, particularly at the lower levels, that is very happy to 

work at Wells Fargo. And you have my commitment to continuing 

to make sure that those team members are paid in an appropriate 

way. 

Chairman CRAPO. Senator Warren. 

Senator WARREN. Thank you, Mr. Chairman. 

Mr. Sloan, since becoming CEO, you have said that your priority 

is rebuilding trust with your employees. At a company-wide meeting this past March, you told your employees, and I want to quote 

you: ‘‘Wells Fargo’s mission has never been just about improving 

our bottom line.’’ And then you went on to assure them that Wells 

Fargo’s employees were the most important and valuable resource. 

Is that right? 

Mr. SLOAN. Yes. I say that often, Senator. 

Senator WARREN. Good. So 2 months after making those comments to your employees, you held an investor day where you and 

your team made your pitch to Wall Street investors, and you rolled 

out a new financial plan, and I would like to submit a copy of that 

plan for the record, if I may, Mr. Chairman. 

Chairman CRAPO. Without objection. 

Senator WARREN. Thank you. 

Now, I am sure you are familiar with this presentation, Mr. 

Sloan. I have also given you a copy of it, too. On pages 26 and 27 

of this presentation, you say that Wells Fargo will cut $4 billion 

in expenses—$2 billion by the end of 2018, another $2 billion by 

the end of 2019. That is a huge cut, an 8-percent reduction in noninterest expenses over just a 2-year period. 

Now, here are some of the ways you describe how you are going 

to achieve those cuts—— 

Mr. SLOAN. I am sorry, Senator. Could I just correct one thing 

you said? 

Senator WARREN. Yes. 

37 

Mr. SLOAN. So it is not over a 2-year period. It is over about a 

4-year period. That is number one. Number two, what we have said is that the first $2 billion that 

we are going to be reducing, we are going to reinvest back into the 

business, so it is not going to the bottom line for our shareholders. 

As it relates—— 

Senator WARREN. Actually, let me just quote what you said to 

the investors. 

Mr. SLOAN. Sure. 

Senator WARREN. You said you were going to consolidate—consolidating similar operations activities to provide better economies 

of scale—— 

Mr. SLOAN. So that Center of Excellence—— 

Senator WARREN. ——improving—can I just read this, please? 

Mr. SLOAN. Sure. I am sorry. 

Senator WARREN. Improving processes, including digital technology to automate manual processes, and outsourcing of certain 

non-differentiated capabilities. 

Now, that is a lot of corporate buzz words, but consolidating, 

automating, and outsourcing sounds an awful lot like firing people. 

So, Mr. Sloan, 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? 

Mr. SLOAN. I cannot. 

Senator WARREN. OK. 

Mr. SLOAN. And the reason for that is, Senator, we have an obligation to run Wells Fargo—— 

Senator WARREN. That is all I need—that is all I need to know, 

because when I look at the numbers, it looks like to me you are 

going to end up firing tens of thousands of employees to be able to 

make these numbers. Compensation—— 

Mr. SLOAN. Senator, Senator—— 

Senator WARREN. ——and benefits for employees by far are Wells 

Fargo’s biggest expense. 

Mr. SLOAN. That is about 60 percent of our total expenses, and 

we are proud of that, by the way, because—— 

Senator WARREN. And if we assume an 8-percent cut in those expenses, that means that you would fire more than 20,000 employees in the next few years. And here is the kicker for me, Mr. Sloan. 

After telling your employees in March that they were your most 

valuable resource and that Wells Fargo has ‘‘never been just about 

improving our bottom line,’’ I want to read you what Wells Fargo 

told Wall Street investors 2 months later, in May: ‘‘We expect an 

additional $2 billion in annual expense reductions by the end of 

2019. These savings are projected to go to the bottom line.’’ 

Mr. SLOAN. That is correct. That is what I just said. 

Senator WARREN. So you are literally telling Wall Street you are 

going to fire thousands of employees—— 

Mr. SLOAN. No, we did not say that. 

Senator WARREN. ——off the bottom line. 

Mr. SLOAN. Senator, Senator, you are using math to then—— 

Senator WARREN. Yeah, I do use math. 

Mr. SLOAN. Yeah, but you are using math inappropriately, Senator. That is not—— 

38 

Senator WARREN. Inappropriately, by adding numbers? 

Mr. SLOAN. No; you multiplied two different numbers—— 

Senator WARREN. I realize—— 

Mr. SLOAN. ——and you applied it to people. 

Senator WARREN. ——different way that that kind of thing—— 

Mr. SLOAN. No. Senator, you—— 

Senator WARREN. ——works at Wells Fargo. 

Mr. SLOAN. You applied it to people. 

Senator WARREN. I asked you, can you say you are not going to 

make these cuts by firing people? And you were very direct. You 

said no, you cannot make that promise. 

Mr. SLOAN. I have a responsibility to the 270,000 team members 

to make sure that the company is in existence and successful—— 

Senator WARREN. So let us talk about—— 

Mr. SLOAN. ——year after year after year. 

Senator WARREN. ——that then. I have got one more thing I 

would like to read from you, and that is, it is clear that you are 

going to knock out a lot of employees here, and it gets worse. At 

the same time you are planning to fire employees, you are promising to spend $11.5 billion in the next year buying back Wells 

Fargo stock. You have made this public announcement. You have 

that much extra money. 

So, look, if you stick to your current plan, it is clear that Wells 

Fargo employees making $30,000 or $40,000 a year are going to get 

screwed, just like they got screwed in the fake accounts scandal before. It was executives who demanded new accounts be produced at 

all costs. But it was 5,300 front-line employees who paid for that 

with their jobs. And now that the fake account 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. 

You know, what happens in these cases, Mr. Chairman, is in 

these corporate scandals it is almost always the front-line workers 

who pay the price, not the executives. And the only way we are 

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 in handcuffs. And until 

we do that, these scandals are going to continue and working people are going to continue to take the brunt of it. 

Thank you, Mr. Chairman. 

Chairman CRAPO. Thank you, Senator Warren. 

Mr. SLOAN. Senator, could I respond to that? 

Chairman CRAPO. Yes. As a matter of fact, I am going to take 

my last word as the last questioning period here. I am interested 

in what your answer would be to Senator Warren’s statements and 

the assertions that she makes. 

Mr. SLOAN. Yeah, well, I could not disagree more with almost everything that Senator Warren said. I think it is inappropriate to 

take various statements out of context and multiply numbers and 

then apply them to people, because then what you are saying, you 

are scaring people, and that is inappropriate. 

When you look at Wells Fargo, I have said first and foremost my 

commitment is to our 270,000 team members, to make sure that 

they have got a safe place to do business in, to serve their cusVerDate Nov 24 2008 09:21 Feb 21, 2018 Jkt 046629 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 L:\HEARINGS 2017\10-03 WELLS FARGO - ONE YEAR LATER\HEARING\100317.TXT JA
39 

tomers, that they are paid fairly, and what those team members 

are saying to us, even in the midst of the fact that we have said 

that we need to become a more efficient organization, is they like 

working at the company, because our attrition is down. It is down 

to its lowest levels in years, and that is because they appreciate the 

fundamental changes that we have made, many of which but not 

all of which we have talked about. 

We care about our team members. That is why I spend a lot of 

my time going out and seeing them and talking to them and understanding how they are feeling about the company. And we are making changes based upon what they tell us. Every other month I 

hold a town hall with one, two, three thousand team members and 

ask them, unscripted, to give us suggestions. We have implemented 

lots of their suggestions. We care about them. 

But at the same time, I have an obligation as the CEO of this 

company to make sure that we keep other stakeholders happy, and 

that includes our shareholders, who are not just Wall Street investors, but they are shareholders that are pension funds that support 

many retirees all across this company. 401(k) plans own our stock. 

We have got an obligation to them. 

So my job as CEO is to try to balance those appropriately, and 

I am working as hard as I can to accomplish that. 

Chairman CRAPO. All right. Well, thank you. And I want to just 

let our Senators know that if they have additional questions, they 

are due by next Tuesday. And then, Mr. Sloan, we generally ask 

that the witnesses respond to those questions as quickly as they 

can. Not knowing how extensive those questions will be, we cannot 

give a specific timeline to that. But we would like—— 

Mr. SLOAN. Senator, if you want to set a deadline for us right 

now, we would be happy to live up to whatever deadline you would 

like to set. 

Chairman CRAPO. We generally ask that the questions be responded to in 1 week from when they are received. 

Mr. SLOAN. We will respond in 1 week. 

Chairman CRAPO. All right. Without anything further then, this 

hearing is adjourned. 

Mr. SLOAN. Thank you. 

[Whereupon, at 11:58 a.m., the hearing was adjourned.] 

[Prepared statements, responses to written questions, and additional material supplied for the record follow:] 

40 

PREPARED STATEMENT OF TIMOTHY J. SLOAN 

CHIEF EXECUTIVE OFFICER AND PRESIDENT, WELLS FARGO & COMPANY

OCTOBER 3, 2017 

Chairman Crapo, Ranking Member Brown, and Members of the Committee, thank 

you for your invitation to today’s hearing, ‘‘Wells Fargo: One Year Later’’. I appreciate the opportunity to discuss the progress Wells Fargo has made. 

The past year has been a time of great disappointment and transition at Wells 

Fargo because we recognized too late the full scope and seriousness of the problems 

in our Community Bank. When my predecessor testified here last year, we had not 

fully grappled with the damage the sales practices scandal had done to our customers, our team members, and their trust in the bank. We came to Congress without a good plan and all of you were right to criticize us. But I heard you—and I 

heard our customers and our team members—loud and clear. You expect us to do 

better, and so do we. 

So let me be very clear about this: I am deeply sorry for letting down our customers and team members. 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 leaders acted too slowly and too 

incrementally. That was unacceptable. 

I also want to be clear about another thing: Wells Fargo is a better bank today 

than it was a year ago. 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. Since I became CEO 11 months ago, my team and I have been focused 

on the three tasks you have invited me to discuss today. 

First, in response to the sales practices problems announced in 2016, we are 

transforming our Community Bank. Our retail bank has strong new leadership, 

more effective organization, and incentives that reward our team members for doing 

what is right for the customer. This is a fundamentally different organization from 

the one that existed in 2016. 

Second, we are looking beyond our Community Bank to review our operations 

across the entire company, including in our indirect auto lending business. That review is still in progress, but it has already identified several ways in which we can 

improve. I am committed to confronting these problems head-on, and fixing them. 

Third, we are working diligently to make things right for every customer who was 

harmed by any of our practices and, to that end, we will compensate every customer 

who suffered because Wells Fargo made mistakes. I am pleased to report that these 

remediation efforts are well underway. 

Transforming Our Community Bank 

No part of our company better reflects the difference between Wells Fargo in 2016 

and Wells Fargo in 2017 than our Community Bank. We have dramatically overhauled its leadership, its organization, and its incentives. At every level of the bank, 

our efforts focus squarely on the needs of our customers, not on achieving product 

sales goals. 

I appointed a new leader, Mary Mack, to transform the Community Bank. Mary 

has worked tirelessly to improve our approach to meeting customer and team-member needs. 

Together, we have eliminated product sales goals for retail bankers. Those goals 

contributed to a high-pressure sales environment that failed our customers. In some 

cases, these goals even resulted in customers receiving products they never requested or realized they had. 

In addition, we have made dramatic changes in the way our team members interact with our customers by adopting a new customer-service approach across our 

Community Bank. We have simplified complicated processes, replaced required 

questions with relevant tips, and enabled bankers and tellers to better meet their 

customers’ needs by offering them the right products, services, or referral. Managers 

have also been empowered to immediately resolve some customer issues, like fees, 

at the branch rather than through a call center. These changes have led to a more 

personalized experience for our customers and more fulfilling jobs for our team 

members. 

We are equally committed to the former Wells Fargo team members who were affected by the Community Bank’s old ways of doing things. I am proud to report that 

since last September we have hired back more than 1,780 team members who left 

the bank during those years. 

I have also now made clear that, when team members have concerns, I want to 

know. I have traveled the country, visiting more than 100 offices, to meet personally 

with thousands of team members. Our senior leadership team has done the same. 

41 

We have also improved our ethics protections to ensure that every team member 

feels empowered to speak up without any fear of retaliation when he or she sees 

a problem. 

Accountability 

I know that responsibility for Wells Fargo’s shortcomings reaches well beyond our 

bank branches. That is why our review and our changes have not stopped there. 

We started by holding executives accountable. Over the past year, Wells Fargo 

eliminated a record $180 million in senior-executive compensation: 

• No member of the Operating Committee who served before September 8, 2016, 

including me, received a bonus for 2016. 

• Every member of the Operating Committee who served before September 8, 

2016, had his or her long-term incentive awards for past performance reduced 

by up to 50 percent. 

• Neither former CEO John Stumpf nor former head of the Community Bank, 

Carrie Tolstedt, received a bonus for 2016. 

• Mr. Stumpf forfeited $69 million in compensation and equity. 

• Ms. Tolstedt forfeited $67 million in compensation and equity. 

And, finally, we terminated four senior leaders of the Community Bank, which 

cost them their 2016 bonuses, their unvested equity awards, and their vested outstanding stock options. 

Looking forward, we have made oversight and compliance much more effective 

than a year ago. These are fundamental changes to the way the company runs. We 

have reviewed and adjusted the roles of tens of thousands of our team members. 

We have moved away from a decentralized ‘‘Run It Like You Own It’’ structure, 

where business leaders had the discretion to run their operations independently. 

Now we follow a more centralized model in which risk, compliance, and human resources leaders have far greater visibility into, and accountability for, issues across 

the individual business lines. In addition, I established a Conduct Management Office with company-wide responsibility for investigations and complaints. This new 

team assesses complaints across the company, reports every month to our executive 

team—including me—and helps leaders ‘‘connect the dots’’ in ways we never could 

before. Now when a problem emerges, we can identify it quickly, escalate it promptly, and address it fully. 

These changes are consistent with, and designed to address, the findings of our 

Board’s independent investigation into the root causes of our retail sales practices 

issues. That investigation found, and I agree, that our previous structure contributed to a failure to see the threat that high-pressure sales goals posed to our Community Bank and our customers. This structure also contributed to our slow and 

insufficient response to that threat. My job as CEO is to ensure that never happens 

again. 

One important way I have exercised that responsibility is by calling for a comprehensive review of sales practices and other customer-facing operations across the 

bank. We decided to go beyond the requirements of our regulators and conduct a 

company-wide review, leaving no stone unturned. 

That review has consumed a big portion of the past year and continues today. 

This has been, and continues to be, a massive undertaking. It has involved our own 

team members, as well as regulators, independent directors, lawyers, and independent consultants. The mandate is to identify any failures or practices that could 

harm our customers. 

We expected to find more shortcomings through this effort, and we did. You have 

undoubtedly heard about some of these problems in the news. Last fall, were viewed 

93 million accounts opened between 2011 and 2015. That review raised concerns regarding whether approximately 2 million accounts had been properly opened. We 

told you and others that we would look at even more accounts, and we did. We 

searched across 2009, 2010, and 2016—nearly doubling the time frame to eight 

years. We also looked at other types of accounts or services, such as online bill pay, 

that may have been initiated improperly. 

In August, we announced the result of this broader look at 165 million accounts 

opened between 2009 and 2016. Our estimate of potentially unauthorized accounts 

grew by about 1.5 million. This is a substantial number, but it is important to note 

that these are not ‘‘new’’ instances of possible misconduct since last fall; they are 

newly revealed instances of possible misconduct based upon our own expanded investigation of the years before 2017. Of the total of 3.5 million accounts, approximately 190,000 incurred fees and charges. Wells Fargo will provide a total of $2.8 

million in additional refunds and credits on top of the $3.3 million previously reVerDate Nov 24 2008 09:21 Feb 21, 2018 Jkt 046629 PO 00000 Frm 00045 Fmt 6621 Sfmt 6621 L:\HEARINGS 2017\10-03 WELLS FARGO - ONE YEAR LATER\HEARING\100317.TXT JA
42 

funded as a result of the original account review. Our commitment is to refund all 

fees and all charges imposed with respect to any accounts and services that proved 

to be unauthorized. 

During the past year, we also confronted problems in our auto-loan business. We 

explained in August that some of our auto loans involved insurance that had been 

placed by a vendor when the customer was already insured. This issue is quite different from the previous sales-practices issues in our Community Bank, because this 

insurance was not a product that Wells Fargo team members were given an incentive to sell. Also, this is an issue we found and addressed ourselves. The improper 

insurance charges occurred because of flaws in our process for verifying the customer’s insurance status and disclosing the premiums added. It was a significant 

mistake that harmed a lot of people, and we are making it right. Last month, we 

began issuing checks to affected auto-loan customers, all of whom we expect to reimburse by the middle of 2018. 

Making Things Right With Our Customers 

The entire Wells Fargo team, all 270,000 of us, is committed to making things 

right for customers the bank let down. This is a big job, and we will get it right. 

To ensure our changes to the Community Bank are working for our customers, 

we dramatically enhanced our monitoring and compliance. As an example, we are 

closely monitoring the opening of new accounts. Every new account now generates 

an email within an hour, or a letter within a day, to confirm the account holder’s 

authorization. In our branches, we are on pace to conduct 16,000 visits by ‘‘mystery 

shoppers’’ this year, so that these anonymous reviewers can test and examine the 

practices and service that our customers experience. These visits will help ensure 

we are proactively identifying any improper sales practices and delivering customer 

service that is consistent with our mission. 

We also are reaching out to customers all across America to determine if they 

were affected by the bank’s practices and, if so, how we can fix it. During the fourth 

quarter of 2016, we contacted more than 43 million individual and small business 

customers. We are issuing refunds to every affected customer who has responded 

or has been identified by our third-party review. Wells Fargo has already paid millions in refunds and credits to Community Bank customers we spoke with between 

September 2016 and July 2017. In addition, customers harmed by our discontinued 

sales practices will receive a total of $142 million in compensation (after deducting 

plaintiffs’ attorneys’ fees and administration costs) under our class-action settlement. This will compensate customers for claims dating back to 2002, including 

claims by customers for increased borrowing costs resulting from credit-score impact. 

Beyond these formal reimbursement mechanisms, I want to be clear that Wells 

Fargo is committed to addressing every concern any customer may have about an 

unwanted product or service—no matter where or when it may have occurred. 

The past year has been humbling and challenging. We are resolving past problems even as we make changes to ensure nothing like this happens again at Wells 

Fargo. We are doing this by strengthening our culture, holding leaders accountable, 

and improving our business practices and risk management. I want to thank all our 

team members for their hard work in this transformation. 

Together, we will do whatever is necessary to put our customers first. I see the 

improvement every day, and so do the team members I visit in our bank branches. 

I think our customers have noticed the improvement, too. I pledge to you that we 

will not stop until we restore our reputation and our customers’ trust, and make 

Wells Fargo the finest and most ethical company it can be. 

Thank you again for the opportunity to address this Committee. I look forward 

to your questions. 

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