[inaudible conversations] [inaudible conversations] [inaudible conversations] the committee will come to order. The gentleman from illinois mr. Foster is recognized for five minutes. Thank you, madam chairman. Mr. Scharf, iraq with the concerns my colleagues on this committee about the extensive shortcomings of west fargo over a number of years past and do hope you are as committed and as successful in turning your dash as you stated in your testimony. Id like to bring up the issue of dreamers. This is ang issue that hits cle to home. Last summer a dreamer from illinois filed suit because he was wrongfully denied an auto loan because of his daca status. I was glad to see some of the changes that wells fargo has decided to implement recently including its plan to provide Daca Recipients with credit products, education loans and mortgages. I cannot emphasize enough how important this commitment is and hope you worked work diligentlo implement this new policy. Because this release is one thing, at the end of the day a new policy that does not achieve results in the form of actual loans to actual Daca Recipients can mean its been a fairly. Can we have your assurance you will track progress on this issue and you will report periodically back to us on progress on providing credit to dreamers . Absolutely track the progress and we can certainly talk to but how we should report back to you. Thank you. I appreciate that. Il its important issue to my constituents. Now, as youre no doubt aware, Banks Committee reinvestment act exam rates and finance are disclosed to the public after i believe a delay of a couple of years. One measure we are contemplating would be to require banks to disclose their consumer compliance rating and findings in the same way. Would you agree this would be an effective method to limit consumer abuses . Congressman, we certainly agree and accountability and ensuring that the regulators understand and have access to all information they need to draw this conclusion. The public also has indeed to understand which banks deal properly with their consumers and which have a different record. Respectfully, thats a decision, discussion between you and the regulators. A discussion between you and the regulators. Okay. So you do not have an opinion on whether or not it would be a good idea so you are opposed to it . Honestly given the condition and the work we have to do, its really not up to me, im not the best person to give advice. Im focused on doing the work. Youre also the process of repairing an organization where some of the incentives were wrong and some of the results were wrong so you must have an opinion on what this sort of thing, a little bit of public visibility towards findings that have shown and abuse of the consumer might be an incentive that might improve behavior in the past and Going Forward. Congressman i believe like any other issue there are places and minuses to this. I think that its really appropriate for you in the regulators to talk about what those are. So will handle this without your input i guess. Incentives in my mind art to the heart of getting corporate behavior right. I was happy to hear you made some changes there. One of the pieces of legislation that is being considered in this hearing does a number of things. One is which to put the bonus executive pool in a loss position for any regulatory fines or penalties. While i have lots of questions about the details, mechanisms and formulas involved in this piece of legislation. I wonder if you have a reaction to how effective this might be in preventing future and getting attention by top management towards consumer abuses. Congressman what i think we have to do and will drive accountability within the organization is a sure make sure we judge people and accountability and what we pay people. That is what we are doing today. Thats what i guess is my next question. Im getting you to answer for the record because there will be some detailed numbers. Could you answer for the record, how the financial burden for regulatory fines go over the top 20 finds that happened over the last decade. Describe how they economic pain for those pains was distributed among shareholders and top executives and everyone else who might have absorbed the pain . Both as they occurred in the last decade and how they would occur with the Current System that you now have in place. Congressman i can tell you that the finds that weve incurred over the past year when i was at the company have been impacted peoples compensation directly. I want to see a number of table of numbers and percentages to see what share, falls upon shareholders. The gentleman from tennessee is recognized for five minutes. Thank you madam chair, thank you Mister Scharf preparing today. Ive heard a number of people ask you why you take the job that youve taken and i frankly appreciate you stepping into the role. With that said, today how would you characterize the reputation and the brand of wells fargo. . Today as we sit . I think as we sit here today, we have not yet returned the trust that we would like an wells fargo name to represent. Your opinion is the brand and reputation of wells fargo irreparably damaged . I do think the brand and reputation is extraordinarily important in this business and that we have to work to earn it and that we can do that. You can restore it . The welsh forego can restore its brand and reputation . I absolutely believe we can restore the brand and reputation of wells fargo to by taking the actions ive taken in my short time at the company. In my district, you have a number of retail institutions, you have a number of branches. If the customers, an hourly wage employee, a Small Business person, a professional, and they come in and want to do business with wells fargo. In laymans terms, how would you instruct your bank officer, Customer Service representative, whoever is greeting them to get that business or maintain that business . What would you tell your employee to relate to this hourly wage employee, to the Small Business owner, whos trying to take out a mortgage. Why should they want to do business with wells fargo . Congressman i think we should treat our customers and our employees the way we would want to be treated. And so to the extent that we are thinking about their needs and what is right for them and how the things that we can do can be there to serve it them. That is the way we want everyone who works for wells fargo to be thinking about when dealing with their customers who walk through the door. If we are not doing that, i genuinely believe we will not be successful. Weve clearly not done that historically at all times. And weve seen the results of that. And so that has something which needs to be built into the culture of the company. The compensation of the company. The management of the company. In a very different way than it has been in the past. Let me ask it in a different way. What would that bank officer tell that customer whos trying to maintain or obtain . What would they tell them about wells fargo and why they should want to do business with them considering everything that that customer or potential customer has seen or read about in the media . Congressman i think that we want our customers to know that we are committed to doing the right thing for them. All the actions that were taken since ive been at the company, it is directed towards that. Ultimately that is whats going to turn back the trust of the people who stand in judgment of us. It is not just our customers, the communities we serve, regulators and shareholders and legislators. So if we are not doing the right things for our customers every single day, then we are going to fall short of who we should be. Im the Bank Customer i say, im thinking about cutting my relations with wells fargo because of everything that ive heard about, read about that has been going on for several years. Mr. Wells fargo, miss wells fargo, why do i stays are customer . In limits terms what would that person say to them . The number one reason they would say is they love the people they do business with who work at wells fargo. The personal relationships that they have developed our extraordinary. I was in a branch yesterday in washington and we asked that very question. Why do your customers come in . It is because of that personal connection. Then its because they believe that what we do is great for them. Our products, our services, our convenience, our technology, but ultimately it has to have this rapper of whats were going to do whats right by them. Thank you mr. Sharp, my time is expiring, i yield back. Mr. The gentleman from massachusetts mr. Pressley is recognized for five minutes. Thank you. I want to recognize the diligent and good work of this committee. In 2018, large banks posted record profits that were only topped by their profits in 2019. A decade ago, the same things banks were rescued by trillions in bailout loans. It does seem in the case of banking, your profits are private while your losses are socialized. Over the years, youve helped lead city group, jpmorgan chase, b and why mellon and now wells fargo. Four of the nine recipients of the original round of rescue funds. Mister sheriff this is your second time appearing in for the committee in less than a year. Given that this report shows the limits of traditional Confidential Bank supervision in effectively curbing wells fargos egregious behavior, do you agree that the public has a right to hear from you directly . Your annual testimony through annual testimony and reporting . Congresswoman, when i took this job i understood that this is part of what the job is. What the corporate frequencies. I will leave it to you to make that determination. It is a reasonable ask, its a yes or no just for the record. Congressman congresswoman, im not the person to as i question to im focused on wells fargo right now. And yes or no do you agree that its fair that you should come annually, and report. Congresswoman, i do believe that its appropriate for me to come, when asked to come by the committee. So congress establish your national charter, it created the deposit insurance your bank enjoys, congress stood up to their federal serve, to be a last resort, and congress developed a Legal Framework that governs your bank, so an annual check in, is not too much to ask. And that is exactly why, with the support of the aflcio, i introduced the greater supervision in banking act. Requiring annual public testimony, of ceos like yourself, and reporting about bank size, diversity any regulatory enforcement or fines and notably the workforces treatment that all levels. Your contract with wells, specifically states he will not require, to relocate allowing you to work remotely. However, while there, you pushed employees to tell commute. Just for a question time, would you institute these policies at wells. First of all congressman i do not tell us commute. Thats a very important decision distinction. Its a National Color country and National Company with places all over the nation. Have you instituted any restrictive policies at wells. Congressman, i have not planted any restrictive policies at wells. In the midst of this global pandemic, will you allow all employees who work remotely or can work remotely to do so. Yes or no. Yes. Do you commit to providing all workers down to custodial staff, call center employees, thirdparty contractors, with necessary sick days as well as paid leave . Yes or no . I need to think about that whole list of people, but for employees yes we will do that. All employees . Down to custodial staff. I did not say thirdparty workers. No i did. I said we certainly would be willing to look at the rest, it is not something i thought of sitting here. I hope you will get deep thought, because they do represent our most vulnerable workforce. Want to be clear being a chartered bank and one of the largest at that is a privilege, its not a right, its a privilege that comes with accountability to this congress, to the employees and american public, when all americans not just those that are wells customers serve, at least you can do is show up once a year to answer these questions thoughtfully thank you and i yield. The gentleman from ohio mr. Gonzales is recognized for five minutes. Thank you mr. Sharp for your testimony. When i look at the report i book at things in three places, one compliance, two reporting, and three board of director issues. I want to try to hit on all three of these. On the compliance side you have talked about how you flatten the organization no longer the federated structure part of the federated structure was Risk Management. It was embedded in the each of the business units. We have elevated the management sort of pulled it away to monitor it more broadly. We have to have independent Risk Management, we have pleaded that with the company we are continuing to build that, and all of the appropriate first line functions. As to make that second line function as effective as it can be. Another issue was mentioned, Risk Management, component i realize it looks different at each bank, but how are we progressing on that specifically . We are continuing to work to make sure that everyone in the company understands what responsibility is, the only way that we can have an effective Risk Management infrastructure across the company, is that there is consistency of application consistent level of understanding, and limitation. That takes sometimes and thats what were working through. On the reporting side again it was clear that the board felt or had all kinds of faults, but they felt at times they werent getting the right information or they were being misled. Obviously they do not prepare the reports, its the reports that management provides them. How confident are you that the reporting issues, the accuracy the frequency etc, has been taking care of Going Forward. I certainly think that congressman the quality of the reports we give them, has to continue to improve, i think that is an ongoing task that we have to make sure we do our very best at. Board members generally can be often as good as the quality of the materials we give them. And so that is an ongoing effort. That is underway and has to continue to improve on that. Thank. You in respect to the board, i want to ask a general question because will have two former members of the reward here tomorrow, and i think that sets an interesting precedent, i hope doesnt become routine that were hauling in Board Members of companies now, your situation is unique i hope in fact this is unique. High level, what is the role of abortive director in a public company. The boards responsibilities to oversee management, to prove strategy, and certainly in our case to have the confidence in the regulatory work that is ongoing. Not to run the bank . Actually no i believe the Management Team is running the bank and overseen by the board. Thank you. How important is it for you to have proprietary conversations with your board . Congressman i think its extremely important, i personally believe that the best way to help the Board Members do their job, and for the company, to get what it can out of every single board member, is to be as open and honest as you possibly can. Think very very early on, about having conversations with them, so they can be brought in early, and doing that, in a confidential way, i think is critical. And i think, im sort of caught in two minds here, if i were shareholder of wills, i would be happy with the outcome of your Board Members, as a member of congress, again i worry that we are going to set a precedent where we haul Board Members in with every company that is not doing things the way we want, i think that sets a dangerous precedent, i think we did it with and ron awhile back, i think its a unique situation and what it feels appropriate, i want to switch or something and we get through it, do you have any immediate plans to run for congress . No i do not congressman. Good job. Do you seek to become a legislator at any point . No i dont congressman. Do you like running your bank . Do you like running banks . Congressman i am very proud proud and i do enjoy running the bank. So i would encourage you to run your bank. Running your Bank According to the laws of this country. We are the legislators. I dont want to run your bank, i dont think you want any of us running your bank. I dont think you want to us who to do business with, what to do, how to operate, all those sorts of things. You run the bank consistent with the Consent Orders and the laws of this country, we will create the laws, its a beautiful system. If we start making it up by telling you who you can and cannot do business with, i think we set a terrible precedent. With that i yield back. The gentlewoman from iowa, we miss actually is recognized for five minutes. Thank you chairwoman and thank you Mister Scharf for being here today. Most of my colleagues have addressed these issues so i wont rehash them. What everything ive been hearing so far sounds like things are improving and i hope that continues because i think all of us here expect more from wells fargo. My interest and wells fargo in doing better is but you employ almost 1500 people in my district so thank you for that. We have a vested interest that wells fargo is a Successful Bank to keep those jobs. Can you give me some assurances that fixing the previous problems will be your top priority and that you are going to work to ensure that any future plans are not creating the kinds of risks that were so poorly monitored before. Congresswoman, theres no question in my mind, in our boards mind. I dont think theres a question in the minds of wells fargo employees that our number one priority is to fix these issues. Ive said it internally, written it internally multiple times. Ive talked about it on our Quarterly Earnings call. They have called for specifics in terms of strategy and growth and ive said i am not in a position to give you information about that. Im focused on fixing these issues that we have which are the regulatory problems and the underlying infrastructure and that has to come before everything. I deeply believe that and i told everyone whos associated with the company that that is the case. Given the work we have done, its totally appropriate. Im sorry your second question . Thank you totally you answered the question exactly the way i would like you to answer. It making aware that we are on top of that, and i appreciate you bringing that up. As a leader of the company its important for you to make sure that message is being pushed down all the way through the ranks. Allowing folks on the frontline jobs to be able to push up to management as well to ensure that there is a good culture. Thank you so much because representing those employees and providing a voice for them truly is one of my biggest responsibilities out here. I was very happy to see that wells Just Announced an increase to its minimum wage. That said, i do want to ask you will you continue to look for ways that ensure all of your employees are paid a living wage . Put more money in their pockets, what might be some of those things youre doing . Congresswoman we absolutely have to continue to look for ways to help our employees, especially the lower paid employees. When we got there and we look at this issue we did think it was appropriate to look at the cost of living in different parts of the country so we could represent to ourselves that we were thinking what that living wage looks like. Differentiating and playing 20 dollars an hour in the highest cost locations is we think very appropriate. Scaling it based upon the cost of living also seemed to make sense. As we go forward, that is something we should continue to look at. That is not something we do once, its set in stone. We need to make sure we are as conscious of that cost of living as we possibly can. We also have to look at the health care benefits. This past year when we set premiums and put monies into people ages. The majority of the lower paid people, if not all of the lower paid people did not see any increase, and many saw a decrease. That is something else. It was done before i got there but that is something as we go through the processes, were going to take a look and say are we sharing Health Care Costs appropriately across the company . Certainly, giving people an opportunity within the company is extraordinarily important. Whether its within a location so people can continue to grow and take on more responsibility and earn more money as time goes on. Or do something at a different part of the bank. That is something that should be core to what our employees think of when they think of wells fargo. Last year i asked mr. Sloan about wells fargos announcement to lay off 400 people in des moines and whether those jobs were going to be moved overseas . To make matters worse although those workers were found to be eligible for retraining, that certification did not come until two months ago. Way too late to be of any use for a lot of those people. Wells fargo has been a lot always been an american bank, gets a significant part of its revenue from the u. S. Will you commit to fully considering where wells has built its business and what it is going to do to make sure that we do not move jobs overseas . We would like to keep as many jobs in the u. S. As possible and we will commit to retraining, offering retraining to anyone who winds up in a situation where we have to make a change in their location. Thank you. The gentleman from tennessee is recognized for five minutes. Mr. Rose. Thank you chairman waters, thank you Mister Scharf for being here today. Contrary to some of my colleagues, i want to applaud you for taking on this role. I know that it is challenging, but with great risk comes great reward and i applaud you for having the courage to step up to the plate and to hopefully rebuild one of our Great American institutions. In many ways you are here today to not only answer about your plans moving forward with morals far go, but fair or not, you are also here to answer for the mistakes of your predecessors. Mr. Scharf i understand you led an intense review of your bank since you became its ceo on october of last year. To some extent, i know youve already addressed this but can you discuss again what youve learned from this review in terms of the culture and wells fargo and Risk Management and other related issues . Congressman i have had the opportunity to talk to so many of the employees at wells fargo who i found to be extremely open and forthcoming. With their opinions of what we as a company and what the management has done right and done wrong. They recognize that the problems we have are extraordinarily significant and they look at management and say, you will need to do something very differently than you have done. So as we think about the work that we need to do, it is around culture. It is around structure. It is around people and jobs. Probably most importantly, because it sets the tone for so many things, it is about accountability. Both people staying in jobs but also whether we are appropriately impacting them for both the good and the bad theyve done inside the company. There were actions taken on every single one of those items to ensure that the company is run differently than it has been in the past. Thank you. One thing we learned since 2016 is that wells fargos leadership provide repeatedly provided incomplete information to the public. As the republican staff report finds, evidence showed that former Ceo Tim Sloan and his Team Provided incomplete and exceedingly optimistic information to congress, the public and the board of directors at wells fargo. Wells fargo has no was no closer to complying with the regulators Consent Orders when time sloan resigned in march of 2019, then when his team took over in 2016. For better or for worse, the Financial Services industry has been under a microscope since the financial crisis. Whenever a major bank like wells fargo fails to uphold its duty, to their shareholders, their customers, the public and the regulators, it reflects poorly on the entire industry. When that happens, some of my colleagues here on this committee claim that the bank is too big to manage. And the Financial Services industry as a whole is rife with abuse. That is not the case. So the burden falls on you mr. Scharf and wells fargo at large to prove to us and regulators that wells fargo is a changed institution. Mr. Scharf weve talked a lot today about the changes the bank is making under your leadership to strengthen the bank Going Forward. As ive listen to you talking, im reminded of an old quote that ive heard many times as a young man growing up that trust takes years to build, seconds to break and forever to rebuild. So i ask you what are you doing, what is wells fargo doing to not only earned back the trust of your customers, but also that of this congress. Congressman we need to run the company fundamentally differently that we run in the past. And my approach, to both hear congress, with our employees, everyone outside the company, is to be completely open forthright and honest, im not trying to paint a picture which is better or worse than anything i say, because you and others will find out. I live my life as simply as i can. If theres one story, thats what i believe and i find out that im wrong, i will deal with that and change the course. So what you are hearing from me, is exactly what i think. Im not trying to minimize the work thats necessary, it is there is a lot of work theres no question about that. But i do believe based upon what ive seen at other institutions, and the issues that we have, that we can run the bank. In a way that will earn back the trust and respect of all those outside of our company. There of course is tremendous work left to be done from a reputation standpoint, i hope you will commit to being transparent with congress, your regulators and the public, every step of the way. Thank you the gentlewoman from virginia representative wicks than is i recognized for five minutes. Mister scharf have you had the opportunity to review the House Majority staff report . Congresswoman yes i have. And it is entitled the real wells fargo, ineffective regulatory oversight. I believe so. You know that in this report they cited the july 2019, occ report of the examination which concluded, that the occ had not observed a drive towards greater consistency in a large number of plants had to be submitted multiple times. You do acknowledge that right. Yes congresswoman. And that the occ remains concerned about the overarching vision around mediation. Yes absolutely. And you also then, are aware that the report concluded that wells fargo board abdicated its responsibility tos oversee the board for the 2016. Yes i am aware that the report that said that. Do you agree that the board did not provide robust oversight. Congresswoman i can talk to what ive seen at the board since ive joined. I was not there. Well that fine will just focus on being forwardlooking. As a result of this report, i dont know if its a result of this report but right after this report was released to hear directors resigned yesterday is that correct . They did resign, sunday i believe. Okay sunday. Yesterday morning. And so you also said, in response to an earlier question, that 70 of your board was new is that correct . I believe thats approximately the number. Theres been a lot of turnover in the board since you took office. Yes there has been. Excuse me i have to correct myself, since i have joined the board we have had one new board member join. And a ceo you serve on the board of directors cracked . Yes i do. And you have a role in selecting new members in recruiting and recruiting new members for the board of directors . Our directors are selected, first by our governance and nominating committee, which i am not a member of. Then they are voted upon by the full board. So i would be aware if it, i would be part of conversation, but i do not have the responsibility to do that. Okay, but you believe that the boards role is to provide oversight of the directors of the company, of the executives in the company correct . Yes i do. And when looking for somebody to serve on the board are you looking for somebody who can credibly challenge you . Would that be something that you would look for . Congresswoman again, i can only speak for myself, not the entire board but i think as a board we absolutely choose people who will challenge us, come from different different places different backgrounds, have different kinds of diversity. And that people with diversity your background should help us get to the best conclusion. The reason i ask is because warren buffett, just sent out his annual letter to shareholders, very recently, and in there he talked about the fact that corporate chiefs, really bring in outside advisers that provide dissenting opinions. And that as a result, when seeking directors, ceos dont look for pitfalls, its the caucus spaniel that gets taken home. So for you, in your decision, when you cast that vote for who is going to replace those the two members of the board of directors who resigned, will you commit to look for a pitbull and not a conquer spaniel . Congresswoman, i absolutely want someone whos going to speak up, can speak their mind that understands things that i dont understand, and adds to the conversation. Theres no question that i think boards are better off for having people like that. And pushes back on behalf of shareholders and other folks, and account holders . Congresswoman absolutely believe the boards have to independent and push back whenever appropriate. Thank you very much i yield back. The gentleman from North Carolina mr. Bug, is recognized for five minutes. Thank you madam chair, thank you mr. Sharp for being here today. Who knew 33 years ago as a teenager, in North Carolina, opening my very first checking account, with my dad, taking these air that it would be a First Union National bank, part of walkover, and later wells fargo. That will be next to the Congressional Office this bank is important to me not only for the sentimental reasons but its important to my constituents and thousands and thousands of family fare in the district its also important because its important to our economy. Again thank you for talking to be a few months ago with my staff about what you are bringing to wells fargo. I want to commend you from what i understand when your first commitment affixing the wrongs of your predecessors, it is not an easy matter to deal with but i have no doubt in my mind that you are the right person to for the job. In your first days later, the serious seriousness of what we do brings important priority, it is our idea to run it with highest standards of integrity. Risk control compliance are the price of admission, it will always be the highest priority. We cannot serve our customers in the manner they and olive stakeholders expect of us, if we do not operate the company, to the standards. My question, can you please elaborate on some of the new standards youre putting in place at wells, and how that will reshape the culture, the institution for the betterment of the consumers. Thank you congressman, i do think it is extraordinarily important that there is clarity inside the organization of what is expected, and that starts with Management Team and the responsibility and accountability that we take for either driving the success or the failures across the organization, we have dramatically changed both the compensation and the Performance Management review system for senior folks i think if you look back historically at how we paid people, there was not the accountability that most people would expect given the results that we have had. When we look at what we are doing Going Forward i, think you will see a meaningful change in that. We carve it a specific piece of the individual of their performance, the company performance, which we are very honest about, and then we say what are you doing in order to do the appropriate risk control work. To the extent that people are not doing it, and that includes the remediation, and that will be a take away. Because as you talked about in my note, i think thats a price of admission. That sends a powerful signal through the organization in a way it didnt exist before. I dont want to take up all your time, by going on about that one question, but i think if i say one thing which i think is will set the tone inside the company, which is extremely different, i think that ranks towards the top. Very good thank you. So little more on incentives, so its not been several years since the scandal came to light, in that case it was clear the banks sales culture, was one of the root causes, and the bank has admitted as much. So your predecessors ultimately failed to change the sales culture of the bank, in an impactful way. How can you ensure that the Culture Shift that you are implementing at the bank will have a lasting and meaningful impact. I get what you are saying earlier thank you how do you know that this is going to last to be meaningful. Congressman. I do agree that we do have to ensure that we dont just fix this problem once, but we fix it everywhere inside the institution and we have a systematic process to ensure it does not happen again. In addition to all the Risk Management controls that we have spoken about that are now being built out across the whole company. Weve just added a new rule called our sales practice oversight officer which looks independently and all of our sales practices across the entire company. It is responsible to ensuring that we do not have any gaps in our practices and ensures that they all operate in a manner which represents the way we want the company to be run in the future. That is not just looking and improving on the plans, but making sure that the right reporting exists and the right management processes exist to support the kind of behavior we know we need and wells fargo. Just as quickly as possible, its no secret that regulators were asleep at the switch when the bank was tied up in the scandal. What measures are you taking to ensure all future practices are above board with regulations . It seems that i am out of time if you would have a chance to answer that. The gentlewoman from pennsylvania miss dean is recognized for five minutes. Thank you madam chair thank you Mister Scharf for being here. Like many of my colleagues here, i really do wish you well. Wells fargo needs powerful leadership to write the ship and correct the wrongs of the past. Weve had a lot of conversation today about governance, about culture, about what is going on presently. A review of those systems and leadership moving forward. But i would like to focus on the people left in its wake. The harms that have been done. As important as it is that you write the ship moving forward, i believe everyone who has been harmed by wells fargo is entitled to remedies. Full return of their damages. We know from oh sissi reports, i will read a part of it from the majority report page 63. When youre after sitting up a center of excellence, Customer Center of excellence, oh sissi found that the banks Remediation Program is critical to the organization as the current approach to remediation is inefficient, and consistent, often lacks appropriate accountability and often takes too long. I will use one example. Because i think personal stories often do it. In 2017, some severe handoff had his car repossessed. It was under a loan from wells fargo. I think unbeknownst to him, or duplicating to him was insurance sold, Car Insurance that he did not need, driving him into delinquency on the car. After paying hundreds of dollars to get the car back, he found that the greater harm to him with his credit score. He lost 100 points on his credit score as a result of the corrupt fraudulent practices at wells fargo. Thats one case. My question is, in your own analysis, has your company done a full look back on every Single Person who was harmed. Whether its the 3. 5 million fake accounts, fraudulent sale conference, wrongful disclosures with your predecessor said came about as a result of a computer glitch. A multipleyear long computer glitch. The taking of peoples homes improperly. The failure to modify mortgages improperly. Lost houses, lost cars, lost credit worthiness. How many people have been harmed . Are you looking individual by individual to know their damages and get them compensation . Congresswoman. I share your both the passion as well as the frustration. When we look at the things that we have done and the mistakes weve made, its one thing to say weve made mistakes we will make them better Going Forward. But we have to do the right remediation work. There is no question that in my mind, we need to move faster and we need to be as complete as we possibly can in the thinking. We have a significant number of people working on this. But with myself coming into the company, a new chief operating officer coming into the company. We want to take a fresh look at what that actually means. That is what im asking you. What have you commanded your team to do in terms, were talking millions of customers. What have you commanded that they do in terms of looking at the harm. I hate the word remediation, it sounds like something that you do out of the yard when there is a spill. These are damages to human beings. Customers who have suffered harms. What are you doing to identify the harm and compensating them for that harm . What i have directed our people to do is to take a fresh look at every one of these instances where we farm consumers. Ask the question, have we sized the answer properly . And what can we do to make sure that the work is done much more quickly than it has been to date . Let me contrast what your predecessor said for example on mortgage foreclosures. He said they took a look and where they had made mistakes they sent 15,000 dollar checks to people, when they heard nothing back they thought it was probably satisfactory. Is that your approach . Our approach is to make sure that everyone who was harmed gets compensated properly. How do you calculate that . Thats what i want to know. Ill be glad to talk to some examples of what that is piece by piece. I would love to know that but in a global way. So each and every person gets compensated. Thank you very much and i wish you well with your work i sincerely do. Thank you. The gentleman from texas mr. Goodin is recognized for five minutes. Thank you madam chair. I will yield my time. Thank you. Thank you mister goodin. Thank you Mister Scharf for being here today. Wells fargo need strong Ethical Leadership to turn the tide. The board thinks you are the right person, time will tell. I appreciate you being here today to talk about what youre doing. Your day one letter to wells fargo employees at the you wrote, your front needs to be doing the following. Set clear priorities and execute, execute, execute. Words are nice but actions are what matter. Priorities, strategies and ideas are useless without clear execution. I want to talk to today about the priorities and your execution and your leadership at wells fargo. Can you walk through what your priorities are that have been set in and the status of those priorities . What are the most important priorities . What needs to be achieved to fix wells fargo and restore public trust . More importantly, what has actually been achieved and what has not yet been achieved . For those that are unresolved, what is getting in the way of that successful execution . Congressman, i think the most important thing that i did when i arrived at the company, when i talked about setting clear priorities is making sure that everyone understands that our First Priority by far is to do all of the regulatory work that is required. We need to do it both because our regulators have asked us but also because it is the right thing to do to build the proper foundation. It was not clear to me inside the company that everyone understood that. When we looked at the activities that people were spending their time on and where we were investing our money, it equally was not clear to me. Setting that as a priority and then as we go through our budgeting exercises and reviews, asking the questions are we doing everything that we should and putting the appropriate resources towards the activities . You wind up with a different answer i think than we had last time. The way we go about managing these activities i think today is very different. The amount of time that i am spending on these activities is 70 to 80 of my time. We brought in a new chief operating officer under which all the responsibility for driving the work across the company for remediation now sits. Hes probably send spending 90 of his time on these activities. We as a company are working together differently than we worked together before and so the priority, the process, the people and then if i were to dig down and talk about each individual Consent Order and thinking about how to do the work. It is a far more professionally managed set of circumstances than it was when i got there. These are just, this is just setting the framework for doing the work. I remind everyone internally all the time that what weve done is put in place our ability to get the work done, but we have to go do it piece by piece. Its a lot, its going to take a period of time, im not committed to the period of time because im not sure what it is yet. But we will stay as focused, as we have to turn sure that we get to the finish line on it. Thank you. Follow up a bit and a lot of my colleagues have discussed concerns about the culture at wells fargo when you arrived. Its well documented, some of those abuses. Can you just touch on some of the recruitment efforts, in particular at the senior staff level that played into wells fargos efforts to change that Corporate Culture . Sure i think, i think one of the problems that we had, across the company is we didnt always put the right people in the right jobs. I said that my opening remarks. The culture of the company, was more family like. And family can be good, but family can be bad. They making the tough decisions about who is capable, whos performing whos not performing its really important at all levels and the organization. I dont think we have done that as well as we could. So if people dont have the right skills, dont have the right experience for things that we need, we need to get people that do as long as we treat people with the utmost respect. When we look at the people that we brought in from the outside, or people that we promoted up from within, i think that people both inside and outside the company are saying that they fit the bill. They have the experience, the know how the Proven Ability to get work done. And so, we are set up with the right infrastructure now to get the work done the way that we werent four months ago. Thank you very much i appreciate you being here, and will continue to observe the progress that you will be making. Thank you very much i yield back. The gentleman from utah mr. Mcadams is recognized for five minutes. Thank you mister missed mr. Sharp for being here today, so not long ago another wells fargo person sat in that chair and promising to turn things around, but ill tell you i told him back then i want wells fargo to succeed, i want the bad practices to stop. I dont want people to taken advantage of. I want wells fargo to succeed, because it has 3000 employees in my state, and i want those employees to be proud of where they, work and not to have a workplace that pushes them to act unethically or illegally. And i hope and believe that you share the same sentiments. So mr. Scharf, you generally except that wells far go failed its customers, its employees, and must do substantially better correct. Congressman yes i do. Thank you im glad you answered that way because to answer otherwise, woods starts off on a very bad foot. To the extent of wills failures of the last decade they run far and wide. Lets talk about how we can do better. Before the hearing today, i read the note that you sent to all employees and your first day ceo. And i appreciated that note. One of the points you made, in that communication was that wells forego needed to move with a sense of urgency, you said it the state expects you to move forward faster than ever, but at the top of that list was to remediate past issues. One of the things the majority staff report said that wells Fargo Management prioritize financial and other considerations above fixing issues that were identified by regulators. Can you commit to me, and to this committee, that you will prioritize fixing the past mistakes of wells, rather than prioritizing short term profits. Congressman these are the most important issues we have, we will prioritize them at the top of everything. Im not only commit to you, here ive told employees that verbally, ive told him that in letters, and i told our shareholders that. It thank you and we expect to see that happen. Thank you for your commitment to. That also in your nose to employees, that you your people set your part, and that the best and brightest people work for wells. I press mr. Sloan an employee issues last year, and the ability for employees to raise concern, his answer displayed a lack of understanding. At the heart of the past welsh scandal, was a cultures in the issue, where profit was king and the employees didnt feel they can raise their voices on certain activities. Can you tell me how your soliciting Employee Feedback and how you want to do in the future. Congressman we do employee surveys, and i think even more importantly, during this rather than just doing the surveys, employees know that you read them and listen to it, and you will do something about it. So ive spoken about the results ive seen an employee survey, many of the actions that weve taken, our result of what we have seen. We have tell hall meetings, i hosted a town hall meeting every quarter, of every employee inside the company, i encourage people to give me feedback, and i get feedback, i get hundreds and hundreds of emails anytime i send something out, not just after those quarterly meetings, but even in between that time. Are you ensuring that employees can get that feedback anonymously, it it sounds that they cant give it outside the normal chain of command, but can they get it back anonymously so they dont get retaliation. I get signed and as well anonymous, and we also have a hotline so you can talk to us anonymously. Changing topics one thing that has been dominating like conversation with constituents is the coronavirus, and how to prepare for this on our economy and our government. As more employees are affected and forced to quarantine, the economic effects of that will weigh heavily on those individuals and on their families. How are they going to put food in their table, how are they going to pay their mortgage etc, how is a Small Business owner going to keep the lights on as his or her supply chain is disrupted. Can you tell me what steps wells fargo is prepared to take, to respond to this pandemic and how it will assist its individual and Small Business customers who are struggling due to lost income or disruptions, if theres such a thing is loan forbearance, late schedules, waiver fee etc. This is something we want our customers to look at us as a source of strength for them, we do not know where this ends, and it is something we think about, and understand the impact that he will have an individuals lives. We asked the question both for employees as well as customers, what can we do to be there for them. As of today, but not sitting here today but not as of today were sitting here today we, have number set up that we are publicizing to our customers so they can call us talk about their hardships, we will talk to them about extension of fees, we will talk to them about other things that we can do for their loans. Thank you and i yield back. The gentleman from wisconsin mr. Style is recognized for five minutes. Thank you and i yield to my colleague mr. Goodman of texas. Thank you mister style, thank you for being here, i have just a few questions yes or no answers will suffice. But feel free to answer as long as you. Like is wells fargo large bank in the world . No it is not the language the large bank of the world. No are is a large bank in north america . No we are not. So not the United States im guessing . No congressman. Of the banks of a larger handle with such magnitude. About how many . Im not aware of another bank that had such issues. There are large banks that have done a good job and it is fair to say wells fargos problems are unique and you are trying to get to the point where they are able to operate fairly smoothly and honestly despite being large . Weve not been run the way we should be run and our culture is not what it should be but it is possible to change those things and possible to run the company well. Appreciate that and thank you for being here and i want to make an observation. Looking through the majoritys report it has been helpful and i appreciate the work they put into it. I was going to point out we had the head of the occ last month and one of the themes was there was mismanagement going on and he was doing the bidding of the Trump Administration. A report that this committee put out, a news release on february 3rd, 2020, really blasted the fdic and occs plans to weaken components of the volcker rule. In the press releases i read it made clear they held these accountability groups, fdic, occ, responsible for doing the wishes of the Trump Administration. They blamed the administration for decisions by the occ. I bring that up because when i look at this report, page 23, Committee Staff findings, it says before the 20162018 Consent Orders, financial regulators knew about serious enterprisewide deficiencies at wells fargo for years without alerting the public. The president was elected in 2016. When i read these deficiencies and regulatory efforts, april 19th, 2017, a report by the occ office of enterprise, government and ombudsman, sales practices, concluded that the occ did not take timely and effective supervisory action, they failed to conduct comprehensive reviews and testing of monitoring and control of sales practices between 20112014. That is right in the middle of the Obama Administration. I cant imagine how this would read of republicans were in the white house during the years of mismanagement by rickets or group that allowed this to go on. My conclusion i would like to make is the Trump Administration has done a good job. The first two years they have executed enforcement action and things are turning around and i applaud the Trump Administration for their progress. Im disappointed so much of this was asleep at the switch actions during the Obama Administration but i wish you look and thank you for coming before us today and i yielded to the chairwoman. The gentleman from illinois is recognized for five minutes. Thank you for holding this hearing along with the Ranking Member and thank you, Mister Scharf, for being here. In 2018 the Federal Reserve imposed an asset wells fargo due in part to depending compliance issues at that time. Despite this, wells fargo remains one of the biggest banks in the country. That wasnt always the case. In 1998, wells fargo merged with northwest. In 2017 the independent directors of wells fargo released a report on sales practices and found the companys focus on aggressive sales goals came largely from northwest. Is that correct your knowledge . That is what i have been told but i dont have evidence of that. The decade after northwest emerged, wells fargo acquired the National Bank of alaska, Financial Services, united bank corporation, you get the point, the mergers. Wells fargo acquired walker via doubling the size of the bank. Is that correct . I believe so. According to the independent directors report wells fargos failed culture quickly spread through walker via branches. Is that correct . I believe the wells Fargo Management model was there. From my perspective these constant acquisitions not only made wells fargo bigger and more complex but brought illegal and irresponsible corporate practices to more customers thus the consent pieces that are out there. Of the Federal Reserve releases wells fargo from its asset u commit to not pushing for more acquisitions . Im not thinking of anything like that today. Im thinking of the work that we have to do and there are examples of acquisitions where companies have been run properly. Our issues relate to the fact that we didnt have appropriate management in place or appropriate controls or risk infrastructure. Sounds like a know to me but wells fargo unchanged by your response continues to illustrate how endless acquisitions and mergers are dangerous. I introduced with senator warren in the senate the Bank Modernization act to stop the rubberstamping of bank mergers between 20002017, reviewed bank merger applications, approved all of them. As banks get larger they become more difficult to manage, to regulate and enforce existing rules, the risk, becoming too big to fail and put our economy at risk. This endangers all of us especially workingclass families like the ones they were present in chicago. After the 2008 crash dozens of my friends, neighbors and constituents were foreclosed on. We sold my parents two flat. The impact, greed wiped out wealth for millions including more than half of the wealth black americans and in our country. We cannot let that happen again. My bill requires Consumer Financial Protection Bureau approval, mergers requires regulators to evaluate Systemic Risk factors of proposed mergers, and regulators that go on before the merger was filed. We need this bill, enormous scale. The gentleman from new york is recognized for five minutes. Thank you, chairwoman waters and thank you, Mister Scharf, for being here today, for your testimony. We met recently. Found you to be highly motivated to do a good job, genuine, candid with all your answers. As one who represents the first Congressional District of new york where you have been spotted on the east end of long island, we are proud to see you in the position you are now. I want to talk to you about Veterans Issues i discussed with your predecessor last time he was here and you cant be blamed for what happened before you arrived but you are here to answer questions about the path forward. That is much appreciated. The initiatives you are undertaking including business organizational structure, specifically by creating five principle lines of mrs. To assure accountability and responsibility. It is clear you want to communicate progress but also be upfront about what went wrong. Wells fargo had an unfortunate history of wrongly treating activeduty servicemembers and veterans. For example it has been widely documented the Bank Repossessed Cars from active military service members, overcharged veterans for refinancing their mortgages. Can you elaborate on the initiatives you have been working on to help veterans in the wake of the scandal . I should start with the statement that we have 0 tolerance scra errors inside the country. The things you described as well as other things others have described, the harm we have caused is completely inexcusable. And flies in the face of who we should be has a company. Specifically for members of current military and former military, the utmost respect for what they do. We have to make sure for that population and other populations all the right controls are in place. What i believe we have in place and is effective at this point, the centralized group, to review all of those that are covered by cra, to ensure those mistakes dont happen again. As we continue to go through my process of reviewing the Company Piece by piece, we will look to that to make sure it is as robust as it needs to be across all businesses but im told people believe that is the case today but we will verify it. Appreciate the open line of communication between you and not just myself and my team but everybody on that issue which is close to my heart as i imagine it is for everyone on this committee. Transitioning a little, and growing concern to me and my constituents, the d banking a legitimate lawful businesses due to pressure from social activists. The israel antiboycott act would prohibit boycotts or requests for boycotts imposed by government organizations against israel and protect American Companies to be coerced to provide information for the purpose of further boycotts against israel. This does not impede the right of any individual american or criticize israel. It is okay to have reasonable edge of the criticism of any government including our own or our allies like israel. This hate fueled movement is not all about affirming the rights of palestinians. Likewise the pressure from those cloaks under the guise of social activism to the bank legitimate businesses in the us is not only wrong but i worry this type of tactic could seep into movements like the bds movement when it comes to pressuring those who provide Financial Services. I understand you are running a bank and lending requires discretion in the underwriting. The community assured me the internal processes would not disseminate against creditworthy individuals and businesses no matter how those in the public might try to cut off access for them. We intend to treat all individuals fairly. There has been immense amount of public power interested to banks to facilitate commerce, acting as regulators. My time is up so i yield back. The gentlewoman from texas, mrs. Garcia, recognized for five minutes. Thank you for holding this hearing so we could visit with the ceo of wells fargo bank. It got canceled and not rescheduled. Could we work on that . I want to ask you, wells fargo announced it would no longer require mandatory arbitration for harassment claims by employees. I applaud you for that. It is a step in the right direction. However wells fargo has mandatory arbitration provisions with credit card agreements, consumer accounts agreements. When can we see changes their . This body passed a bill in the house passed a bill to end arbitration clauses and contractual agreements. I have been forced to sign some and didnt want to. When can we expect you to remove those clauses from those agreements . As you pointed out, we did make those changes regarding sexual harassment. We have also been able to settle self practice exams without referring those 2 arbitration as well. There are places we have looked around the company. We want to have a process in place that is fair and effective for employees and customers. This is something we started to look through and nothing more to report today but as we continue to think about it, willing to engage with you on the topic. He maintained in previous employment in the Banking Industry . I dont believe melanie arbitration but we will check on that. You were saying you cant commit to get us on the right track on those agreements. I believe we have a goal of being fair and effective how we handle disputes with our customers and employees, there are different ways to accomplish that and we will determine what we think is the best way to do that. This body found arbitration clauses were not fair to the consumer. I find, as attorney and former judge, you deny consumers the right to participate in any Class Action Lawsuit or class arbitrations against the bank . Is that true and when can we see a change in that . I dont know the specifics of that. When you go back to your office could you check into that or add it to your list so you can work on that also . Glad to. I want to go back to an answer you gave when we were talking about a lot of accountability issues with prior management of the bank and you said you would no longer use any reviews based on sales, that you would be focused on Customer Service, you would look at balanced growth, what does that mean . I was referring to incentive plans that have been changed in the Consumer Bank where a meaningful part of the compensation is based on sales goals that led to this behavior. Those have been removed and several different pieces of go into the evaluation, one of which is customer experience, the second has to do with balances that exist inside the customer accounts. The dollar balances . What balances are you talking about . Dollar balances. Versus the consumer account of 100 . What we do is instead of looking at the numbers of accounts because the numbers of accounts is part of what happened to the problems that exist in, we want to attract more balances and the ranchers. We have different bankers who cover different customers at Different Levels so we arent judging those you dont suggest the bigger number, the better treatment . The average joe comes up with a 2 Million Bank Account they will get treated differently because the person will get more points for the higher value . They should not be treated differently. I yield back. The gentlewoman from california is recognized for five minutes. Mister scharf, have you seen harold and kumar go to white castle . I have not. There was a famous scene where Neil Patrick Harris borrows the car and completely trashes it. Wells fargo led many consumers to buy cars and to take good care of the car, that is the collateral. Protect that value but there is always this Neil Patrick Harris risk, so in crash of the car, defaults on the loan and the value is not enough, risk of loss. To guard against that laws wells fargo has consumers pay for waivers, guaranteed auto protection and the gap waiver canceled the remaining balance on loan, the regular auto, payout after the car is damaged, is insufficient. When someone pays off the loan, there is no need for the gap waiver. The debt is paid off. But you, wells fargo, keep charging for that gap waiver. You didnt tell consumers after they paid off the loan early that you owe that money back, 350 each. Effectively the bank still this money from 1. 7 Million Consumers nationwide. 600 million in all gotten gains. What wells fargo owes consumers, has been returned. Dont know the exact number. The chart on the side. This is how much you owe, 600 million, this is how much he returned, this is how much he returned, 0. You told me wells fargo has been penny wise and pound foolish and i agreed. Resisting doing what is right in paying consumers. I saw that as monitor of the foreclosure crisis. If youre here to tell us wells fargo changed its ways you should have no problem committing to giving these people their own money back and terms of gap charges. Will you commit to give them their money that . No question if we have harmed customers we should in fact do that. We will go back and look at the specific example and understand why it hasnt been done and how to rectify it. This is the pleading in that case which wells fargo is currently arguing that even though it charged people for many years of gap insurance, the consumer paid off alone and they have not refunded the gap insurance and that 350 means a lot to 18 banks for families. I would love you to commit to doing that. I also want to ask if you heard of the song mamas dont let your babies grow up to be cowboys . I dont believe i have. By American Hero willie nelson. I have three kids and i am thinking of writing a new song, dont let your babies grow up to be bank tellers. Mister scharf, how many of your tellers are currently receiving public assistance in this country . Im not aware. Right now, one third of bank tellers in the United States receive public assistance. I would like permission to enter into the record a study from university of california berkeley that shows the cost of Public Benefits to families of bank tellers is almost 900 million a year. Without election. Taxpayers are subsidizing wells fargos wages to the tune of 900 million per year. I dont want my kids to be wells fargo tellers because statistically speaking they will need public assistance. Is wells fargo profitable . Is wells fargo profitable . I believe it is. You believe, 19. 5 billion last year. That is profit. The bank can afford to pay tellers significantly more. Do you think the Hardworking Taxpayers should be showing up wells fargos salaries when they have 20 billion year and paid out 30 billion in dividends last year . I believe we should pay People Fairly and the actions taken by raising the minimum wage does in fact do that. We also you raised the weight only in highcost areas, not acrosstheboard. We raised our wages in four different tears. With that, i yield back. The gentleman from illinois recognized for five minutes. Thank you, long day here. I want to shift to the recent market activities in the oil sector. I am an energy guy. I dont want to make much of one day volatility but after yesterdays news that saudi interests are not aligned with our own and we need to brace ourselves for a potential downturn, in the 2016 period, your energy fund was exposed to significant losses because of the cubic energy bankruptcy. What i would like to understand is how much capital exposure does wells fargo have exposed to the oil and gas sector . Dont have that number sitting here. Last time i looked, i look at our exposure as a percentage of total loan exposure and percentage of equity and look similar to what larger banks have. If there is exposure would it all be in the Wells Fargo Energy group . Is that where the Energy Lending would take place . Im not sure. This is off of your website, 42 billion committed to companies in downstream services. If i look at this, 41 , 15 in midstream. If i think Exploration Production pipelines is 23 billion of exposure, does it feel outright to you . Im trying to do math on my head, not put you on the spot. I will take your word for it if you have a document. Do you have any sense how much of that is in equity versus death . Know i dont. Im trying to do the math. In your most recent, your total Loan Portfolio for oil, gas and pipeline was 13. 56 billion. I assume that is just the debt side, that is a reasonable guess, 10 million equity. I dont know the specifics. Can you estimate on the debt side the second lane versus senior debt . Know i cant. I suspect a lot of you dont know, do you know how far the oil price would have to fall for senior loans to be in technical default . We have a risk function and business function that has run models, i dont have the answer to that. Do you have a general sense given Oil Market Volatility how concerned your risk is between the Oil Market Volatility . Certainly a heightened degree of activity around oil and gas exposures. When we took those exposures it was in the context of what we thought the risk could tolerate. Beyond that i can answer additional questions. Do you think your exposure is representative the industry, the broader Banking Industry . I cant speak for the rest of the industry and dont know the specifics a exposures. Any idea how much you have got in reserve for potential losses in the sector . I dont, sitting here today. Not sure it is something i would want to share broadly. I will follow up, what im trying to understand is the Systemic Risk created to the Banking Sector of which you are a participant. If there is a stained reduction in the value of the books in this country, i will leave you in cubic energy went bankrupt, john ross, were you took a wipe on the equity, john ross, Vice President of operations, said what is really worth anything at 40 oil and 2 gas . It is hard for me to say. The equity holders including wells fargo was 0. It was 43, natural gas is what you need. It is a concern for me that you dont know. I know this is just recent news, and the Broader Market exposure in the Banking Sector, i appreciate it. It is a topic of conversation in the company. I yield back. The gentleman from colorado is recognized for five minutes. Good to see you Mister Scharf. Three questions. Two, to follow along miss porters questions and mister cassidys questions about the company. A wise man once told me problems dont age very well. This gap insurance, guaranteed Asset Protection where wells fargo received a premium to cover the loss of a car, and wells fargo has paid off, refinanced car has paid off, continues to hold the premium and there are cases out there broadly bins the company to recover that. Small dollar amounts and as somebody who has been outside counsel to financial institutions, outside lawyers will say we can fight this and require arbitration and make everybody get their 322 and we will be better off as an institution. I would remind you of this by saying problems dont age very well. As chief executive officer i ask that you consider miss porters discussion and also pleading and take a look, these things need to get before the bank. This is my second point. The things that really has been difficult for democrats and republicans is a series of Consent Orders, the delay from the first one to today. The question, both reports to different magnitudes with management, issue with the boards and the regulators and for us the question, the board of directors derelict in their duty and the culture of the company, difficult to get your arms around or is this company too big to manage . I would like to get your response to that. It is possible to run a company like wells fargo well. There are a series of things we havent and to categorize, the lack of ability to make progress in these activities we have spoken about. Culture did work against us. It is not what it needs to be. We havent had the right Management Structure of the company in place for the right people in place and we didnt have the right priorities across the company. We have spoken about the fact that we didnt have the right about accountability to map with those priorities were to what it meant for them. When you put those together, and you run the company very differently it is possible to have a different outcome than we have seen. Last one. The proof will be in the putting. Further delays are going to continue to age and not good for the company. I have been a customer of the bank for 40 years and i had some of those issues in my own accounts. I want to see the company right its ship and do good. Last thing, the softball i want to give you, if you were sitting up here and have coronavirus and you see Small Businesses, potential victims of a recession, the tourism industry, hospitality and couple that with the fight between china, russia and saudi arabia on oil. If you were sitting up here as a member of congress on the Financial Services committee thinking a recession is a the potential, what should we be looking for to help stem off something that would get worse . I would certainly ask the question what the banks are doing to do what they can to support all the individuals that are affected by this. We dont know how far it will go but it is significant and we know there are things we can do to help the individuals at our own companies, the consumers who our clients but the impacted consumers of the corporations we do business with. The last point, those that could be really affected, some things were done during the shutdown, i would ask that you consider to do similar things to help those affected individuals. Thank you. The gentlewoman from michigan, miss tlaib is recognized. I do think it is important that many folks understand what the chairwoman is trying to do is not called intimidation. It is called doing her job. This report alone is doing her job as chairwoman of Financial Services, somebody that oversees especially overseas actions by banks like yours, many are calling it a cultural issue. It is called cheating. The division of cheating is to act dishonestly or unfairly to gain to gain an advantage. It is a criminal scheme. Page 13 of the report alone, you did to servicemembers and our country, there they were facing eviction. A loan, a criminal scheme that you got away with. Understandably my colleagues try to be more forgiving but when somebody in my community defraud the government, they go to jail. They get prosecutor. Im taken aback by folks who dont understand consumer abuse by the company and dismissing and belittling it as a cultural issue. It is a criminal scheme. You all got caught doing something that was extremely disgusting, disadvantaged so many folks especially frontline communities, your predecessor at wells fargo made 18. 4 million in 2018. Did you know that . I have read that. 283 times more than the Median Income for your employees. Yes. Do you think it is appropriate for a bank caught cheating to not address the excessive executive pay at wells fargo, the bank you know every see . I am focused on making sure we treat everyone fairly Going Forward. Lets talk about the when you dont pay a living wage to many of our residents who live in our communities that because you dont pay living wage they end up going on assistance and we have to cover Health Coverage you dont provide adequate Health Coverage or they have to get a second job. That is something you should absolutely write down and what is happening in the lives of people who serve in your company. One of the things i was trying to finish something to forfeit your and compensation to pay any penalties wells fargo faces under your leadership. I think all the activities that occur should be factored in. How many ceos do we have, and they are trying to say this was an issue. This is 10 years of doing these 2 real people that lost their homes, lost their lives, you are still settled out of court and get away with it. I encourage my colleagues to look at this, the tax excessive ceo act i coauthored with senator sanders would put a penalty on all banks and corporations with big gaps between ceo and worker pay. It is import to give incentives to end the practice that put all of us at risk. Im tired of us subsidizing for you all not even paying a living wage to the residents that work for the company and on top of that you are around the corner scamming them. Im not convinced. It is no fault of your own Mister Scharf, or maybe it is, you come in here and say that is before my time. If i went to my community and sent them i just got here, i dont know, they would hold me accountable and say you need to know. You come before this committee, you should have been much more prepared in acknowledging and owning with the company has done because that is not changing culture when you dont acknowledge that is what you inherited as a criminal scheme by your company that is literally meeting people on the street. This is not personal, Mister Scharf. This is life and death for our residents at home. When you come here and dont have answers, it is a disgrace and disrespectful to this chamber. You cannot continue say im new. Thats not the right answer. Speechangechi provided many answers. Thank you, madam chair. The gentlewoman from ohio who is the chair of the Senate Committee on diversity and inclusion for five minutes. Thank you to the witness. I am interested in how you plan to run the bank. First, let me start with do you know what you inherited when you took this job, yes or no to move us, we have had a long day. Do you think you were adequately prepared . Yes or no . As prepared as i could be. You were adequately prepared . Is that a yes . As prepared as i could be. Thats a no answer. Do you think you are adequately prepared for this hearing today . Yes or no for the sake of time . I have waited a long time. Ive done the best i can. Were you prepared for this hearing . Yes or no . That is for others to determine. You are sitting in the chair. You are a witness. Do you think you were adequately prepared . Its not a gotcha question. I was hoping as the ceo that you would say yes. That is for others to determine. What do you believe . Do you believe you were adequately prepared . Yes i do. Thank you. Are you familiar with the interests of the subcommittee chair people on this committee . Do you know what i chair on the subcommittee . The diversity subcommittee. Thank you. It appears you are adequately prepared to know what i chair. Did you read the wells fargo support report that was committed to the subcommittee . Know. That is disappointing and i am very serious. I can answer the question, you were not adequately prepared. For you to come here and say to me one of the biggest things we are doing in moving this needle and you wonder why people ask you questions, when you talk about moving the needle for inclusion we are looking at closing the wealth gap, looking at pay equity. It is beyond race and ethnicity and gender, it is about veterans, it is about how we move the needle to make sure people have inequality and not in justices. I am very sad that you cant answer my questions and you didnt take the time to look at the report. I have been consistent. I asked the same questions for the last six years to every ceo in this room. This is my life mission to make sure women and minorities and africanamericans stand a fair chance in the world you operate and the world that you run. In your transcript, when they talked about hiring you, you were passionate about diversity and inclusion and committed to work with a talented Management Pool of people and you answered and said you were excited to do those things. See how connecting the dots, if they thought you were committed to diversity and inclusion and yet you dont read or look at the dni report and you knew you were coming before this committee . I have asked every Single Person the same question. Can you give me a commitment to cleaning the house, bringing on new people . Do your will you have a diverse your inclusion executive on your team . Do you have one . Yes we do. Does that person report to you . He does not. Wrong answer. If you believe in diverse city. And lack of addressing what colleagues have asked you should look at that person reporting to you. I get the point that you dont serve on the nominating committee. And and do you know what the rooney rule is. And and it was put into legislation and actually past. Will you participate in that . I have the conversation. And on the board. They are diverse. Nobody else. Before we adjourn the hearing, to close. Thank you. You outlined an aggressive plan for institutions needed. It is accountable to the board. You are held accountable by your shareholders. You will be held accountable by those who make the lawn capitol hill and oversight of those regulators. What is clear in the history of your institution, this hearing today. And and and there are 5 issues by the committee, 3 by republicans, two by democrats. We had access to the same information from the majority and minority. After the wells fargo sales scandal came to light in 2016, the republican chairman opened an investigation, republicans in charge of the house. Called the ceo to testify and requested documents and information in the companys regulators. Penciling obtained 170,000 pages of documents for your institution and regulators. Issued subpoenas, some of those documents and issued subpoenas to get documents from all regulators the we have oversight over and that was during the Obama Administration. Democrats were in those jobs, had to be a republican subpoena to get that information. The majority and minority, get those same documents. The same sort of insight into this process. At the time the democrat minority issued a report republicans issued two reports during this last congress, that last congress. Fast forward to 2019, democrats are in charge of the house of representatives, change over the regulators as well. We had requests for Additional Information from wells and the regulators, 370,000 pages are turned over without a single subpoena from your institutional regulators. The key difference is every single one of those pages came without a subpoena for the regulators, that was different under the Trump Administration. They had to subpoena those documents. They handed those documents over the institution and ensuring laws are appropriate, enforcement is appropriate. Between us, we have half 1 million pages of documents on this committee. We have key findings of fact, real indictment for institution, wells fargo. Key findings of fact. Not adhering to regulation, failing to comply with consent degrees, and agree on those facts. Two conclusions how to deal with your institution and institutions of this, that is a decision for policymakers to make on what to do with key findings of facts and it is an honest disagreement between republicans and democrats, the key finding of facts were bipartisan in nature. It is the question of what to do, we need better measurement of practices, adhere to existing law and continue to go along with current law and legal structures with institutions of your sides. Are you back the balance of my time. Before we conclude today is hearing i yield a few minutes to discuss the process the majority of the took to conduct our wells fargo investigation and create a report with its findings. A year ago at my direction the majority 70 she aided an investigation into wells fargos compliance with 5 Consent Order, majority staff requested and reviewed 330,000 pages of records in the course of the investigation was the majority Committee Staff received briefings from the Federal Reserve, the occ, cfpb, sec and wells fargo and conducted interviews with Key Executives at wells fargo and the former chair of the boards risk committee. They interviewed officials at the Federal Reserve. The documents served as the basis of the majority staff report. The report was obtained because the majority staff spent months working to obtain them from regulators and the bank, did not offer these documents up on their own. But instead only provided them after months and months of intense negotiation. The majority staff determined the focus of this investigation, drafted the document request through the occ, cfpb and the Federal Reserve. The board of directors determined the scope of those inquiries. The majority staff selected the witnesses, the committee interviewed, negotiated their appearances for interviews but at the same time republican staff had access to all documents and had the opportunity to participate in all formal interviews. I would like to acknowledge the work of the following majority Staff Members without whose yearlong efforts this report would not have been possible. Bruce johnson, deputy chief oversight council, carolyn holland, senior counsel. I would also like to acknowledge kevin burris, chief oversight council, christine balthazar, paralegal, glen sears, director of Consumer Protection policy. A v malik, senior counsel. Rhonda miles, senior counsel. He or watley, professional staff. Eric harrison, communications director. Eric low, Deputy Communications director. Marcus, director, digital director. And eden harris, assistant. The majoritys investigation revealed deeply troubling failures on the part of the banks board of management and regulators and shows that the bank is still broken and continues to harm consumers. Also made clear that Congress Needs to act to make sure megabanks can never escape accountability. To the public are responsibility to consumers. At this hearing we have made it clear to Mister Scharf that this committee is keeping a close eye on wells fargo and we will hold them accountable to ending the banks egregious pattern of consumer abuse. It is an immense task, the committee will not relent in its scrutiny of the bank until its appalling practices end from good. Megabanks understand they are not above the law. No matter what is being said about who did what and when i am in charge of this committee. I have the gavel and we have put together this report. We are going to follow up with it and all of the information, Incorrect Information that has been shared today about who is responsible for what, we are responsible for the report. We stand by it. I would like to thank our witnesses for the testimony today. All members will have 5 legislative days in which to submit additional written questions which will be forwarded to the witnesses for this purpose. I wish, i ask our witnesses to please respond as promptly as you are able. Without objection all members will have 5 legislative days in which to submit extraneous material to the share for inclusion in the record. The hearing is now adjourned, thank you. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] sunday on after words, Deputy National security adviser kay t mcfarland gives insight into the political process and the Trump Administration in her latest book revolution, trump, washington and we the people, shes interviewed by danielle mclaughlin. Demographically, geographically, socially, economically, constantly reinventing ourselves not just as individuals but as a nation, government by its nature is a status quo institution. This is how we have always done things and we will always do this thing and we will do it the same way again and people get stuck. It is a status quo. America is set up to have these revolutions, political revolution. We had one in the very beginning in the American Revolution but ever since then we mostly had revolutions the played out in the ballot box. Watch k t mcfarland with her book revolution, trump, washington and we the people sunday night at 9 00 pm eastern on after words on booktv. Cspan, your unfiltered view of government created by cable in 1979 and brought to you by your television provider. Us agency
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