On Tuesday, Wells Fargo CEO Timothy Sloan appeared before the Senate Banking Committee on Capitol Hill regarding the bank's creation of unauthorized accounts.
What follows is a full transcript of the exchange between Senator Elizabeth Warren and Sloan during Tuesday's hearing.
Senator Elizabeth Warren: I want to take a look at your time at Wells Fargo. From 2011 to 2014, at the height of when Wells Fargo was cheating customers by opening false accounts, you served as the chief financial officer. As CFO, you spoke to potential Wells Fargo investors a lot. On those calls, you aggressively promoted Wells Fargo ability to open up new accounts, didn't you?
Tim Sloan: No. I didn't.
Warren: No, you didn't?
Warren: Well, here are the transcripts from all of the investors' earnings calls that you participated in from 2011 to 2014. I've 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've marked that one, you said, 'I can't wait to get a credit card in every one of our credit worthy customer's 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 stocks. Is that right?
Sloan: Senator, I don't recall how much stock I owned in Wells Fargo. I'm a very proud shareholder.
Warren: Well, it's actually in your SEC filing.
Sloan: Sure! It's public. It's all out there.
Warren: 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 three years into your time as CFO, the LA Times published a large article on the relentless pressure Wells Fargo put on employees to open new accounts. The article was based on an internal review of 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'm not aware of any overbearing sales culture.' Hmm, that is really interesting phrasing: 'I'm not aware.' So when the LA Times came to you with concrete evidence of a terrible problem with fake accounts at your bank, did you launch an investigation into the issue before brushing it off?
Sloan: Senator, as it relates to my comments in 2011, I'm proud of the credit card products that we have at Wells Fargo.
Warren: That's not the question I'm asking. I just asked — you brushed it off. You said, 'you're not aware of problem.' Did you open an investigation when someone laid out evidence of fake accounts?
Sloan: Senator, in that interview, to the best of my recollection with the LA Times, they didn't provide me with any information. It was soon after that –
Warren: So I take that as a no? You did not open an inquiry into it?
Sloan: Again, the LA Times did not provide me with any documents. It was a phone call…
Warren: Did you read the article?
Sloan: I read the article, yes.
Warren: …And then you opened an investigation immediately?
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 and that's the time that we began to take action.
Warren: So let's talk about that time. You didn't 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's fast forward to 2016, two months before the fake account scandal became public. You were then the Chief Operating Officer of Wells Fargo. An interviewer asked you whether you'd brought sales goals and cross-selling too far, and your answer was 'No. The fundamental strategy we have is not going to change.' In July 2016, just before this breaks open, according to Wells Fargo's own investigation, you knew that thousands of employees had been fired for opening fake accounts and other sales violations. You knew that aggressive cross-selling goals were to blame and still, you publicly said that the bank didn't have a problem. Right?
Sloan: Uh, Senator, that's incorrect, you --
Warren: --You didn't say this? That --
Sloan: Senator, could you read the entire quote and can we go through the entire presentation because I think in that presentation --
Warren: Your answer when asked if you pushed employees to far, your answer was 'no. The fundamental strategy we have is not going to change.' And that's a month before before this break was public.
Sloan: And I was referring to, I was referring to the vision of our company.
Warren: The vision, including the fake scandals you're being asking about?
Sloan: No, Senator. Every time I give a presentation to our team members, I start with our vision, which is the ground people and the culture of our company, which is that our job is to satisfy our customer's financial needs and help them succeed financially.
Warren: Mr. Sloan, I--
Sloan: --That's the context I made that statement. Since I've become CEO, I have made fundamental changes to address the issues that we're talking about today.
Warren: Mr. Sloan, you were asked about pressure on employees, which caused the fake accounts scandal. We all know that now -- it's 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 scandal. And Mr. Sloan, you say you've 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 are incompetent. At worst, you are complicit. Either way, you should be fired. Wells Fargo needs to start over and that won't happen until the bank rids itself of people like you who led it into this crisis. Thank you, Mr. Chairman.
Sloan: Mr. Chairman, could I respond to that?
Chairman: Yes, you may.
Warren: I want an equal amount of time.
Sloan: Senator, I think a couple things. First -- and I'll get to your criticism of me in a moment -- but first let's talk about the board. I think the board has taken very important steps in terms of a thorough, independent investigation that's been made public, that's 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 don't believe that your criticism of the board are accurate. As it relates to me, again, I think the reason that I'm the right person to run this company today, notwithstanding your criticism, is because I have been making changes at this company for 30 years. I have made mistakes, I certainly haven't been perfect, but I think having that knowledge of the company, having the ability to make the change, the actions that I've taken since I've become CEO 11 months ago, have made fundamental change at this company. So I'm not afraid to make hard decisions when it's needed, and I have the support of 247,000 people. That's why I think I'm the right person.
Warren: [to Chairman] Can I just make a short comment on this? I know we're, I know we're over [time], but I really want to say, [to Sloan] are you kidding? You know, look. You've been there for 30 years and every one of my colleagues, on both the Republican side and the Democratic side, who have 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 leaving 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 promote it, 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.