Wells Fargo CEO, Facing Senate, Resists Call to End Forced Arbitration
Wells Fargo & Co. chief executive Tim Sloan defended the bank's use of mandatory arbitration as he appeared on Capitol Hill on Tuesday, drawing stiff criticism from Senate Democrats who are resisting a Republican effort to repeal a new regulation that bars the financial industry from forcing consumers to waive their right to file class actions.
October 03, 2017 at 12:08 PM
5 minute read
Wells Fargo & Co. chief executive Tim Sloan defended the bank's use of mandatory arbitration as he appeared on Capitol Hill on Tuesday, drawing stiff criticism from U.S. Senate Democrats who are resisting a Republican effort to repeal a new regulation that bars the financial industry from forcing consumers to waive their right to file class actions.
Facing the Senate Banking Committee from the same hot seat where his predecessor, John Stumpf, testified last year in the throes of Wells Fargo's sales practices scandal, Sloan argued that arbitration is fast and fair for consumers. Sloan cited a Consumer Financial Protection Bureau study, saying the agency's analysis showed that arbitration can deliver more redress to aggrieved consumers.
Sen. Sherrod Brown, the top Democrat on the banking committee, said that was a “selective reading” of the study and noted the CFPB finalized a new rule banning forced arbitration clauses with class action waivers.
“But keep in mind where the CFPB ultimately came out on that question,” Brown said.
Brown noted that several of Wells Fargo's competitors have begun eliminating forced arbitration. When Brown asked Sloan whether he would commit to following suit, the Wells Fargo executive responded, “No, I won't, senator.”
Under questioning from Sen. Jon Tester, D-Montana, Sloan said the bank would not invoke its forced arbitration clause in disputes over accounts that were opened without consumers' knowledge or consent. Earlier this year, Wells Fargo disclosed that up to 3.5 million accounts were potentially opened without consumers' consent after previously estimating the total to be 2.1 million. Wells Fargo had agreed in September 2016 to pay $185 million to resolve allegations related to the sales practices scandal.
The Democrats' focus on arbitration comes at a crucial time for the CFPB's arbitration rule. In July, within weeks of the CFPB's move to finalize the rule, the U.S. House of Representatives passed a resolution to undo the regulation under the Congressional Review Act—a tool allowing lawmakers to repeal agency regulations within 60 legislative days. The Senate has until early November to vote on a repeal bill filed by Sen. Mike Crapo, R-Idaho, chairman of the Senate Banking Committee, and co-sponsored by 31 other Republicans.
Last week, the U.S. Chamber of Commerce joined with financial industry groups to challenge the CFPB's arbitration rule in Dallas federal district court. A team from Mayer Brown filed the complaint.
A team from Sidley Austin helped prepare Sloan for the congressional hearing. The core team included: Michael Borden, a government strategies partner; Mark Hopson, the firm's Washington managing partner; litigation associates Ben Beaton, Ava Guo and Sana Munasifi; and Rick Boucher, a former Democratic U.S. representative from Virginia who leads Sidley's government strategies team.
In his opening remarks at the hearing, titled “Wells Fargo: One Year Later,” Sloan apologized for the “damage done to all the people who work and bank at this important American institution.”
“When the challenges at Wells Fargo demanded decisive action, the bank's leaders acted too slowly and too incrementally. That was unacceptable,” he said.
Sloan said Wells Fargo, in response to the scandal, has clawed back $180 million in executive compensation. Sitting behind him at the hearing was the bank's top in-house lawyer, C. Allen Parker, a former Cravath, Swaine & Moore partner who replaced longtime Wells Fargo general counsel James Strother earlier this year. Strother had planned on retiring at the end of 2016 but stayed on to guide the bank through the immediate aftermath of the scandal.
Wells Fargo, Sloan said, “is a better bank today than it was a year ago. And next year, Wells Fargo will be a better bank than it is today. That is because we have spent the past year determined to earn back the public's trust. Since I became CEO 11 months ago, my team and I have been focused on the three tasks you have invited me to discuss today.”
Sen. Elizabeth Warren, D-Massachusetts, questioned whether Sloan—a 30-year veteran at the bank who was promoted from chief operating officer to CEO following Stumpf's retirement last year—could adequately lead the change.
“At best you were incompetent, at worst you were complicit,” Warren said, before adding, “You should be fired.”
C. Ryan Barber, based in Washington, covers government affairs and regulatory compliance. Contact him at [email protected]. On Twitter: @cryanbarber
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View All10th Circuit Raises 6th Amendment Bar for Prosecutors' Attorney-Client Violations
Biden Administration Urges Justices to Pass on Potential Climate Blockbuster
Texas Bitcoin Mining Execs Sued for Alleged ‘Deception and Brazen Self-Dealing’
3 minute readCoinbase Justifies wBTC Delisting by Pointing to Justin Sun Connection
4 minute readTrending Stories
- 1Supreme Court Takes Up TikTok's Challenge to Upcoming Ban or Sale
- 2State High Court Bucks Trend Favoring Insurers, Sides With Restaurants Seeking COVID-19 Coverage
- 3Remote Proceedings: A Gift for the Holidays
- 4Contested Engineer Cleared to Testify in Defective Pistol Suit, Federal Judge Rules
- 5How I Made Partner: 'Don’t Be Scared to Be Ambitious,' Says Aya Eguchi of Morrison Foerster
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250