When the chief executive of Wells Fargo, Charles W. Scharf, appeared before the House Financial Services Committee on Tuesday, the committee’s chairwoman opened with an ominous warning: The last two Wells Fargo chiefs to face Capitol Hill inquisitions resigned soon after.
Unsurprisingly, Mr. Scharf tried to put distance between himself and his predecessors.
Denouncing the company’s “flawed business model” and “broken” culture, Mr. Scharf acknowledged that the bank’s efforts to reform itself had been stumbling and incomplete — and said that was changing.
“The sense of urgency that people are working with inside the company is very different today than it was four months ago,” he said.
That’s when Mr. Scharf became the latest person in charge of fixing the mess that is Wells Fargo, which has made little progress righting itself in the nearly four years since a series of scandals began bursting into view. Employees had opened what may have been millions of sham accounts in customers’ names, charged mortgage customers unnecessary fees and forced auto loan borrowers to buy insurance they did not need.
In a hearing that lacked the kind of table-pounding anger from lawmakers that punctuated his predecessors’ appearances, Mr. Scharf said appeasing the bank’s regulators was his top priority.
The bank is operating under a dozen consent orders from regulators, including a rare restriction imposed by the Federal Reserve in 2018 that prevents the bank from growing. Mr. Scharf said he considered that penalty a reasonable one for the bank’s misdeeds and declined to speculate on how long it would last.
“We need to run the company fundamentally differently than we’ve run it in the past,” Mr. Scharf said.
Even though Mr. Scharf sought to make a clean break from the bank’s past, some of its problems have extended into his tenure. Last week, House Democrats released a damning report filled with internal communications that spotlighted bank leaders’ churlish responses to regulators demands.
Two board members, including Elizabeth A. Duke, the bank’s chairwoman, resigned this week under pressure from Representative Maxine Waters, a California Democrat and the chairwoman of the Financial Services Committee.
Mr. Scharf called the behavior described in the House report as “deeply disturbing” conduct that “has no place in our company.”
Wells Fargo has churned through leaders since 2016, when John G. Stumpf stepped down amid public outcry over the fake-account scandal. His successor, Timothy J. Sloan, left the company last year, two weeks after Democrats and Republicans sharply criticized him over reports from Wells Fargo employees that the bank’s high-pressure culture was still a problem.
The bank’s next leader was C. Allen Parker, who had been its general counsel. According to the committee report last week, he had private conversations with a political appointee at one key regulator, the Consumer Financial Protection Bureau, in an effort to soften the bank’s punishments.
That back channel is now closed, Mr. Scharf said: “All the conversations I think that we have with the C.F.P.B, to my knowledge, are open, on-the-record conversations.”
Three times during Tuesday’s hearing, lawmakers asked Mr. Scharf, who previously ran the Bank of New York and Visa, why he had taken the Wells Fargo job. Mr. Scarf responded that he felt the bank was redeemable.
“We can restore the brand and the reputation of Wells Fargo by taking the kinds of actions that we’ve started to take in my short time at the company,” he said.
Those actions include replacing much of the company’s top leadership, increasing oversight of its previously independent business units, and centralizing responsibility for regulatory compliance under the bank’s newly hired chief operating officer.
So far, regulators appear to be cautiously pleased. Joseph M. Otting, who leads the bank’s main federal overseer, the Office of the Comptroller of the Currency, said last week that he was “encouraged” by Mr. Scharf’s actions.
Many lawmakers remain skeptical. In her opening statement, Ms. Waters described the bank as “essentially a lawless organization that has caused widespread harm to millions of consumers.”
While Mr. Scharf emerged from the four-hour hearing largely unscathed, the committee isn’t done dissecting the bank. On Wednesday, Wells Fargo’s two recently departed board members are scheduled to testify at a hearing on the board’s role in what the committee’s leadership called the bank’s “egregious pattern of consumer abuses.”