Three big questions as Wells Fargo's CEO visits Capitol Hill

Will Tuesday be a difficult battle or an impossible mission?

This is the key question faced by Wells Fargo CEO Tim Sloan as he prepares to testify before the House Financial Services Committee. The hearing should be a marathon session, with Sloan answering the questions of most, if not all, of the 60 members of the committee.

The task that awaits Sloan is simple, though difficult. Demonstrate that the bank has resolved its chronic operational problems and turned a new page.

Wells faced "an unprecedented and well-deserved review," Sloan said in his written testimony, released Monday before the hearing.

"We went beyond what is required to disclose [problems at the bank] In our public repositories, we have tried to remedy these problems and, above all, we have tried to address the root causes that have allowed them to occur, "he added. "As a result, Wells Fargo is a better bank than it was three years ago and we are working every day to become even better."

Here are three important factors that will determine Sloan's success before the committee – and help guide the bank's broader efforts to rewrite the public narrative that surrounds it.

Can Sloan stay on the message?

It will not be easy. Wells has certainly made many changes since the publication of its false accounts scandal in 2016. It has centralized its organizational structure, improved its risk management, reoriented its incentives for bankers and donated more than $ 400 million. to non-profit and community organizations. , among other updates.

However, it will probably be difficult to keep lawmakers focused on these reforms and not on the various misdeeds of the bank.

This is especially true in light of a new report released by the Committee for Better Banks on Monday, a group that is trying to organize bank employees, saying some Wells workers continue to be under pressure to increase their customer base. despite changes in sales practices. The New York Times also raised concerns over the weekend, adding fuel before Tuesday's hearing.

A spokesman for Wells called the report of the group "inaccurate" in a written statement, noting that "we absolutely do not agree with the characterization of our sales culture".

Will the job security of Sloan become a problem?

Senator Elizabeth Warren, D-Mass., Led the charge for years arguing that Sloan should be fired. Yet while House Democrats hit the bank countless times for misconduct, Sloan himself was not reviewed in the same way by the House.

But that could change this session, especially with the addition of several new frank lawmakers – including representatives Alexandria Ocasio-Cortez, DN.Y., Katie Porter, D-Calif., And Rashida Tlaib, R-Michigan – who might to be more inclined to make Sloan's mandate a central point.

The bank has repeatedly said that the CEO has the full support of the board, but questions about his position and whether or not he deserves to remain at the helm of the bank could frustrate efforts to to highlight the positive changes that have taken place in recent years.

To this end, it will be Sloan's responsibility to emphasize that the bank assumes real responsibility for its past actions and the wrongs they have caused. Any signs that the bank is in a state of siege or has been unfairly chosen, as Sloan has suggested in the past, risks falling out of favor and could strengthen the bank's position – and its own – in the political line of fire.

Will the Democrats in the House land?

While Sloan's performance will be the most decisive factor on Tuesday, observers will also monitor legislators in the House, especially Democrats, to see if they are able to take another step in the Megabank debate.

Kathy Kraninger, director of the Consumer Financial Protection Bureau, remained relatively unscathed last week after her appearance before the House committee, despite strong concerns from the left about the practices of the Republican-controlled agency.

This is a particular problem for large audiences such as Kraninger and Sloan. With so many lawmakers asking questions, a number of topics are likely to be addressed – from sales practices to pot banking to the Community Reinvestment Act – that could mitigate the general effect of event on the most severe criticisms of the bank.

Nevertheless, in the end, the event remains to be won or lost to convince the public that the bank has changed for good.

Bankshot is the column of American Banker devoted to real-time analysis of the news of the day.