Mary Mack at Wells Fargo works to repair bank after scandal

Two summers ago, Mary Mack thought she'd just need to know more about the situation in the United States. employees created millions of bogus customer accounts without their authorization.

But three days quickly morphed into three weeks for Mack, who had recently been in charge of the bankruptcy enmeshed in the scandal. She's based in Charlotte.

"I washed clothes in the sink in the Omni (hotel), no lie," she said, describing the experience at a ceremony in New York where American Banker named her her No. 1 Woman to Watch. "I took pictures, because nobody would believe it."

Now, Mack said, it's a scandal-but she's not going to make a big change in the world.

"I'm really proud of how much progress we're making," Mack said in a recent Observer interview. "I'm really proud of the resilience of our team members.

"We'll always have more work to do," she said. "I think that this is a journey."

In the Charlotte metro area, where Wells Fargo has a large presence, Mack is one of the top ranking executives. She reports directly to CEO Tim Sloan, who is based in San Francisco.

Before Mack took on the task of cleaning up the community bank, she had headed Wells' brokerage unit, which she ran from St. Louis. In that shift to community banking, Carrie Tolstedt, who stepped down before Wells was $ 185 million for the scandal.

Under Mack, the community banking division has undergone an overhaul that is included in the elimination of credit cards.

During the scandal, employees have opened up a number of accounts. The bank said it is safe to say that new accounts are being opened up.

The reputation of the scandal, Wells Fargo has also introduced a number of changes in the marketplace, such as an overdraft-forgiveness policy and email alerts when account balances drop to zero or below. Both launched last year.

Enhanced monitoring

Some measures of customer activity have shown improvement.

Customers' use of Wells Fargo debit and credit cards last year Wells made in July.

The goal of customer loyalty and satisfaction surveys has been reported to be lower than the same period, according to the disclosures.

Since the scandal, Wells has stepped up to unacceptable employee behavior, the bank said. That enhanced monitoring includes more visits to branches by Wells Teams and Computer Technology that enables managers to better monitor employee activity, the bank said.

Mack said the technology gives the bank real-time data so it can identify bad behavior and act on it.

Kush Goel, Senior Research Analyst and Investment Manager Neuberger Berman, said Mack has been working in the United States since the scandal.

It's a big challenge to turn around a large division with a coast-to-coast footprint, multiple business lines and more than 100,000 employees, he said.

"I think from the outside (to) investors she's viewed as being very competent," Goel said. "I think she's done a fantastic job, actually."

But for Wells Fargo overall, one area of ​​concern is how much the bank's soured reputation – and any new revelations – will affect its ability to grow income, he said.

During the first half of this year, Wells Fargo's revenue fell to 2% from the same period last year, while revenue rose at Bank of America, Citigroup and JPMorgan Chase.

The income decline at Wells follows post-scandal disclosures by the bank of the company. Federal government agencies, including the Justice Department, are probing some of those activities, said Wells in an August filing with regulators.

Investors will learn how to play well in the third quarter, and whether or not they are plaguing the bank, when it reports its results for the period.

'Painful lessons'

One challenge still looming for Mack is rebuilding trust with Wells Fargo's customers.

To help repair its image, the bank has launched a nationwide ad campaign. In the campaign, Wells points out that it was founded in 1852 goal "re-established" in 2018, a reference to the changes it's making to move past the scandal.

Mack said the bank's reputation needs improvement.

"We know that we have gotten to work, that we have gotten to show and win every day," she said. "We have taken a rich, 166-year history and combined with some breadmaking lessons learned on the past couple of years to really learn, recommend and value."

Pointing to some areas of progress, she said Wells' employee retention rate is at its highest levels in at least the past five years. Customer retention is also at its highest levels during that time, too, she said.

Mack said the bank has no plans to bring back sales.

"Do we talk about the right way to run a community bank? Absolutely, "she said. "But it will not be through product sales goals, because I really believe it needs to start with the customer."

Regulators not satisfied

Despite the steps Wells has taken, regulators and lawmakers continues to express concerns about the bank, including business lines that fall under Mack.

During a Senate Banking Committee hearing this month, the head of the Office of the Comptroller of the Currency said it was not satisfied with the situation.

In that action, the regulator, Both business are supervised by Mack following an expansion of her duties.

"We continue to work with the management and the board," Joseph Otter said. "We are not comfortable where we are with them."

During the same exchange, Sen. Brian Schatz, Democrat from Hawaii, said the problems at Wells Fargo.

"This institution does seem beyond repair," said Schatz, "from the standpoint of the overall economy and from the standpoint of how they systematically screw customers."

Mack told the Observer that customers can trust doing business with Wells Fargo.

"Absolutely," she said. "What we're doing and we're doing it."

'We got this'

Wells Fargo has faced questions from some of the analysts about whether or not they can turn themselves around with insiders such as Mack and Sloan in charge.

Mack's career stretches to Charlotte's First Union and Wachovia, which was acquired by Wells in 2008. Sloan has worked for Wells and predecessor companies for more than three decades.

Goel, the analyst, said it will probably take a couple of years before the bank's reputation fully recovers.

"We still have new issues coming out … even this year," he said.

Mack expressed confidence in Wells' ability to right itself.

"While the last couple of years were really hard years for Wells Fargo … we got this," said Mack at the ceremony in New York.

"Managing and leading through change at Wells Fargo," she said. "That's what I do."

Deon Roberts: 704-358-5248, @DeonERoberts