Wells Fargo boasts good deeds to return to the good graces of lawmakers

WASHINGTON (Reuters) – Tired of being chosen to represent the big banks that misbehave, Wells Fargo & Co (WFC.N) expanded its presence in the nation's capital to convince legislators that it has changed and to publicize its charitable work in their districts.

In the past, the bank's lobbying efforts have been modest, but in the last 18 months Wells Fargo has added more than 15 people to its Washington team, which has tripled its size, and continues to hire . The bank also has contracts with big names such as Ogilvy and Federal Street Strategies, whose executives previously worked for influential lawmakers, financial regulators or President Donald Trump, according to interviews and records reviewed by Reuters.

Wells Fargo also highlighted the millions of dollars spent on programs dedicated to homelessness, housing for veterans and financial literacy in key districts of lawmakers to reclaim their favors, bank officials said.

"We are proud of many projects in many communities and we have these conversations with elected officials," David Moskowitz, head of government relations at the fourth largest US lender, told Reuters. "Our plan is to converse with virtually everyone on Capitol Hill, both sides of the alley."

Moskowitz said he was expecting his team to meet almost daily with important government officials.

Wells Fargo launched its charm offensive to limit the shock of a sales scandal that erupted in September 2016. Revelations revealed that employees were potentially opening up millions of fictitious accounts on behalf of clients without their permission. Since then, the bank has revealed other problems, including the registration of hundreds of thousands of customers on expensive products, such as car insurance, which they did not need or want.

Chart: Top 10 Cash Donors from US Companies (tmsnrt.rs/2QJzGJr)

In an unprecedented move in February, the US Federal Reserve imposed a cap on assets in Wells Fargo. In April, two US regulators fined the bank $ 1 billion for abusing auto borrowers. Authorities, including the Ministry of Justice, the Securities and Exchange Commission and the Ministry of Labor, are still conducting their own investigations.

SCAPEGOAT

Every negative headline about Wells Fargo indicates how long the bank will stay in the regulator niche, said Isaac Boltansky, director of policy research at Washington-based Compass Point Research & Trading.

"Some decision makers think that Wells Fargo wants to straighten the boat and that it will take time to do it," he said. "But in the meantime, they will remain the rhetorical whip for persistent populist anger."

The spinoff of the scandal has begun to affect the profits of Wells Fargo, which has to work harder to win new customers and whose additional marketing costs keep expenses high. In the first half, Wells Fargo earned $ 10.3 billion, 10% less than a year ago. According to Refinitiv, its pre-tax profits for the entire year should be lower by 5%.

The bank's team in Washington is trying to guide the conversation about what the bank is doing for communities now and away from the evils of the past. Success could mean fewer negative titles and a less strict regulatory leash.

In interviews, Wells Fargo officials said they had explained to lawmakers what the bank was doing to address customer abuse and prevent it from happening again. They also provide the bank's expertise in lending and economic trends, the number of people Wells Fargo employs in the legislator districts, and the philanthropic programs that appeal to them.

For example, Wells Fargo said he had provided $ 11.3 million in down payment assistance to homeowners in Los Angeles, represented in part by Democrat Maxine Waters.

Waters is well positioned to chair the House Financial Services Committee if Democrats take control of this chamber in the November 6 mid-term elections and is one of Wells Fargo's harshest critics in Congress.

She said expanding access to affordable housing would be a top priority as committee chair. Wells also claims to have donated more than $ 10 million to various non-profit organizations in the Waters District over the past two years.

Wells Fargo CEO Tim Sloan asked Ms. Waters to meet, said her representative. Bank representatives met with staff in July.

"She is looking forward to meeting with her once their schedules are aligned," said Charla Ouertatani, Waters' staff director on the House's Financial Services Committee.

Last year, Wells Fargo also donated $ 3.3 million to non-profit organizations and schools around Baltimore, represented by Democrat Elijah Cummings, who proposed to chair the House's oversight committee. if his party had won.

"Many exceptional organizations are transforming lives in Baltimore and throughout Maryland with limited resources," Cummings said in a statement. "Whenever Wells Fargo or a company chooses to help them, I applaud that decision."

If the Democrats took control of the House, Waters and Cummings would have extensive powers to review Wells' commercial activities, as well as asking bank executives to testify, as appropriate, about wrongdoing in the past.

Wells Fargo said the bank had also donated $ 4.5 million to non-profit organizations in Iowa in 2017, a clear fact for the state's mainly Republican legislators, including Senator Chuck Grassley , who chairs the powerful Senate Judiciary Committee.

LONGWAY

In total, Wells Fargo is committed to donating $ 400 million to charity in 2018, as well as 2% of after-tax profits in subsequent years. According to the Chronicle of Philanthropy, which tracks corporate donations, this could position it as the largest corporate donor in the United States. The bank was the largest donor among financial firms in 2017 and the second largest among companies. (Graphic: tmsnrt.rs/2QJzGJr)

In 2015, before the sales scandal, the bank donated $ 281 million, although the Wells credit tax cuts were implemented early this year for part of this year's increase .

Even with these good actions in hand, Wells Fargo will likely remain in the political radar for a while, according to analysts and congressional staff.

On October 4, the Democrats of the Senate Banking Committee called Elizabeth Duke, president of Sloan and Wells Fargo, to testify about the "widespread and persistent failures at the bank". Wells Fargo's plan to reduce its workforce by 10% also reduces the anger of Democrats.

The bank must also catch up with regulators. Last week, the controller of the currency, Joseph Otting, told legislators he was "not comfortable" with the bank's efforts to get things right with 600,000 borrowers. At the hearing, Hawaiian Democrat Brian Schatz called the bank "irreparable". [L2N1WI189]

Wells' efforts were noticed, but the reception was mixed, according to members of Congress and staff interviewed by Reuters.

While some say the bank is taking the necessary steps to rebuild its reputation, mistrust of it remains deep, especially among Democrats. Some lawmakers, such as Senator Elizabeth Warren, have said that the bank still does not do enough to redress the wrongs of the past.

Representative Bill Huizenga, a Michigan Republican who is a prominent member of the House's Financial Services Committee, said Wells Fargo had a long way to go before the legislator took his efforts seriously.

"Trust is a delicate thing," he told Reuters. "And it's a lot easier to lose than to win."