Good morning.
Wells Fargo CEO Tim Sloan got his rear end chewed up by Elizabeth Warren’s whirring blades yesterday. “You should be fired,” the Senator told him, after accusing him of enabling the scam in which the bank created millions of unwanted accounts, “getting rich off it,” and then “lying” to “cover it up.”
The attack was wildly unfair. There’s no evidence Sloan was involved in the creation of false accounts, or in creating the overhyped sales culture that led to the practice. And attacking him for owning stock in his own company is like accusing a baker of kneading dough. Moreover, Sloan deserves credit for taking big steps to address the bank’s problems since the scandal broke, as my colleague Geoff Colvin showed in this Fortune story in June.
But yesterday’s spectacle once again raises the question of whether a company lifer, insulated by an insular board, can dig the bank out of the very deep political and reputational hole it has dug for itself. GM CEO Mary Barra is the rare example of an insider who transcended the culture that created her. But she’s the exception, not the rule. Whether Sloan can pull off the same trick is still an open question, as yesterday’s hearing demonstrated.
Sloan is also the wrong advocate for the increasingly common business practice of forcing customers to use arbitration to settle their grievances, rather than the courts—which became a hot topic in yesterday’s hearing. There may be merit to the business case for arbitration. And there is certainly big trial lawyer money behind the Democrats’ opposition. But with revelations showing Wells employees created 70% more fake accounts than previously thought, Sloan makes a frail flag carrier for the business case.
You can see Sloan in action in this video from Fortune Brainstorm Tech.
More news below
Alan Murray @alansmurray alan.murray@fortune.com
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Summaries by Geoffrey Smith; geoffrey.smith@fortune.com
@geoffreytsmith
