Wells Fargo touts good deeds to get back in lawmakers' good graces
Tired of being cast as the poster child for big banks behaving badly, Wells Fargo & Co has been expanding its presence in the nation`s capital to convince lawmakers it has changed and talking up its charitable work in their districts.
In the past the bank`s lobbying efforts had been modest, but over the past 18 months, Wells Fargo has added more than 15 people to its Washington team, tripling its size, and is still hiring. The bank has also contracted big-name firms including Ogilvy and Federal Street Strategies, whose principals previously worked for powerful lawmakers, financial regulators or President Donald Trump, according to interviews and filings reviewed by Reuters.
Wells Fargo has also been highlighting millions of dollars spent on programs dedicated to homelessness, housing for veterans and financial literacy in key lawmakers` districts to win back their favor, bank representatives said.
"We have a lot of projects in a lot of communities that we are proud of, and we do have those conversations with elected officials," David Moskowitz, head of government relations and public policy at the fourth-largest U.S. lender, told Reuters. "Our plan is to engage with virtually everyone on Capitol Hill on both sides of the aisle."
Moskowitz said he expected his team to meet with important government officials or staff almost every day.
Wells Fargo launched its charm offensive to limit the blowback from a sales scandal that erupted in September 2016, with revelations that employees opened potentially millions of phony accounts in customers` names without their permission. The bank has disclosed other problems since then, including enrolling hundreds of thousands of customers in costly products such as auto insurance, that they did not need or want.
In an unprecedented move in February, the U.S. Federal Reserve imposed an asset cap on Wells Fargo. In April, two U.S. regulators jointly fined the bank $1 billion for mistreating auto borrowers. Authorities including the Department of Justice, the Securities and Exchange Commission and the Department of Labor are still conducting their own probes.WHIPPING BOY
Each negative headline about Wells Fargo extends how long the bank will remain in the regulatory doghouse, said Isaac Boltansky, director of policy research at Washington-based Compass Point Research & Trading.
"There`s a belief among some policymakers that Wells Fargo wants to right the ship and that it will take time to do so," he said. "But in the meantime they will remain the rhetorical whipping boy for lingering populist anger."
The scandal-related fallout has started to hit Wells Fargo`s profits as it needs to work harder to win new customers and additional marketing costs keep expenses high. In the first half of the year, Wells Fargo earned $10.3 billion, 10 percent less than a year earlier. Its full-year profits before taxes are expected to be 5 percent lower, according to Refinitiv.
The bank`s Washington team is trying to shift the conversation to what the bank is doing now for communities and away from the misdeeds of the past. Success could mean fewer negative headlines and a looser regulatory leash.
In interviews, Wells Fargo representatives said they had been telling lawmakers what the bank is doing to remedy customer abuses and prevent them from happening again. They also offer up the bank`s expertise on lending and economic trends, tout the number of people Wells Fargo employs in lawmakers` districts and outline philanthropic programs that appeal to them.
For instance, Wells Fargo said it has provided $11.3 million in down payment help to homeowners in Los Angeles, which is represented in part by Democrat Maxine Waters.
Waters is positioned to chair the House Financial Services Committee if Democrats take control of that chamber in the Nov. 6 mid-term election and has been one of Wells Fargo`s harshest critics in Congress.
She has said expanding access to affordable housing would be a top priority as committee chair. Wells also says it has donated over $10 million to various nonprofits in Waters` district over the last two years.
Wells Fargo Chief Executive Officer Tim Sloan has asked Waters for a meeting, her representative said, and bank representatives met with her staff in July.
"She looks forward to meeting with him once their schedules align," said Charla Ouertatani, staff director for Waters on the House Financial Services Committee.
Wells Fargo also donated $3.3 million last year to nonprofits and schools around Baltimore represented by Democrat Elijah Cummings tipped to chair the House Oversight Committee, if his party wins.
"There are many exceptional organizations that are transforming lives in Baltimore and throughout Maryland with limited resources," Cummings said in a statement. "Whenever Wells Fargo or any company chooses to assist their efforts, I applaud that decision."
If Democrats take control of the House, Waters and Cummings would enjoy broad authority to examine Wells`s business operations, as well as demand bank executives testify on past wrongdoing if they saw fit.
Wells Fargo said the bank had also donated $4.5 million to nonprofits across Iowa in 2017, a fact it highlights to the state’s mostly Republican lawmakers, including Senator Chuck Grassley, who chairs the powerful Senate Judiciary Committee.LONG PATH
In total, Wells Fargo has pledged to give away $400 million to charitable causes in 2018, and 2 percent of after-tax profits in following years. That could position it as the top corporate cash donor in the United States, according to the Chronicle of Philanthropy, which tracks corporate giving. The bank was the top donor among financial firms in 2017 and the second-largest among corporations. (Graphic: https://tmsnrt.rs/2QJzGJr)
In 2015, prior to the sales scandal, the bank donated $281 million, though Wells credits tax cuts implemented at the start of this year for part of this year`s increase.
Even with those good deeds in hand, Wells Fargo will probably remain in the political crosshairs for some time, according to analysts and congressional staff.
On Oct. 4, Senate Banking Committee Democrats called for Sloan and Wells Fargo Chair Elizabeth Duke to testify about "widespread and persistent failures at the bank." Wells Fargo`s plan to cut its workforce by up to 10 percent is also attracting ire from Democrats.
The bank has to make up ground with regulators too. Last week, Comptroller of the Currency Joseph Otting told lawmakers he was "not comfortable" with the bank`s efforts to make things right with 600,000 auto loan borrowers. During the hearing, Hawaii Democrat Brian Schatz characterized the bank as "beyond repair."
Wells`s efforts have been noticed, but the reception has been mixed, according to members of Congress and staff interviewed by Reuters.
While some say the bank is taking the right steps on a long path to a repaired reputation, distrust of banks stills runs deep, particularly among Democrats. Some lawmakers, such as Senator Elizabeth Warren, have said the bank is still not doing enough to right past wrongs.
Representative Bill Huizenga, a Michigan Republican who is a senior member of the House Financial Services Committee, said Wells Fargo has a lot more work to do before lawmakers will take its efforts seriously.
"Trust is a tricky thing," he told Reuters. "And it`s a lot easier to lose it than it is to gain it."
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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