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April 23, 2017

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Fake accounts can't be fixed overnight: Wells Fargo

NEW YORK -- Wells Fargo CEO Tim Sloan said the company could need several more months to resolve customer damage tied to its massive sales practices scandal, such as figuring out if people had trouble getting approved for other loans because of the fake accounts bank employees opened.

Speaking with The Associated Press on Friday, Sloan reiterated what he has said since becoming CEO in the wake of the scandal, that rebuilding trust with customers is his primary focus since taking the job.

Wells Fargo has seen a sharp drop in new account openings and bank traffic since admitting in September that employees pressured to meet ambitious sales goals opened up to 2 million accounts without customers' permission. Sloan said he believes the declines have bottomed out, and customers are incrementally returning. Its January branch traffic data showed that while checking and credit cards applications and traffic were down from a year earlier, they were up or stable compared to December.

While Wells has changed its sales practices, ousted some executives and called tens of millions of customers to check on whether they truly opened the accounts in question, Sloan acknowledged that the full scope of the effect is not yet known. Determining how a negative mark on a customer's credit score caused by Wells Fargo affected a person's ability to borrow money or take out a mortgage is more complex than concluding whether a customer paid fees on their checking account when they shouldn't have, he said.

"I will describe it as more complicated than anyone could have imagined, but that's not an excuse. It's going to take a few more months to work through. But I assure you we will remediate all those customers," Sloan said.

The scandal resulted in a US$185 million fine from the Consumer Financial Protection Bureau, and directly led to the abrupt retirement of Sloan's predecessor, John Stumpf, in October. Both Stumpf and Carrie Tolstedt, the executive in charge of Wells Fargo's retail banking division, lost their 2016 bonuses and had tens of millions of dollars in promised compensation clawed back.

Wells Fargo's board of directors is conducting its own investigation into the bank's sales practices, a report that is expected to be out in April ahead of the annual shareholder meeting. While that is still in progress, the board has cut bonuses to major executives — including Sloan — as well as publicly firing four high-level managers. Sloan, who got a 17 percent raise to US$12.8 million when he became CEO, says he supports the board on that move.

"If the board feels there are other people responsible, there should be consequences," he said.

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