MReport November 2017

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TH E M R EP O RT | 57 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT Buffett in Wells Fargo CEO's Corner "Tim Sloan has my faith," said the business magnate. L ast month, Wells Fargo President and CEO Tim Sloan was called to tes- tify in front of the U.S. Senate Committee on Banking, Housing, and Urban Affairs full committee hearing titled "Wells Fargo: One Year Later." Despite calls for his stepping down, Sloan still has Berkshire Hathaway Chairman and CEO Warren Buffett in his corner. "Tim Sloan has my faith," said Buffet on CNBC's "Squawk Box." "If you get [a problem that is] sys- temic, you've got a big problem. And once you find out about it, you've got to get it right, get it fast, get it out, get it over—and getting it right is hard." According to Senator John Tester (D-Montana), since the first report of unauthorized accounts, Wells Fargo's banking practices have affected 4.3 million custom - ers or four times the population of Montana—something that Senator Tim Scott (D-South Carolina) said the "entire banking committee is irritated by" due to the continued discovery of ac - counts over time. "If we're doing this again six months from now, it's not going to be good," Scott said. Sloan explained that Wells Fargo had an insensitive plan that drove inappropriate a sales culture, but they now have a new plan that, based on feedback, is acceptable to employees. In fact, of the 17,000 new hires, Sloan estimated that 10 percent of those are rehires that either left due to a dislike of the sales culture or terminated because they didn't meet sales quotas. Many senators urged that the change in culture cannot just be at the retail banking locations; it needs to go from the execu - tive level down. Because of that reason, Senator Elizabeth Warren called for the removal of Sloan and every member of the board who was involved during the "height of cheating customers." "At best, you were incompetent; at worst, you were complicit," Warren said. "Either way, you should be fired." Warren highlighted quotes from Sloan during various inves - tor calls between 2011 and 2014 that led her to believe that Sloan was part of the company culture that pressed employees to open the unauthorized accounts. "I've read through them, and on these calls no one, not even John Stumpf, who was the CEO at the time, bragged more about Wells Fargo's ability and com - mitment to open new accounts for existing customers," Warren said before reading off a quote from Sloan during one of the calls which said, "I can't wait to get a credit card of every one of our creditworthy customers' wallets." Sloan later urged that as a banking business, one of the products they provide and that he is proud of is the credit card—and he isn't embarrassed about that. "I would agree that in our community bank, we had fun - damental problems that created a broken culture," Sloan said. "In the rest of the company, it wasn't a broken culture." New Bill Could Change Dodd-Frank Regulations The bill rides on the coattails of Sen. Blaine Luetkemeyer's similar bill passed last year. A new bipartisan bill was introduced recently that would allow the Fed- eral Reserve to exempt smaller banks from standard bank oversight restrictions. The bill was introduced by Senator Claire McCaskill (D-Missouri) and Senator David Perdue (R-Georgia), and aims to make "'common sense fixes' to financial rules, providing regulatory relief to small regional banks subject to unnecessarily overly-burdensome regulations put in place by the "Dodd-Frank" financial reform bill—rules that were never intended for banks that primarily engage in ordinary consumer banking practices," according to Sen. McCaskill's of - ficial press release. The bill would reduce regulations on regional banks with more than $50 billion in assets that would also have no global financial risk in the event of another market collapse. The bill rides on the coattails of Senator Blaine Luetkemeyer's (D-Missouri) similar bill passed last year. "When even some of the architects of 'Dodd-Frank' agree the law is unnecessarily burden - some on regional banks, you know we've got a problem on our hands," McCaskill said. "This is a common sense fix that'll untie the hands of our small regional banks and return to them the flexibility to lend to Missouri customers who want to buy a house, or start a business. I'm glad to join Congressman Luetkemeyer's ef - forts to help get this bill across the finish line in the Senate." Perdue stresses the importance of regional banks' contribution to local economies. "Regional banks offer a lifeline to small businesses and entre - preneurs looking to create jobs," Perdue said. "Dodd-Frank over- regulated these banks by placing them into the same category as huge banks with a global reach. This sent these banks' compliance costs through the roof and limited their ability to do what they do best—support their communities. This legislation would actually test banks for systemic risk rather than forcing banks to comply with an arbitrary figure." Currently, under Dodd-Frank, all banks with assets over $50 bil - lion are subject to the same regu- lations. The newly introduced bill aims to change that regulation.

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