Editor’s note: On Aug. 4, CEO Tim Sloan sent the following companywide message.
Today we filed our Form 10-Q for the quarter that ended June 30. The report details the strong financial results we generated for the quarter, reflecting your hard work and commitment to fulfilling our company’s vision of helping our customers succeed financially. This standard financial disclosure filing, which became public just moments ago, also includes updates on our rebuilding trust efforts that I would like to review with you.
Rebuilding trust became our top priority when I became CEO last October. That’s when we began our recovery from the reputation damage we sustained from unacceptable retail sales practices in the Community Bank. Since then, thousands of you have led a transformation across our company that has demonstrated a recommitment to our vision as we have improved our control functions and risk management. At the same time, we have made additional enhancements in our Community Bank, with new leadership, new compensation programs, and a renewed focus on customers.
To regain the trust we have lost, we must continue to be transparent with all our stakeholders and go beyond what has been asked of us by our regulators by reviewing all of our operations — leaving no stone unturned — so we can be confident we have done all that we can do to build a better, stronger Wells Fargo.
Today’s regulatory filing reminds us of this, because it includes evidence of much of that work — particularly as we have identified problems that we have committed to fix. Some of the items identified already have been the subject of news reports, such as the Collateral Protection Insurance issue in Dealer Services.
Other items — though we have been working on them internally — are newer to the public, such as a regulatory review into actions we took to freeze, and in many cases close, consumer deposit accounts after detecting suspected fraudulent activity (by third parties or account holders) that affected those accounts.
The report also updates the public on the ongoing reviews we have been conducting to identify customers who may have been harmed by unwanted products or services resulting from unacceptable retail bank sales practices, and summarizes the status of our preliminary settlement agreement to support our customer remediation efforts. These reviews are expected to be completed by the end of the third quarter, when we will communicate with and remediate more customers. If you know any customer with a concern, you can help by encouraging them to meet with their banker, so we may resolve their problem.
The filing also makes references to the settlement of a long-standing lawsuit claiming that some Veterans Administration (VA) mortgage refinance loans we originated should not have been eligible for guarantees paid to us by the VA. The 2006 suit sought compensation for claims paid by the VA after the loans defaulted. We finalized this agreement today, and while we deny the allegations, we have chosen to pay $108 million to the U.S. government so we can put the matter behind us, avoid costly litigation, and continue to focus on serving customers and rebuilding trust.
Finally, our Form 10-Q filing also notes the work of our Board of Directors, which is engaging in an ongoing, comprehensive review of its structure, composition, and practices. The review is expected to result in actions that the board will announce publicly in the third quarter.
No doubt, other work lies ahead. That’s because, as I said in October, rebuilding trust will take time as we transform our company’s operations to achieve our goal of leadership in customer service and advice, team member engagement, innovation, risk management, corporate citizenship, and long-term shareholder return.
Because there is so much interest in the work we are doing to rebuild trust, we can expect more headlines as we fulfill our commitment to identify and fix problems and make things right for our customers.
This is a lot of information, but such is our commitment to you, our team members, and to our customers, investors, regulators, and the public. We want our stakeholders to know about issues that we are committed to fixing. Today’s quarterly report, as an example, identifies issues, even if the final conclusions or outcomes for many are unknown at this time.
It is hard work to build a better, stronger Wells Fargo. But it is work that I know you are committed to do, because you serve our customers with integrity, pride, and passion. You do so because you believe in our vision and, like me, you want to continue to improve and transform this treasured 165-year-old American institution.
This is why I am optimistic that our rebuilding trust efforts will succeed. I have faith in your resiliency and your passion for our customers. It’s truly a privilege to continue this journey with you.