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UPDATE 1-Wells Fargo CEO defends leadership in heated Senate appearance

(Adds details from Sloan's testimony, senators' comments)

Oct 3 (Reuters) - U.S. senators grilled Wells Fargo & Co Chief Executive Tim Sloan on Tuesday about what he had done to change the bank's culture after a sales practices scandal erupted last year, with one senior Democratic lawmaker calling for his ouster.

Senate Banking Committee members flagged problems involving auto insurance and mortgage fees that came to light months after the lender disclosed it had created millions of phony customer accounts.

The ensuing scandal hammered Wells Fargo's reputation and sparked management changes, lawsuits and government probes.

U.S. Senator Elizabeth Warren, seen as a possible 2020 presidential candidate, dismissed suggestions that Sloan could be an agent of change at the San Francisco-based bank and called for his firing.

"Wells Fargo is not going to change with you in charge," said Warren, who noted that Sloan had bragged about the bank's ability to open accounts between 2011 and 2014 and had said its strategy did not need to change months before its 2016 scandal.

"The only way we're ever going to stop these scandals is to hold executives personally accountable, to fire people who are responsible and when they break the law, to march some of them out in handcuffs," the Massachusetts lawmaker added.

Sloan, who took over from John Stumpf in October 2016, defended his own leadership and tried to distinguish the bank from the track record of his predecessor. Stumpf resigned less then a month after he appeared before the same Senate committee.

"I am angry about how we handled the problems historically," Sloan said, also noting that his knowledge of Wells Fargo and the actions he had taken since becoming CEO made him qualified to lead the bank.

But Democratic Senator Sherrod Brown said Wells Fargo was still falling short of the mark, criticizing it for "forcing" legal claims against the bank into private arbitration, including one case brought two months ago.

"The changes Mr. Sloan and his team made are not enough, Brown said.

The Ohio lawmaker also pointed out that Sloan was a three-decade veteran of the bank and questioned why he had not taken action earlier.

Wells Fargo shares were down 1 percent in early afternoon trading.

REGULATORY, LEGAL TANGLES

The stakes are high for Sloan as he tries to shake the year-long scandal.

The Office of the Comptroller of the Currency, the leading regulator for Wells Fargo, is considering new sanctions against the bank for customer abuses involving auto insurance and mortgage loans, Reuters reported on Monday.

Wells Fargo a year ago reached a $190 million settlement with regulators after it said it had opened as many as 2.1 million accounts without customers' authorization to meet internal sales targets.

The bank raised that estimate in August to potentially as many as 3.5 million after an expanded review. Sloan said on Tuesday he was "confident" no more than 3.5 million accounts had been opened.

Warren, who last year accused Stumpf of "gutless leadership," has repeatedly called on the Federal Reserve to remove 12 members of Wells Fargo's board of directors, including Vice Chair Elizabeth Duke.

Duke, a former Fed governor, is set to take over from Wells Fargo Chairman Stephen Sanger at the start of 2018.

Wells Fargo's problems with auto insurance and mortgage products emerged publicly this year. In late July, it said hundreds of thousands of customers were due a refund on auto insurance that they did not need.

In late August, a homeowner sued Wells Fargo for charging too much for his fixed-rate mortgage. Sloan said on Tuesday the bank will contact 108,000 mortgage customers to remediate any complaints they may have about a fee paid to lock in rates.

The bank has already said its "rate-lock" service is under investigation by the Consumer Financial Protection Bureau. (Additional reporting by Ross Kerber in Boston; Writing by Meredith Mazzilli; Editing by Carmel Crimmins and Paul Simao)