Congress@ (Updates to reflect hearing in progress)
March 10 (Reuters) - New Wells Fargo & Co Chief Executive Charlie Scharf testified on Tuesday before the House Financial Services Committee, where he will face off against some of the bank's harshest critics amid a backdrop of market turmoil and a dark economic outlook.
Since taking over the scandal-plagued bank late last year, Scharf has shaken up its leadership and overhauled the bank's business lines, winning over some regulators in the process.
Last week the Office of the Comptroller of the Currency, the bank's top regulator, said it was encouraged by the new leadership. Lawmakers, however, have so far been unimpressed.
Democratic House Financial Services Committee Chair Maxine Waters, a fiery bank-basher, told reporters on Thursday that despite meeting with Scharf, she had no indication that he had a compelling plan for turning around the bank.
"I think perhaps less has been done than I would anticipate at this time," she said.
Waters will press Scharf on his relationship with the board after the committee unearthed documents and emails that appeared to reveal complacency on the part of the bank's directors and management, including board Chair Betsy Duke, regarding its various regulatory issues. Duke resigned on Monday.
Waters and others on the committee, which is responsible for overseeing financial firms and their regulators, are also likely to quiz Scharf on the health of the banking system amid turmoil in global markets. U.S. stocks closed more than 7% lower on Monday.
Bank stocks have been hurt more than other sectors as the quickly spreading coronavirus has lead to a lower interest rate environment and raised concerns about future credit costs as businesses are squeezed, according to analysts.
"We understand the seriousness of concerns felt by customers and employees about the coronavirus," Scharf said in prepared remarks.
When Scharf took the reins in October, he inherited a bank that was under federal investigation, subject to more than a dozen consent orders and hindered by an unprecedented Federal Reserve cap on its balance sheet growth. Sources inside the bank say that he has been laser-focused on efficiently tackling the bank's problems by cutting unnecessary meetings and focusing on accountability.
The bank has also recently announced a number of initiatives that would appeal to the Democratic majority committee, like increasing the minimum wage for its employees, rolling out new bank accounts that limit overdraft fees and credit products for DACA recipients.
Prior CEOs John Stumpf and Tim Sloan left the company shortly after similar appearances before Congress.
Scharf, though, as the new broom, is not likely to meet the same fate. But investors, analysts and regulators will be watching closely to see if he can fare better in Washington than his predecessors. (Reporting by Imani Moise; Editing by Dan Grebler and Andrea Ricci)