Wells Fargo Struggles to Distance Itself from Crises

company's re establishment. We're holding ourselves accountable to find and fix issues proactively, because earning back your trust is our greatest priority. Joining us from our studios in Washington is Jesse Westbrook, Bloomberg News Financial Regulation editor Jesse Wells. Fargo has had scandal after scandal and has been trying to clean up its act to no avail. Will this time

be any different? Well, Um, you know, an interesting part about that is that maybe there is something accurate they're at in the sense of they are find They do seem to keep finding things, and they do seem to keep finding reporting the the the message of putting the scandals behind them. However, um, you know it every every day that that we see an ad like that, something

new seems to come up. I mean, we had this interesting situation yesterday where they were holding an event here in d C. And just as that event was going on, um, this story comes out that some senior people were putting, uh, putting false social security numbers in corporate client documents that

were filed to regulators. And you know, it's supposed to be one of these events where they're showing people they've changed, and a Republican lawmaker who is actually quite friendly to the banking industry, Jeb Hencerling, got up there and trashed them standing in front of a Wells Fargo banner. So if you can't, uh, if you don't have friends in Washington, Inn who are pro bank, anti regulation Republicans, I don't

know who your friends are. Yeah, but I mean it's it's not as though it's that hard for lawmakers on either side of the aisle to continue to treat Wells Fargo as kind of a political punching bag. But is this a matter of the bank is offering greater transparency now by getting these bad incidents out of the limelight, or or is it still uh committing these bad acts

has has it just not gone away? Well there, I guess my view the Wells Fargo from the perspective of you know, we talk a lot about too big to fail in relation to banks. I mean, that's obviously an issue. You know, there's arguments in Washington about whether Dodd Frank fixed too big to fail. Clearly what Dodd Frank did not fix is the two big demandage issue. Um. I mean I don't I don't have a great insight into

Wells Fargo. I'm not inside there every day. But to the degree that these things keep happening, I mean you get the sense that now some of it the people at the top or to blame for it, but some of it you just get the sense they really just have no idea what's going on inside that bank, and you know they're they're these big bureaucratic apparatus is where the right hand really doesn't know what the left hand

is doing. Um. And even if you try to do things to stem to control that and and tamp it down, there are so many people that these institutions are so large, their global, global footprints, you know, you just can't seem to have everyone rowing in the same direction. So to speak. So the change in management has that made any difference? Uh? I mean I don't I answer, I don't really want to. I mean, I don't really want to take any shots at at at the CEO Tim Sloan, I don't. I

don't know him. I've never met him, I've never talked to him. Um. I mean I will say that, you know, sort of observing this less as a journalist and more just as you know, a member of the public. I'm not sure the contrition has been strong enough with Wells Fargo, and even under Sloan. I'm not sure that sort of message of being contrite has been powerful enough. I mean you sort of look at these ads and you know, the last person I really have sincerely believed that Wells

Fargo has fixed things is Wells Fargo. I mean, I'm not I I that message would resonate more if I had someone who was sort of an objective analyst who spent six months in there, digging under every rock and told me it's fixed. But sort of, the the taint of that bank is so strong. I mean, we're supposed to believe them that they fixed their problems, and meanwhile, we keep getting this evidence every day. That they haven't

fixed their problems. And back to Sloan, I mean, you know, there's been a couple of instances where being contrite probably would have gone further than being sort of the combative way that he has been. In some instances, he's been a little combative with the press. You know, he he's made some statements at time times where you know, oh, it's the press's fault, this stuff keeps popping up. Well, no, it's your fault that you're not fixing the problems. I mean,

you know that's what journalists do. We dig, We look for problems. We're not We're rarely reporting that the sun is out today. We're looking for bad So so you know we're looking for bad stuff. So give us less bad stuff to find. I guess would be with you've you've rolled out the carpet nicely for us to uh let our listeners know that we will in fact be speaking with Wells Fargo CEO Tim Sloan. We'll see if he continues his combative stance with the media when he

speaks with Bloomberg Television's Eric Shatzker. You can hear that conversation. Uh, this coming Monday afternoon, four pm Wall Street Time. Yeah, comments, I'm not going to hold them to it, and we'll see what happens at any rate. That's coming up at four pm Wall Street. Trying to be nice this coming Monday on Bloomberg Radio and TV. Want to switch to another topic that you and your team have been covering at the finn reg team, Jesse, Fannie May and Freddie Mack.

They're not supposed to be lobbying about whether they should continue to operate, but apparently, uh, that admonition isn't stopping Fanny's general council. Okay, tell us a little bit more about that. Yeah, so, uh, good reporter works for me knows more about Fannie and Freddie than anyone I know.

Joe light Um had this story about their general counsel going out and meeting with stakeholders people associated with the Trump administration and expressing the view that he thinks that that the Trump administration should find a solution for these companies on their own, on its own, cut Congress out of the picture. Congress has not been able to do anything about these companies for a decade. They continue to

sit under the government's thumb. They're they're sort of in this you know, purgatory of not really independent companies, but they've got such a huge footprint in the mortgage market, so he he wants them to take the bull by the horns and and fix this. Now, on the surface, that doesn't sound like a bad thing. I mean, we do need a solution to Fannie and Freddy. It's just sort of one of these things that has enormous implications UM in Washington and beyond, and no one really has

a good idea to what to do about it. And just like everything in Washington, there's no immediate crisis. And unless we have an immediate crisis, no one in Washington is going to do anything. So these massive companies that are basically, you know, cutting to the chase of the argument propping up the housing and mortgage market have been in this state of purgatory for a decade. Um what might be inappropriate about what what Mr Brooks is doing,

um inappropriates a strong word. There is um awkwardly or you know, unfortunately, a ban on lobbying at these companies. And that's because people who have been in this town a long time. Remember, before the crisis, there were no bigger lobbying powerhouses in Washington, d C. Than Fannie May and Freddie mac Every lawmaker was on their payroll, so to speak. Um, and they had huge gallas and breakfasts, and you know, many attempts to regulate the companies and

prevent them from growing bigger and bigger were halted. And that was you know a lot of people smart, people smarter than me. I think that was largely because of their lobbying prowess. We'll have to stop you there and we'll pick up with this another time. Thanks. That's Jesse Westbrook,

Bloomberg News Financial Regulation editor. Can a phone interview with Bloomberg yesterday, Rudy Giuliani, President Trump's lawyer, said that Special Counsel Robert Mueller has indicated he'd be willing to narrow the scope of an interview with Trump. Speaking on CNN this morning, Giuliani repeated that assertion. They sent us a response. I can't go into detail, but narrowing the subjects for questioning down to about two. Joining me is Jimmy Grule,

a professor at Notre Dame Law School. Jimmy, Sometimes I wonder if Giuliani's real intent is to wear us down with this bouncing ball explanation of what's happening in the case and contradictions about the facts. He's gotten the facts wrong before. How likely is it that Mueller would narrow the interview down to two questions. I think it's highly unlikely.

Excuse me, And I think it's another example indication of Juliani either not knowing what the president's intentions and desires are or he's just speculating as to what he thinks the President will go along with, and then from day to day he seems to flip and flop back and forth on on these issues. So I think what he says on any given day should be taken with a

grain of salt. Does it seem that the problem is not so much the scope of the interview as the likelihood that Trump, no matter how much prep there is, and it doesn't seem like they're leaving room for much, will contradict himself where the facts and Mueller may owe them as well as Trump. I think that's the real danger. You hit it right on the head. First of all, Trump has a long history of flip flopping, exaggerating, misstating,

misleading on a number of different issues. Uh, and here he's going to go in to an interview with an adversary who's going to be fully informed on very specific details, very specific facts, in which he can rebut and challenge Trump's claims, and and I think it's a it's a great danger, a risk that the Trump is is running

if he agrees to this type of interview. According to Politico, Giuliani also said he got a verbal assurance from a top Mueller deputy that the Special Council intends to follow a pair of Justice Department legal opinions that say a sitting president can't be indicted. Legal opinions change. There are no specific cases on point, but that change if, for example, let's say Trump purjursed himself in an interview. It's it's possible,

but but I think it's highly unlikely. I think it's clear from the Constitution that the Framers envisioned UH with respect to bringing criminal charges against a sitting president, that that be a political process, not a legal process, and that political process would be the process of impeachment. Again, the caveat there as well, the president is sitting in office now. Once he he is removed from office, or

he doesn't run for reelection, or he's defeated. He's like any other citizen, and he could be criminally charged for for any crime that he allegedly committed. Mueller's team apparently offered no assurances, according to Giuliani, that the investigation would end shortly after a presidential interview, which is one of Giuliani's demands. What do you make of that, because they've they've been there, The rumors have been and the talk has been that Mueller wants to close the obstruction of

investigation at first, he wants to hear about intent from Trump. Well, that's true. I mean, the the investigation is on two parallel tracks. The first track is, of course, the issue of whether there was Russian interference in the two thousand and sixteen eleven and more specifically, whether there was a conspiracy between Russian government officials and members of the Trump campaign.

And then the second attract is the obstruction of justice track, whether the president has taken actions, including the firing of FBI director former FBI director Comey, to obstruct justice to fort fort the investigation. But but again we have to put this in perspective. Yes, it's one year, this investigation has been going on one year. But let's look at past investigations of presidents, including white the white Water scandal involving President Clinton that went on for for I think

close to six years before it was finally concluded. I think sevent of Clinton's ten are in office involved this investigation. This investigation was going on during that period of time. So one year, I think, when you put in perspective, is a relatively short time for this type of very complex criminal investigation. Now he seems to be moving rather quickly if you if you ask me when you when you look at the indictments and things. Let's turn so

that's true. I mean, if you look at the number, we're looking at nineteen people that have been indicted or pleaded guilty, and then as well as three Russian companies that have been indicted. So that's a very robust, substantial track record of investigations prosecutions in that one year period of time. Let's turn to some of the civil lawsuits

that Trump is facing. A New York appeals court rejected his request to put a defamation lawsuit by a former Apprentice candidate, Summer zevos Zevo's on hold, and the judge in that case had said in March when she rejected Trump's request to throughout the lawsuit. No one is above the law. What does that ruling tell you, Well, exactly that it's very important. It's very fundamental to the to

American democracy. American democracy is founded on the rule of law, and central to that tenant is that no one is above the rule of law, including the president. And so like any other citizen, the president can be sued, like any of the citizens, he can be the target of a criminal investigation. Now, at the same time, in fairness, you know, it's important that these these civil and criminal investigations do not uh significantly disrupt the president's ability to govern.

But if these investigations can be conducted, especially the civil investigations, in a way that doesn't substantially interfere with governance, then they should be permitted to go forward, and someone who has been harmed should be afforded his or her day in court. Jimmy, we have about forty five seconds here.

But does it seem to you as if the civil investigations are almost causing more trouble for Trump than than the criminal Well, certainly, the Stormy Daniels investigation has been and that's a huge headache for the president has been very embarrassing. The President has been caught in a lie.

On one occasion he said he knew nothing about the payment, and then we love to Stormy Daniels just one dollar payment, only to learn later than in fact, he didn't know about it and in fact reimbursed his attorney, David Cohen Hunter. Thank you, Jimmy. As always, that's Jimmy Garoule, a professor at Notre Dame Law School. Thanks for listening to the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple Podcasts, SoundCloud, and on Bloomberg dot com

slash podcast. I'm June Brolso this is Bloomberg