WASHINGTON–A report released by Democrats on the House Financial Services Committee said deficiencies have been found in how federal regulators responded to a number of customer abuses committed by Wells Fargo.
The report urges Congress to take steps in such cases that would compel regulators to act against “recidivist” banks and to improve oversight and enforcement of consumer protections.
The report was released in advance of three upcoming congressional hearings that will focus the job done by the bank’s top management and board related to numerous scandals, including opening approximately three-million bogus accounts as employees struggled to meet aggressive cross-sales targets.
The committee’s report reviews compliance by Wells Fargo with five different regulatory orders issued in response to those customer abuses, which the report refers to as “compliance breakdowns.” According to the report, financial regulators had known for years about Wells Fargo’s deficiencies before taking enforcement action, and alleges both the bank and political appointees at the Consumer Financial Protection “had backchannel communications” regarding the Bureau’s compliance risk management consent order.
Moreover, the report alleges former Wells Fargo CEO Timothy J. Sloan provided inaccurate and misleading testimony during a committee hearing in March of 2019.
Finally, the report suggests there remains potential for extensive consumer harm at the bank.
Five Recommendations
The report includes five recommendations for actions to be taken by Congress to strengthen oversight of the biggest banks:
- Compel regulators to act against recidivist megabanks that engage in widespread consumer abuses
- Strengthen the regulators’ authorities and enhance bank management and board accountability
- Require greater transparency regarding bank supervision and how banks treat consumers
- Enhance bank compensation practices
- Pass a bank workers’ bill of rights
Wells Fargo executives are scheduled to testify at congressional hearings on March 10 and March 11. A subcommittee will hold another hearing on March 25.
In a statement accompanying the release of the report, Financial Services Committee Chairwoman Maxine Waters (D-CA) described Wells Fargo as a “reckless megabank with an ineffective board and management that has exhibited an egregious pattern of consumer abuses.”