Democrats slam Wells Fargo settlement as bank faces 3 congressional hearings

Dive Brief:

Democrats are blasting what they call Wells Fargo’s "disappointing" $3 billion fine, which was levied by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) last week as a result of the company’s fraudulent sales practices.
The government agencies announced on Friday the bank agreed to pay the fine as part of a deferred prosecution agreement over the bank's fake-accounts scandal, which took place over a 14-year period from 2002 to 2016. On the same day as the DOJ and SEC announcement, the House Financial Services Committee released next month’s schedule, which includes three Wells Fargo hearings on March 10, 11, and 25.
Last week’s settlement may have closed the book on several criminal and civil investigations by the DOJ and the SEC, but the ramifications of Wells Fargo’s fake-accounts scandal are far from over as the bank once again becomes the subject of several congressional hearings.

Dive Insight:

In a statement, Andrew Murray, U.S. Attorney for the Western District of North Carolina, said the settlement "should serve as a stark reminder that no institution is too big, too powerful or too well-known to be held accountable and face enforcement action for its wrongdoings."

"Wells Fargo admitted that it collected millions of dollars in fees and interest to which the Company was not entitled, harmed the credit ratings of certain customers, and unlawfully misused customers' sensitive personal information, including customers' means of identification," the DOJ said in a statement.

But Democrats have called the fine too lenient for the country’s fourth-largest bank.

In a statement, Rep. Maxine Waters, D-CA, chairwoman of the House Financial Services Committee, said Wells Fargo’s settlement represents half of the $6 billion profit the bank received from the Trump administration’s 2017 Tax Cuts and Jobs Act.

"This fine barely dents Wells Fargo’s $200 billion in profit over the last ten years," she added. "In short, this fine which is coupled with a deferred prosecution agreement, is the cost of doing business for a bank with $1.9 trillion in assets. Wells Fargo must be fully accountable to the public for its crimes."

Sen. Sherrod Brown, D-OH, a ranking member on the Senate Banking Committee, also expressed his opposition to the fine in a Facebook post, saying the settlement sends the message that Wall Street banks "can defraud Americans, abuse your employees, and walk away with a slap on the wrist."

"The American people deserve justice and instead the Trump administration is betraying them once again," he said.

Sen. Mike Crapo, R-ID, chairman of the Senate Banking Committee and Rep. Patrick McHenry, R-NC, the ranking Republican on the House Financial Services Committee, have not released statements addressing the bank's fines.

Waters said next month’s hearings, as well as a House Financial Services Committee investigation, "will make clear that the problems at Wells Fargo remain unresolved."

The San Francisco-based bank has faced congressional hearings in the past, several of which have resulted in CEO exits.

Former CEO John Stumpf, who was recently fined $17.5 million and banned permanently from the banking industry for his connection to the scandal, stepped down shortly after a 2016 hearing where Sen. Elizabeth Warren, D-MA, called for his resignation.

Stumpf’s successor, Tim Sloan, also resigned following a similar hearing in March last year.

As new CEO Charlie Scharf attempts to move the bank into a new scandal-free era, he’ll have to testify at his own hearing on March 10, entitled, "Holding Wells Fargo Accountable: CEO Perspectives on Next Steps for the Bank that Broke America’s Trust."

Wells Fargo board members are set to testify on March 11, while the hearing on March 25 will examine the impact of the bank’s “toxic culture” on employees.