GOP Says Watchdog Went Easy on Wells Fargo Scandal
House Republicans critical of the Consumer Financial Protection Bureau say the consumer watchdog didn’t penalize Wells Fargo enough over its fake account scandal last year, Reuters reports.
Wells Fargo reached a $185 million settlement last year with CFPB and two other regulators following revelations its reps opened up to 2.1 million debit and credit accounts without customers’ authorization. CFPB, set up by the Democrats following the financial crisis, made off with $100 million of the settlement — its largest fine at that point, according to Reuters. But if the regulator had applied all the statutory penalties available to it, that fine could have been closer to $10 billion, according to a memo sent last July by CFPB’s staff to Richard Cordray, the agency’s director, the newswire writes.
CFPB staff opted for the much smaller figure to expedite the settlement while deeming it large enough to act as a deterrent, according to the memo cited by Reuters.
The memo came to light as part of a 929-page report dubbed “Did the CFPB let Wells Fargo ‘beat the rap’?” written by the Republican contingent of the House Financial Services Committee, according to the newswire. Jeb Hensarling, R-Texas, the committee’s chairman, has long been critical of the agency and has introduced legislation to curb its power, Reuters writes.
A spokesman for CFPB tells the newswire the agency has yet to review the report but stressed the fine was the largest CFPB has ever imposed and that it helped millions of customers. A Wells Fargo representative tells Reuters the bank is still reviewing the report.
Wells Fargo has been besieged by lawsuits on a range of issues ever since last year’s fake account scandal. Just earlier this month the bank was sued by a European investment firm, alleging Wells Fargo misused client funds. Two former managers also sued the bank this month for allegedly retaliatory dismissals related to complaints about its aggressive sales practices. And even the scope of the original scandal appears to have been much bigger. An outside review found the actual number of fake accounts was closer to 3.5 million, and that review only went back to 2009, while Wells Fargo execs had first learned about the practice back in 2002.