In the wake of a settlement between Wells Fargo and the City and County of Los Angeles, as well as federal regulators including the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC), Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, issued the following statement:
“Yesterday, we learned that Wells Fargo perpetrated widespread, illegal conduct, including secretly opening an estimated 1.5 million deposit and credit card accounts for unsuspecting consumers. Since 2011, Wells Fargo profited from this illegal scheme by transferring money out of consumers’ existing accounts and rerouting them to new, unauthorized accounts, causing the consumers to be hit with surprise fees and other charges.
News reports indicating that the bank fired more than 5,000 employees as a result of this conduct demand a further investigation into how such a widespread scheme could proliferate unnoticed by management. Either more must be done to continue to reform bank compensation systems to ensure that they do not encourage employees to deliberately break the law, or it may be the case that some banks are simply too big and complex to manage effectively.
Most troublingly, the settlement with regulators echoes many of the same practices we saw in the run-up to the foreclosure crisis, with bank employees falsifying account documents in order to generate profits and commissions, without regard for either the law or the hard-earned savings of consumers.
To his credit, Wells Fargo Chairman and CEO John Stumpf personally discussed with me his willingness to take full responsibility, and to take steps to ensure that this conduct never happens again. However, notwithstanding the $185 million settlement, and the $50 million that the City and County of Los Angeles will receive for the purpose of consumer protection, I remain concerned that mere financial penalties may not be enough to prevent this from happening again.
As such, I would urge City and County officials, as well as our federal financial regulators, to refer all relevant information to the Department of Justice related to potential criminal activity, and for the Department to pursue criminal cases wherever warranted.”