September 27, 2017 The Skanner MINORITY BUSINESS ENTERPRISE EDITION Page 7
MBE 2017
Special Business Edition
GOP Report Accuses Watchdog of Going Easy on Wells Fargo
Bank’s problems may have gone back to at least 2006
NEW YORK— The Con-
sumer Financial Protec-
tion Bureau could have
fined Wells Fargo in ex-
cess of $10 billion for its
illegal sales practices but
instead settled for $100
million, according to the
agency’s internal docu-
ments released by Con-
gressional Republicans
last week.
The CFPB also had ev-
idence that the bank’s
sales problems went back
to at least 2006 — far ear-
lier than the 2011 to 2016
timetable that Wells Far-
go originally admitted to,
the documents show.
“The bank knew since
at least 2006 that its em-
ployees were gaming its
incentive compensation
program, yet failed to
take actions sufficient to
stop it,” CFPB employees
wrote in a 2016 confiden-
tial memo.
The documents were
released as part of a po-
litically charged report
by the staff of House Fi-
nancial Services Com-
mittee Chairman, Rep.
Jeb Hensarling of Texas.
Hensarling is a critic of
the CFPB who along with
other House Republicans
has called for the firing
of its director, Richard
Cordray, an appointee of
President Barack Obama,
as well as for new laws to
curtail the bureau’s au-
thority over the financial
services industry.
It would take months
for Wells Fargo to ac-
knowledge
publicly
that its sales practices
problems, in which em-
“
ing Committee in late
September 2016, he was
reluctant to go back fur-
ther than that.
Eventually Wells Far-
go would admit the sales
practices problems as
early as 2002 in a report
issued by the bank’s
board of directors ear-
lier this year, roughly
seven months after the
CFPB’s fine.
It is not clear why the
CFPB chose 2011 as the
original cut-off date for
The fact is that the CFPB
worked effectively with
our partners to expose the
Wells Fargo scandal and put
a public spotlight on their
practice of secretly opening
unauthorized accounts
ployees trying to reach
unrealistic sales goals
opened accounts without
customers’ permission,
dated earlier than 2011.
At first, then-Wells Fargo
CEO John Stumpf agreed
to expand its internal
investigation to 2009.
But when testifying in
front of the Senate Bank-
getting Wells Fargo to
admit its sales practices
problems. A Wells Fargo
spokeswoman declined
to comment on the date
issue, but said the bank is
reviewing the report.
CFPB employees esti-
mated that based on the
2 million fake accounts
that Wells Fargo’s em-
ployees had
o p e n e d ,
the penalty
against
the
bank could
be in excess
of $10 bil-
lion before
taking into
account mit-
igating fac-
tors. That’s
according to
a confidential
memo writ-
ten to Cor-
dray in July 2016 that out-
lined potential sanctions
the bureau could take
against the bank.
CFPB employees ulti-
mately recommended a
$100 million fine against
Wells Fargo — represent-
ing the largest fine ever
levied in the CFPB’s his-
tory at the time — to “suf-
ficiently deter similar
violations” by the bank
and its competitors. That
amount was adopted by
the agency when it pub-
licly announced its order
against Wells Fargo in
September.
The
San
Francis-
co-based bank also paid
another $83 million in
fines to the Los Angeles
PHOTO BY ILDAR SAGDEJEV
By KEN SWEET
AP Business Writer
Attorney’s Office and the
federal bank regulator
the Office of the Comp-
troller of the Currency
for its sales practices vio-
lations, for a total of $183
million.
The report and publicly
disclosed documents are
meant to imply that the
CFPB went easy on Wells
Fargo. However, Cordray
accused House Republi-
cans of “Monday-morn-
ing quarterbacking.”
“The fact is that the
CFPB worked effective-
ly with our partners to
expose the Wells Fargo
scandal and put a public
spotlight on their prac-
tice of secretly opening
unauthorized accounts,”
Cordray said in a state-
ment. “In response, we
levied our largest fine
ever and secured broad,
nationwide relief for
consumers.”
The Los Angeles City
Attorney’s Office, which
has been credited with
starting the first inves-
tigation into Wells Far-
go back in 2013, did not
agree with Republicans’
argument that the CFPB
was asleep at the wheel
regarding Wells Fargo.
“The CFPB was inte-
gral to our collective
work holding Wells Far-
go accountable for fake
accounts, including as-
suring Wells’ customers
across the nation got re-
lief,” said City Attorney
Mike Feuer.
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