Brown, Colleagues Call for Wells Fargo CEO to Testify Before Congress on Phony Account Scandal

Brown, Menendez, Reed, Merkley, Warren: How is it possible more than 5,000 employees could bilk customers over the course of five years? Senators Call for Banking Committee Hearings and Investigation

WASHINGTON, D.C. — After last week’s announcement that Wells Fargo employees secretly opened millions of phony bank and credit card accounts without customers’ permission, Sen. Sherrod Brown (D-OH) and four Senate Banking Committee members called for immediate hearings to investigate the scandal’s impact and determine whether new consumer protections are needed.

“The magnitude of this situation warrants thorough and comprehensive review,” the Senators wrote in a letter to Banking Committee Chairman Richard Shelby. “Specifically, the committee should thoroughly examine this issue, including: how it is possible that more than 5,000 employees could bilk customers over the course of five years; the timing, extent, and disposition of customer complaints; whether Wells Fargo’s sales and compensation structure incentivized employees to engage in deceptive and abusive practices; and what additional safeguards may be needed to prevent this type of behavior.”  

Brown is the ranking member of the Banking Committee, which has jurisdiction over the issue. Along with Brown, Senators Bob Menendez (D-NJ), Jack Reed (D-RI), Jeff Merkley (D-OR), and Elizabeth Warren (D-MA) signed the letter.

In total, Wells Fargo may have opened as many as 1.5 million unauthorized deposit accounts costing customers approximately $2 million in fees and more than 560,000 unauthorized credit card accounts resulting in more than $400,000 in fees to customers.

The Senators said they specifically wanted the opportunity to question Wells Fargo’s Chairman, President, and Chief Executive Officer John G. Stumpf, as well hear from Los Angeles County Attorney Mike Feuer, CFPB Director Richard Cordray, and Comptroller of the Currency Thomas J. Curry.

The letter is available here. The full text follows.

September 12, 2016

The Honorable Richard Shelby

Chairman

U.S. Senate Committee on Banking, Housing, and Urban Affairs

534 Dirksen Senate Office Building

Washington, DC 20510

Dear Chairman Shelby:

In light of last Thursday’s announcement by the Consumer Financial Protection Bureau (CFPB) that Wells Fargo opened unauthorized accounts and submitted fraudulent credit card applications in a duplicitous attempt to boost sales figures, we respectfully request that the Senate Committee on Banking, Housing, and Urban Affairs hold immediate committee hearings to fully investigate the matter. 

According to the CFPB’s consent order, Wells Fargo engaged in a wide range of deceptive and abusive practices placing customers at major financial risk.  Specifically, Wells Fargo opened unauthorized deposit accounts for existing customers and transferred funds to those accounts, submitted credit card applications, enrolled customers in online banking services, and ordered and activated debit cards, all without the knowledge and consent of the customers.[1]  In total, Wells Fargo may have opened as many as 1.5 million unauthorized deposit accounts costing customers approximately $2 million in fees and more than 560,000 unauthorized credit card accounts resulting in more than $400,000 in fees to customers.[2]  As a result, Wells Fargo will pay the largest fine in the agency’s history.

We applaud the CFPB’s swift enforcement action.  The Dodd-Frank Wall Street Reform and Consumer Protection Act provides the CFPB with the authority to take action against institutions engaged in practices that violate consumer financial laws, including those practices that are unfair, deceptive, or abusive.  Thursday’s announcement is yet another indication that the CFPB is making consumer financial markets safer for consumers and protecting hard-working American families from abusive financial practices. 

The magnitude of this situation warrants a thorough and comprehensive review.  As members of the Senate committee of jurisdiction, we should undertake prompt action to fully investigate the cause, scope, and impact of this event, as well as understand and consider implementing any lessons learned.  Specifically, the committee should thoroughly examine this issue, including: how it is possible that more than 5,000 employees could bilk customers over the course of five years; the timing, extent, and disposition of customer complaints; whether Wells Fargo’s sales and compensation structure incentivized employees to engage in deceptive and abusive practices; and what additional safeguards may be needed to prevent this type of behavior.  Furthermore, any committee investigation of this event should include testimony from Wells Fargo’s Chairman, President, and Chief Executive Office, John G. Stumpf, Los Angeles County Attorney Mike Feuer, CFPB Director Richard Cordray, and Comptroller of the Currency Thomas J. Curry.

As members of the United States Senate Committee on Banking, Housing, and Urban Affairs, we should accept nothing less than a full and transparent explanation of what went wrong, who is responsible, how to fix it, and how to prevent such fraud in the future.

We look forward to working with you to better protect consumers.  Thank you for your attention to this critical issue.

Sincerely,

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