Senate to hold hearing on Wells Fargo’s aggressive sales tactics
The Senate Banking Committee will hold a hearing next week on the aggressive sales tactics by Wells Fargo & Co. employees that led to a $185-million settlement package with federal and state regulators.
The decision by the panel’s chairman, Sen. Richard C. Shelby (R-Ala.), to look into the matter came Monday night just hours after five Democrats on the committee publicly released a letter to him requesting hearings.
“The magnitude of this situation warrants a thorough and comprehensive review,” the lawmakers, led by Sen. Robert Menendez of New Jersey, wrote to Shelby.
The five senators requested a committee investigation into the pressure-cooker sales practices, first uncovered by the Los Angeles Times in 2013, that pushed thousands of Wells Fargo employees to open as many as 2 million accounts that customers never wanted.
The hearing will be held Sept. 20, said Torrie Matous, a spokeswoman for Shelby. There were no further details Monday night.
The Democrats asked that the committee probe include hearings and testimony from Wells Fargo Chief Executive John Stumpf, Los Angeles City Atty. Mike Feuer as well as the heads of the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency.
As members of the committee with oversight over the banking industry, “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,” the senators wrote.
In addition to Menendez, the letter was signed by Sens. Sherrod Brown of Ohio, Jeff Merkley of Oregon, Jack Reed of Rhode Island and Elizabeth Warren of Massachusetts.
A Wells Fargo spokeswoman declined to comment.
Feuer, a Democrat, said earlier Monday that he hoped that Shelby would agree to hold hearings.
“Many members of the public certainly are outraged by this and deserve to know more,” Feuer said. “This isn’t a partisan issue. It’s a consumer protection issue.”
A spokesman for the Committee for Better Banks, a coalition of bank employees, labor groups and community and consumer advocates, said the aggressive sales policies extend beyond Wells Fargo.
“We believe it’s an industry-wide problem and it needs to be addressed,” said Shane Larson, legislative director for the Communications Workers of America, a union that is part of the coalition.
Feurer said hearings could deter other financial firms from engaging in similar practices.
“I do not know if other banks have engaged in conduct like we’ve alleged here,” Feuer said. “But I do think there has been for a long time an imbalance in power between the big banks and the consumers they serve. Any time we can shine light on that, it helps.”
On Thursday, Feuer joined Consumer Financial Protection Bureau Director Richard Cordray and Comptroller of the Currency Thomas Curry to announce that they had reached settlements with Wells Fargo and hammered the bank for “a major breach of trust.”
Feuer said his office began investigating Wells Fargo’s practices after The Times story and sued the bank last year. The suit alleged that Wells Fargo “victimized their customers by using pernicious and often illegal sales tactics,” including unrealistic quotas and policies that have “driven bankers to engage in fraudulent behavior.”
The CFPB, which conducted its own investigation, said bank employees may have opened as many as 1.5 million checking and savings accounts, and more than 500,000 credit cards, without customers’ authorization.
Wells Fargo agreed to pay $100 million to the CFPB — the largest fine the federal agency has ever imposed — as well as $50 million to the city and county of Los Angeles and $35 million to the Office of the Comptroller of the Currency.
The bank separately fired 5,300 workers for improper sales practices since 2011, according to the agency.
The five Democratic senators are strong supporters of the CFPB. They wrote that the Wells Fargo settlement package “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.”
Democrats are eager to tout the accomplishments of the CFPB, which was created as part of the 2010 Dodd-Frank overhaul of financial regulations that is one of President Obama’s major accomplishments.
But Shelby and other congressional Republicans have complained that the CFPB is too powerful and that its actions have made it more difficult for banks to offer consumer products. Republican presidential nominee Donald Trump has called for dismantling nearly all of the Dodd-Frank reforms.
Last week, Democratic presidential nominee Hilary Clinton seized on the Wells Fargo settlements to warn of the implications for the CFPB if Trump becomes president.
She said the CFPB’s “forceful response” in the case was “a stark reminder of why we need a strong consumer watchdog to safeguard against unfair and deceptive practices.”
Wells Fargo did not admit any wrongdoing in the settlements. But the bank apologized to customers, announced that it was changing its sales practices and agreed to pay refunds to customers assessed fees on accounts they never wanted.
The bank still faces lawsuits from customers, as well as former employees who claim that they were were fired or forced to quit when they wouldn’t resort to breaking rules to meet the strict sales quotas.
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6:10 p.m.: This article was updated with the announcement that a hearing would be held next week.
2:30 p.m.: This article was updated with comments from Los Angeles City Atty. Mike Feuer, a spokesman for the Committee for Better Banks and a senior Senate Banking Committee aide, as well as additional details and background.
This article originally was published at 8:20 a.m.