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Waters accuses ex-Wells Fargo directors of ‘dereliction of duty’ in hearing

Rep. Maxine Waters
Rep. Maxine Waters (D-Los Angeles) at a House Financial Services Committee hearing last year.
(Andrew Harnik / Associated Press)

The former chairwoman of Wells Fargo & Co.’s board said she resigned to remove a distraction as the scandal-plagued bank works to fix its problems and that the company is well-positioned for a turnaround under its new chief executive, Charlie Scharf.

“I believe that today the company has the right team and path forward,” Betsy Duke, who quit Sunday, told lawmakers in Washington on Wednesday. “This company must move forward.”

Duke and former board member James Quigley, who also resigned Sunday, appeared for the second in a trio of Wells Fargo hearings this month before the House Financial Services Committee. Wednesday’s session was held to examine “the role of the board of directors in the bank’s egregious pattern of consumer abuses,” according to the committee.

Like his former fellow director, Quigley said Wednesday that his position at Wells Fargo was a hindrance. “I decided to resign from the board to permit the bank to turn the page,” he said.

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Quigley and Duke, a former Federal Reserve governor, faced a growing chorus of calls for their ousters after Democrats atop the committee last week issued a scathing report on the bank’s response to a series of scandals.

“Their resignations do not absolve them of their failures,” Rep. Maxine Waters (D-Los Angeles), the committee’s chairwoman, said Wednesday. “We’re examining this conduct and this dereliction of duty.”

Under questioning from Waters and her fellow committee members, Duke said Wells Fargo’s board expressed “regular concern” about management’s speed responding to regulatory orders and making risk-management improvements. Scharf, whose “job is not going to be easy,” is focused on resolving the bank’s regulatory issues, Duke said.

Duke also said, in response to a question from Rep. Warren Davidson (R-Ohio), that some former Wells Fargo employees should be prosecuted.

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“I would say yes,” Duke said. “When we did our investigation of what happened in sales practices, we delivered all of the evidence that we found to the SEC, the DOJ, both civil and criminal,” she said, referring to the Securities and Exchange Commission and Department of Justice. Quigley declined to answer Davidson’s question.

Wells Fargo’s leaders have been in Washington’s crosshairs for years after consumer scandals that began with the 2016 revelation that employees opened millions of potentially fake accounts to meet sales goals. The company has faced unprecedented political and regulatory fallout, including repeated hearings, record fines for former executives and a growth cap put in place by the Fed.

Scharf, not yet five months into his tenure atop Wells Fargo, had his own hearing Tuesday, when he told lawmakers that the bank hasn’t done enough to turn itself around and is now more focused than ever on fixing its problems.

“The sense of urgency within the company is very different today than it was four months ago,” Scharf, who became CEO in October, told the committee Tuesday.

Two former Wells Fargo CEOs, Tim Sloan and John Stumpf, stepped down after tough hearings of their own in Washington that included calls for their ousters — resignations noted by Waters during Tuesday’s hearing.

Waters said last week that she planned, during Wednesday’s hearing, to call for Duke and Quigley to resign. Her party’s report, which mentions Duke by name dozens of times, details multiple instances when agencies including the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau took issue with the board’s efforts to clean up the bank in recent years.

The committee’s Republicans issued a report of their own and, during Wednesday’s hearing, criticized the board for its oversight of the bank.


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