Following reports that Wells Fargo & Company has requested that the Federal Reserve remove an asset cap imposed in response to widespread consumer abuses and compliance breakdowns, Congresswoman Maxine Waters, Chairwoman of the House Financial Services Committee, wrote a letter to Jerome H. Powell, Chairman of the Board of Governors of the Federal Reserve System, requesting additional information.
Waters responded to a Financial Times article which reported that Wells Fargo & Company “made a pitch to the Federal Reserve to remove an asset cap introduced in the wake of its fake accounts scandal, saying it would allow the US bank to extend support to businesses and customers hit by the economic fallout of the coronavirus pandemic.”
“As you know, pursuant to its February 2018 consent order, the Federal Reserve restricted Wells Fargo’s growth until the firm develops and implements—and a third party independently evaluates—the governance and internal control improvements specified in the order,” the Chairwoman wrote. “The U.S. House Committee on Financial Services’ (“Committee”) ongoing oversight activities have revealed that Wells Fargo has yet to fully satisfy the requirements of the Federal Reserve’s February 2018 consent order. Pursuant to its legislative and oversight authority under House Rule X, 116th Congress, the Committee must know more about whether Wells Fargo requested that the Federal Reserve remove the asset cap and, if so, the Federal Reserve’s consideration of any such request.”
Earlier this year, Waters called Wells Fargo a “lawless organization” that has caused harm to millions of consumers during.
Wells Fargo CEO Charlie Scharf testified before the committee during the hearing titled “Holding Wells Fargo Accountable: CEO Perspectives on Next Steps for the Bank that Broke America’s Trust.”
The Securities and Exchange Commission (SEC) announced in February that the bank will pay a $3 billion settlement over its account scandal dating back to 2016. Wells Fargo’s penalties include a $500 million fine to the SEC.
According to the SEC’s order, between 2012 and 2016, Wells Fargo publicly touted to investors the success of its Community Bank’s “cross-sell” strategy, which it characterized as a key component of its financial success. According to the order, from 2002 to 2016, Wells Fargo opened millions of accounts of financial products that were unauthorized or fraudulent.
Fellow committee member Patrick McHenry, however, noted that his colleagues on the other side of the aisle “made up their minds about Wells Fargo long ago.”
He said that before the committee received any evidence in 2016, Waters said she had come to the conclusion that “Wells Fargo should be broken up. It’s too big to manage.”
McHenry said that after reviewing nearly half a million documents and countless testimony, that breaking up the bank is not the answer.
“Wells Fargo isn’t too big to manage. The findings of this document show it was grossly mismanaged,” he said.