Waters: I want to break up Wells Fargo

The top Democrat on the House Financial Services Committee said Thursday that she is actively working to break up Wells Fargo.

Rep. Maxine Waters (D-Calif.) announced that the creation of potentially 2 million fake accounts by bank employees has led her to believe the bank is too large to be effectively managed.

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“I have come to the conclusion that Wells Fargo should be broken up. It’s too big to manage,” she said. “I’m moving forward to break up Wells Fargo bank.”

Waters made her announcement at a hearing with John Stumpf, the bank’s CEO and board chairman. For several hours, Stumpf was excoriated by members of both parties by the wrongdoing at his bank. The bank potentially created more than 2 million accounts without authorization from customers in order to meet sales goals.

Stumpf characterized the activity as the work of misguided employees — over 5,300 workers have been fired in response to it — but it was clear lawmakers were furious with the bank’s executives for allowing it to happen.

Stumpf said he only found out about the improper activity years after it had begun, and several lawmakers questioned whether the bank had effectively become too large to manage.

Some lawmakers, particularly Democrats, have suggested in the past that regulators should work to break up the nation’s largest banks. That debate is frequently held in the abstract, as lawmakers ask regulators if they are prepared to break up banks if they deem it appropriate.

But now, a House Democrat has said she will actively work to break up the bank.

The power to break up financial institutions, granted by the Dodd-Frank financial reform law, primarily lies with regulators. So if Waters says she wants to break up Wells Fargo, it presumably will come via an overt push to regulators to take that action.