Hensarling, Waters say Wells Fargo execs should be punished after record fine

Hensarling, Waters say Wells Fargo execs should be punished after record fine
© Greg Nash

Top House lawmakers from both parties said Friday that federal officials should punish Wells Fargo executives for a slew of scandals, including fraudulent sales practices.

House Financial Services Committee Chairman Jeb HensarlingThomas (Jeb) Jeb HensarlingThe next two years of federal housing policy could be positive under Mark Calabria Why Ocasio-Cortez should make flood insurance reform a priority Exiting lawmakers jockey for K Street perch MORE (R-Texas) and the panel’s ranking Democrat, Rep. Maxine WatersMaxine Moore WatersPrivate insurance plays a critical part in home mortgage ecosystem On The Money: Lawmakers closing in on border deal | Dems build case for Trump tax returns | Trump, Xi won't meet before trade deadline | Waters in talks with Mnuchin for testimony Waters in talks with Mnuchin for testimony on lifting of sanctions on Russian firms MORE (Calif.), said Wells Fargo executives should be held accountable for fraudulent sales practices spanning several years.

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The rare moment of bipartisan agreement between Hensarling and Waters comes after Wells Fargo agreed to pay a $1 billion fine to two federal agencies to settle claims that the bank charged mortgage borrowers inappropriate fees and forced loan customers to purchase unnecessary auto insurance.

“It is not enough to hold a bank accountable,” Hensarling said in a statement. “The actual individuals responsible for the wrongful deeds must be held responsible as well."

In his statement, Hensarling also noted that the bank "has many dedicated employees" that "had nothing to do with the wrongful acts." 

Waters said “fines are not sufficient in addressing the pattern of illegal behavior by Wells Fargo, and this action still does not put the bank’s past behavior to rest. Steeper penalties are still necessary.”

Wells Fargo’s series of sales scandals has drawn bipartisan outrage in Washington since 2016, when the Consumer Financial Protection Bureau (CFPB) fined the bank $100 million for opening and charging fees on millions of accounts for customers without authorization.

As federal officials probed deeper into Wells Fargo in 2017, media reports revealed several other seemingly fraudulent practices, prompting regulators to expand their investigations.

The CFPB and Office of the Comptroller of the Currency (OCC) on Friday settled charges with Wells Fargo that it unfairly charged mortgage borrowers fees to lock in interest rates over delays that the customers did not cause and forced borrowers who used autos to secure loans to purchase insurance for the vehicle being used as collateral.

The fine is one of the largest penalties slapped on a single bank, and it addresses actions that could have affected up to 1 million customers. The CFPB ordered Wells Fargo to reimburse roughly 50,000 confirmed victims up to $10 million, and revealed that close to 27,000 customers might have had vehicles used as collateral repossessed because of Wells Fargo’s insurance scheme.

“Fraud is fraud and theft is theft,” Hensarling said. “What happened to far too many customers at Wells Fargo for far too many years cannot be described any other way.”

Republicans and Democrats have blasted federal regulators for their response to Wells Fargo’s abusive sales practices, but for vastly different reasons.

GOP lawmakers criticized former CFPB Director Richard CordrayRichard Adams CordrayOn The Money: Consumer bureau proposes scrapping borrower safeguards from payday loan rule | Negotiators running out of time to avert shutdown | Trump nominates World Bank critic as its next chief Consumer bureau proposes scrapping borrower safeguards from payday loan rule Supreme Court should do what Congress won’t: Rein in the Bureau of Consumer Financial Protection MORE for failing to penalize Wells Fargo before September 2016, accusing the agency of being asleep at the wheel and piggybacking on state probes for credit.

“All the facts indicate that the OCC and the Bureau under the previous administration had ample evidence and ample authority to have discovered and ended these unlawful practices early on,” Hensarling said. “They failed, pure and simple.”

Democrats have praised Cordray but also called on the Federal Reserve and OCC to take more drastic action against Wells Fargo. Waters has called on the Fed to revoke Wells Fargo’s charter, while other progressives support firing its board and prosecuting former executives and chairmen.

Waters on Friday said it was “disappointing” that the OCC “has not taken the kinds of tougher supervisory actions I have longed call for, such as holding culpable executives accountable, or revoking the bank’s charter.”