03/11/2020 - Holding Wells Fargo Accountable: Examining the Role of the Board... (EventID=110719)

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Connect with the House Financial Services Committee Get the latest news: https://financialservices.house.gov/ Follow us on Facebook: https://www.facebook.com/FinancialDems/ Follow us on Twitter: https://twitter.com/FSCDems ________ Wednesday, March 11, 2020 (10:00 AM) - Holding Wells Fargo Accountable: Examining the Role of the Board of Directors in the Bank’s Egregious Pattern of Consumer Abuses --------------- Witnesses for this one-panel hearing will be: • Ms. Elizabeth A. Duke, Chair, Wells Fargo & Company • Mr. James H. Quigley, Independent Chairman, Wells Fargo Bank, N.A Purpose The hearing will review the findings and recommendations of a report prepared by the Majority staff of the Committee entitled, “The Real Wells Fargo: Governance & Management Failures, Consumer Abuses, & Ineffective Regulatory Oversight. Background In 2016 and 2018, Wells Fargo Bank, N.A., and its holding company, Wells Fargo & Company (collectively, “Wells Fargo”) entered into five consent orders with the Consumer Financial Protection Bureau (“CFPB”), the Office of the Comptroller of the Currency (“OCC”), and the Federal Reserve System (“Federal Reserve”) to settle the regulators’ allegations of widespread consumer abuses and compliance failures within Wells Fargo. In February 2019, Chairwoman Waters, initiated an investigation into Wells Fargo’s progress toward designing and implementing the risk management reforms and customer remediation programs required by the five consent orders, which remain open as of the date of the investigative report. Specifically, the Committee staff’s investigation examined Wells Fargo’s compliance with the CFPB’s and OCC’s September 8, 2016 sales practices consent orders (collectively, “2016 Sales Practices Consent Orders”); the Federal Reserve’s February 2, 2018 risk management consent order (“2018 Federal Reserve Consent Order”); and the CFPB’s and OCC’s April 20, 2018 compliance risk management consent orders (collectively, “2018 Compliance Risk Management Consent Orders”). On February 25, 2019, Chairwoman Waters formally scheduled Wells Fargo’s then- CEO and President, Timothy J. Sloan, to testify before the Committee on March 12, 2019. Chairwoman Waters specifically requested that Mr. Sloan’s testimony cover, among other things, “Wells Fargo’s efforts to remediate consumers affected by its various instances of wrongdoing,” and “Wells Fargo’s varied engagements with its regulators, including the bank’s compliance with its outstanding consent orders” with the CFPB, OCC, and Federal Reserve... Key Findings of the Committee Staff Report In response to Chairwoman Waters’ and Chairman Green’s April and May 2019 letters, Wells Fargo, its board members, and the regulators, collectively produced approximately 330,000 pages of records. In addition to reviewing these records, Committee staff received briefings from the Federal Reserve, OCC, CFPB, SEC, and Wells Fargo. Committee staff conducted interviews with key executives at Wells Fargo and the former chair of the board’s risk committee. Additionally, Committee staff interviewed officials at the Federal Reserve, OCC, and CFPB. Committee staff’s review of the records and witness interviews reveal the following: • Financial regulators knew about serious, enterprise-wide deficiencies at Wells Fargo for years without alerting the public; • Wells Fargo’s board of directors failed to ensure that management could competently address the Company’s risk management deficiencies; • Wells Fargo and political appointees at the CFPB had backchannel communications regarding the CFPB’s Compliance Risk Management Consent Order; • Wells Fargo’s board of directors allowed management to repeatedly submit materially deficient plans in response to the consent orders; • Wells Fargo’s board of directors and management prioritized financial and other considerations above fixing issues identified by regulators; • Wells Fargo’s board of directors did not hold senior management accountable for repeatedly failing to meet regulators’ expectations under the consent orders; • During the Committee’s March 12, 2019 hearing, Wells Fargo’s then-CEO Sloan gave inaccurate and misleading testimony about the status of Wells Fargo’s compliance with the requirements of the 2018 Compliance Risk Management consent orders; and, • The potential for widespread consumer abuse at Wells Fargo remains. Policy Recommendations and Proposed Legislation In consideration of Committee staff's findings and prior legislative proposals of Committee members, including Chairwoman Waters' Megabank Accountability and Consequences Act of 2017, the report includes below policy recommendations intended to enhance accountability in the banking industry, promote transparency and market discipline, strengthen consumer protections, and empower responsible workers. The following is a list of proposed... Hearing page: https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=406263