Sen. Elizabeth Warren, D-Mass., told Federal Reserve Board Chair Janet Yellen on Wednesday to remove Wells Fargo board members who served between May 2011 and July 2015 — a time period when she said the bank continually cheated customers and shirked its regulatory duties.
In a Wednesday letter to Yellen, Warren said that new evidence shows that Wells Fargo failed to refund money owed to car loan customers, that it overcharged small businesses for credit card transactions, and that it billed certain mortgage customers for unexpected optional services.
“Between 2011 and 2015, Wells Fargo seems to have had an almost limitless capacity to cheat its customers and shirk its regulatory responsibilities,” Warren wrote. “Yet a dozen board members from that period continue to serve today.”
Warren cited an Aug. 7 article by The New York Times that said Wells Fargo had failed to refund money owed to customers who had paid off their car loans early.
“[T]ens of thousands of customers” may have been denied proper refunds, Warren said in quoting the article, noting that the article said a spokesperson for the bank admitted that the failure stemmed from “a lack of oversight and controls,” which the Wells Fargo board is supposed to provide as part of its risk management obligations.
Warren once again urged Yellen to use the Fed’s existing authority to remove the 12 Wells Fargo Board members who served during that time, while also raising concerns about a Fed proposal from earlier this month that could reduce the supervisory responsibilities for bank board members.
As part of the proposed change, the Fed would stop sending bank boards most supervisory findings, instead initially providing the information only to senior management.
“If bank boards lack independent access to key supervisory findings, they can more easily be misled by senior management — and more easily plead ignorance when asked to account for their actions,” Warren wrote.
“I am deeply concerned about these proposed changes,” she said. According to “current and former bank regulators,” the proposed guidance “is very likely to reduce crucial interactions between bank examiners and bank boards.”
She noted that the proposal was particularly troubling in light of the events at Wells Fargo, where senior managers downplayed the extent of the fake-accounts scandal in their reports to the board.
The senator’s letter requests that Yellen provide an update on the Fed’s review of misconduct at Wells Fargo by Sept. 8, and asks for information about the Fed’s recent proposal.
— Check out Sen. Warren Probes 16 Financial CEOs on CFPB Anti-Arbitration Rule on ThinkAdvisor.