Democratic lawmakers on the House Financial Services Committee released a report Friday detailing what they say shows a “pattern of abusive business practices” and “disregard for consumers” by Wells Fargo.
The 38-page staff report “also makes the case for why prudential regulators’ enforcement of our current laws is insufficient to address widespread anti-consumer behavior by megabanks,” said Rep. Maxine Waters, D-Calif., the top Democrat on the committee, in releasing the report.
Since the news that Wells Fargo had created millions of fake accounts broke last September, “it has become clear that that scandal was just the tip of the iceberg,” Waters said.
Tim Sloane, Wells Fargo’s president and CEO, is set to testify Tuesday before the Senate Banking Committee in a hearing titled “Wells Fargo: One Year Later.”
The report says Wells Fargo demonstrated a pattern of “egregiously abusing” its customers, describing its infractions:
- Opening 3.5 million fraudulent credit card and deposit accounts;
- Illegal student loan servicing practices;
- Inappropriate checking account overdraft fees;
- Unlawful mortgage lending practices, such as overcharging veterans for refinance loans; and
- Charging customers for auto insurance policies they did not need, which resulted in some customers losing their vehicles.
Prudential regulators, such as the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corp., have also “failed to use their most severe tools to shut down repeat offender megabanks or otherwise hold their executives accountable,” the report charges.
Effective deterrence of bad behavior “demands the use of robust enforcement tools to end unlawful practices of megabanks and their senior executives, including by revoking megabanks’ charters in egregious cases,” the report asserts.
If action isn’t taken by prudential regulators, the Congress should enact laws to better protect consumers, the report states.