HFS Staff Report Details CFPB Missteps in Wells Fargo Scandal
Staff for the House Financial Services (HFS) Committee released a report late Tuesday detailing the Consumer Financial Protection Bureau’s (CFPB) handling of the account scandal that left millions of Wells Fargo customers owing fees on checking and saving accounts they never authorized. The report, titled “Did the CFPB Let Wells Fargo ‘Beat the Rap?,’” is the second critique by HFS staff of CFPB activity related to the scandal. Of note in the new report is the uncovering of a recommendation memorandum by CFPB enforcement personnel to Richard Cordray advising the agency director on the proper course of action in light of a joint investigation with the Office of the Comptroller of the Currency and officials from Los Angeles. The memorandum appears to conflict with testimony given by Director Cordray to the HFS Committee at a hearing on April 5, 2017.
The HFS staff report documents considerable contradictions surrounding the independence of the CFPB’s investigation after the LA Times broke a story of Wells Fargo’s fraudulent activity. The memorandum recommended seeking penalties against Wells Fargo of around $10 billion; the CFPB ultimately entered into an agreement with Wells Fargo that fined the bank only $100 million. Internal agency communications referenced in the HFS staff report explain the CFPB may have hastily negotiated the penalty in order to be the first entity to publicly announce a fine against the troubled bank.
The HFS staff report expressed concern over Director Cordray’s decision to end investigations into Wells Fargo shortly before announcing the bank’s fine, despite evidence that there may have been more fraudulent accounts (Wells Fargo recently acquiesced that the total is likely around 3.5 million, not the 2.1 million originally reported) and other illegal activity at Wells Fargo. It was uncovered earlier this year that similar illegal tactics were used in the bank’s credit card processing unit.
This report is part of a bigger partisan debate over the fate of the CFPB and Wells Fargo’s role in the fight. Cordray has yet to comment on the HFS staff report or its contents.
