Wells Fargo is in the cross hairs of a powerful California Democrat.
Maxine Waters is a Democrat from the State of California and she is the Chair of the House Financial Services Committee.
The schedule for hearings for March recently came out and Wells Fargo is the topic of three committee hearings.
The four hearings are entitled: Holding Wells Fargo Accountable: CEO Perspectives on Next Steps for the Bank that Broke America’s Trust, Holding Wells Fargo Accountable: Examining the Role of the Board of Directors in the Bank’s Egregious Pattern of Consumer Abuses, and Holding Wells Fargo Accountable: Examining the Impact of the Bank’s Toxic Culture on Its Employees.
Along with the hearings, the committee released a 113 page staff report entitled, “THE REAL WELLS FARGO: BOARD & MANAGEMENT FAILURES, CONSUMER ABUSES, AND INEFFECTIVE REGULATORY OVERSIGHT”
Waters put the report together with Al Green, a Democrat from the State of Texas. They both provided statements, in conjunction with the report’s release.
Green is Chair of the Investigations Subcommittee on the House Financial Services Committee.
“This Committee staff report shines a much-needed spotlight on ‘The Real Wells Fargo,’ a reckless megabank with an ineffective board and management that has exhibited an egregious pattern of consumer abuses,” said Chairwoman Waters. “Last year, I made it clear that under my leadership, the Committee is putting consumers first and holding financial institutions accountable. The findings of our investigation detailed in today’s Committee staff report have only deepened this commitment. That is why I am convening three hearings on Wells Fargo this month to scrutinize the megabank’s harmful practices. Wells Fargo has clearly demonstrated an unwillingness and inability to stop harming its customers, so this Committee is working overtime to make sure consumers are never subjected to the types of abuses and failures committed by this megabank again.”
“This report underscores federal regulators’ repeated failure to hold Wells Fargo accountable for admitted wrongdoing that has harmed millions of Wells Fargo customers,” said Green. “When wrongdoers agree to settlements to make their victims whole, we rely on federal regulators to enforce the terms of those agreements. This report demonstrates not only that Wells Fargo is failing to comply with the terms of multiple settlement agreements dating back to 2016 and 2018, but also that our federal regulators have simply failed to enforce those agreements, despite having ample tools and authorities under existing law to do so.
“Unfortunately, those who pay the price of these failures are those least able to pay and most in need of protection – customers initially victimized by the bank. The status quo is unacceptable and must not continue. Wells Fargo must be held to its obligations to restore those whom it has harmed, and it must end the abuses of consumers as well as the conditions of the bank that have allowed and promoted such abuses.”
Wells Fargo first blew up in scandal when it was revealed late in 2016 that the bank staff were creating bogus bank accounts in order to boost their own numbers.
Since, Wells Fargo has also been the subject of trading related shenanigans.
In the last twenty-four months, Wells Fargo has been sanctioned by three regulators: the National Futures Association, the Commodities Futures Trading Commission (CFTC), and the Securities and Exchange Commission (SEC).
The NFA is a self-regulatory organization over the futures industry.
In August 2019, the NFA sanctioned a Wells Fargo swap dealer division for failing to deal fairly with counterparties.
The complaint by the NFA noted, “Wells Fargo Bank and the Client agreed that the settlement price for the forward contract would be based on the weighted average of the CAD spot contracts that Wells Fargo Bank purchased on August 27, 2014.
“However, instead of calculating and providing the Client with a settlement price on the forward contract based on the weighted average of the actual spot trades, Wells Fargo Bank devised a rate that Wells Fargo Bank thought the Client would accept. Wells Fargo Bank also failed to tell the Client that the average rate was an arbitrary rate not based solely upon the actual spot CAD spots contracts’ price.”
The CFTC also hit Wells Fargo’s swap dealer in November 2019.
Here’s part of a story in The Industry Spread, “The U.S. Commodity Futures Trading Commission today issued an order filing and settling charges against Wells Fargo Bank, N.A. for violating multiple swap dealer business conduct standards. Specifically, Wells Fargo failed to deal with a counterparty in a fair and balanced manner based on principles of fair dealing and good faith. Wells Fargo also failed to implement and monitor systems to ensure compliance with policies and procedures regarding communicating with counterparties in a fair and balanced manner. The order requires Wells Fargo to pay a civil monetary penalty of $10 million, restitution of $4.475 million, and to cease and desist from violating the CFTC’s business conduct standards.”
The SEC settled with Wells Fargo advisors for improper sales of complex financial products.
To top it off, in December 2016, FINRA, the Financial Industry Regulatory Authority, the SRO over the investment industry, also accused Wells Fargo for retaliating against certain whistleblowing employees by manipulating their securities registration documents.
Wells Fargo’s stock price has taken a hit after all these scandals. On March 26, 2015, Wells Fargo, which trades as WFC on the NYSE, finished the day trading at $54.59.
On March 3, 2020, WFC finished trading at $40.73.
An email to the public affairs department at Wells Fargo was left unreturned.