Republicans Say CFPB Kowtowed to Wells Fargo

WASHINGTON (CN) — Pointing to records that they say regulators intentionally withheld, House Republicans say there is more evidence than ever that the Consumer Financial Protection Bureau obstructed oversight of Wells Fargo’s fraudulent accounts scandal.

Fraudulent tactics by America’s third-largest lender were first brought to light in 2013 by The Los Angeles Times, prompting a lawsuit by the LA City Attorney’s Office.

After federal regulators joined in, directors of the bank spearheaded an audit that found Wells Fargo employees had opened millions of checking and credit card accounts in customers’ names without authorization.

Wells Fargo initially counted 2.1 million phony accounts, opened between 2009 and 2016 by employees struggling to meet aggressive sales quotas, but the bank upped that figure last month by another 1.4 million.

Though the $185 million settlement that Wells Fargo paid last year marked the largest fine ever imposed by a federal agency, deregulation-minded Republicans have rebranded the scandal as an attack against the agency created in 2010 by President Barack Obama.

In a 32-page report published Tuesday, the House Financial Services Committee says new evidence reveals that the CFPB failed to fully investigate Wells Fargo.

“Instead, the bureau rushed to settle with Wells Fargo for less than 1 percent of the Bureau’s own estimate of the bank’s statutory civil monetary penalty,” the committee said in a statement about its report, accompanied by more than 900 pages of appendices.

Following up initial findings released in June, Tuesday’s report say the CFPB has been improperly withholding a memorandum for over a year that shows Wells Fargo’s activities could have cost it at least $10 billion in penalties.

“The CFPB’s handling of this matter and its refusal to fully comply with the congressional subpoena are a slap in the face to millions of Americans who were harmed by Wells Fargo and further evidence of the CFPB’s unaccountable structure and leadership,” Committee Chairman Jeb Hensarling, R-Texas, said in a statement. “The premature suspension of its investigation means that the CFPB also potentially lost the opportunity to discover recently revealed instances of further consumer harm.”

In addition to accusing regulators of deliberately withholding records, the report says some CFPB officials actively worked to conceal the memorandum’s existence from the House Committee. 

“Today’s report confirms what everyone already knew — the CFPB lacks accountability and oversight,” said Rep. Ann Wagner, R-Mo., chairwoman of the Oversight and Investigations Subcommittee. “While everyday Americans suffered at the hands of Wells Fargo, [CFPB] Director [Richard] Cordray evaded the truth before Congress and the CFPB settled for pennies on the dollar after being caught asleep at the wheel. Additionally, this second Interim Majority Staff Report confirms that the CFPB is willfully obstructing this Committee from conducting our oversight responsibilities.”

The committee says it remains unable to complete its investigation of the Wells Fargo fraudulent account scandal because of Cordray’s failure to comply with its April 2017 subpoena.

“At a minimum, information revealed in the recommendation memorandum does not corroborate Director Cordray’s congressional testimony that the CFPB conducted an ‘independent and comprehensive investigation’ of Wells Fargo and also raises questions as to the accuracy of the Director’s testimony before the Senate Banking Committee,” a press release from the committee says.

The CFPB’s Cordray denied the committee’s allegations.

“Despite the Monday-morning quarterbacking, the fact is that the CFPB worked effectively with our partners to expose the Wells Fargo scandal and put a public spotlight on their practice of secretly opening unauthorized accounts,” Cordray said in a statement. “In response, we levied our largest fine ever and secured broad, nationwide relief for consumers. And most importantly, our action finally put a stop, once and for all, to illegal practices that had been harming consumers since well before the Consumer Bureau opened its doors.”

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