House Puts Wells Fargo in the Hot Seat

All eyes fell again on Wells Fargo Chairman and CEO John Stumpf during the House Financial Services Committee Hearing examining the opening of unauthorized customer accounts at Wells Fargo.

Financial Services Committee Chairman Jeb Hensarling (R-Texas) delivered the open remarks the hearing noting that this hearing “is just the beginning of our investigation, not the end.”

“In the coming weeks, we will be questioning Wells Fargo executives,” said Hensarling. “If necessary, I will not hesitate to issue subpoenas because we will do what is necessary to get to the bottom of this.”

Hensarling did note that Wells Fargo was not the only one on the hot seat for this situation, citing that the OCC and CFPB should also be held accountable for conducting regular examinations but not exposing the issue until now.

“We launched this investigation because it is our job to hold both Wall Street and Washington accountable, and to protect consumers from the excesses of both,” said Hensarling.

In her opening, Congresswoman Maxine Waters (D-California), Ranking Member of the Committee on Financial Services, urged Stumpf to tell the truth about the fraudulent activity that occurred and take full responsibility.

“We still do not have the information we need to understand how this happened, when the sales culture turned toxic, and who knew about it and when,” Waters said.

Waters called for a thorough investigation by the Justice Department into executive conduct. “Someone who is responsible for the broken culture that led to this behavior needs to be held responsible,” she said. “Not the lower-level employees that have been left to bear the weight of the mistakes that have been made.”

Waters and Congressman Al Green (D-Texas), Ranking Member of the Subcommittee on Oversight and Investigations, requested this hearing to investigate these harmful practices. It is the first time Hensarling has brought a financial executive before the Committee to testify for misconduct.

Stumpf was then allowed to give a brief statement before questioning began, where he accepted full responsibility and shared with the Committee updated information about what work Wells Fargo is doing to rectify the issue at hand.

During the opening statements and subsequent questioning, the idea of déjà vu kept coming to into play as Hensarling and Waters, among others, noted that this investigation had marked resemblance to the fraudulent mortgage document scandal Wells Fargo was investigated for over 6 years ago.

“Unfortunately, this is not the first time we have seen abusive practices at Wells Fargo,” said Waters. “We thought you were working on these practices six years ago, your mortgage executive sat in that very chair, reassuring my Subcommittee that you were committed to fixing Wells Fargo’s forgery of mortgage documents. And yet, we haven’t seen the problem fixed, we’ve just seen it migrate to another part of your bank.”

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