Feb. 24-- Democrats blasted the $3 billion sales practices settlement that Wells Fargo came to with federal officials on Friday, calling it "a slap on the wrist" for a bank that could easily pay the cost of the deal.
The settlement, reached between the bank, federal prosecutors and the Securities and Exchange Commission, essentially put Wells Fargo on a form of probation, known as a deferred prosecution agreement, while requiring it to pay a total of $3 billion in penalties.
For over a decade, Wells Fargo employees created millions of fake accounts in customers names, among other misconduct, to meet unreasonably high sales goals that the bank had set. Management knew about it, Wells Fargo agreed in the settlement, turned a blind eye to the practices and minimized the issue to the company's board.
U.S. Attorney Nick Hanna of Los Angeles called it a "complete and total failure of leadership," when he announced the settlement.
Many, though, saw the fine as scant for a bank with nearly $2 trillion in assets. It took the bank only two quarters to set aside the $3 billion.
Sen. Sherrod Brown, the top Democrat on the Senate Banking Committee, said in a statement the settlement "sends a clear message to Wall Street banks: you can defraud Americans, abuse your employees, and walk away with a slap on the wrist."
The same day as the settlement, Democrats in Congress announced plans to turn up the pressure on the San Francisco-based bank, which has its largest workforce in Charlotte.
Rep. Maxine Waters, chair of the House Financial Services Committee, announced three hearings on Wells Fargo on March 10, 11 and 25.
New CEO Charlie Scharf will testify at one, and the next day Wells Fargo board members will testify, including the board chair, former Wachovia executive Elizabeth Duke. A third will focus on the impact of the bank's past high-pressure sales culture on employees.
Waters, a steadfast critic of the bank, said in a statement that the settlement's fine "barely dents" the bank's profits and that Wells Fargo must be held fully accountable.
Congressional hearings have proved perilous for Wells Fargo executives.
Former CEO John Stumpf, who is now banned from the industry, resigned shortly after a 2016 Senate hearing in which he was sharply criticized by Sen. Elizabeth Warren, who directly asked him to resign. Stumpf's successor as CEO, Tim Sloan, resigned soon after another such hearing in March 2019.
Wells Fargo's new leadership has repeatedly apologized for the sales practices, and Scharf said in a statement Friday that the bank's past conduct was "reprehensible and wholly inconsistent with the values on which Wells Fargo was built."
He added that the bank will dedicate "all necessary resources to ensure that nothing like this happens again."
Warren, the Massachusetts Democrat and presidential candidate who rose to fame for her criticism of big banks in the financial crisis, wrote on Twitter that the "settlement barely puts a dent in the bank's $12 billion profits from the fake accounts scam.
"When big banks can break the law, pay a fine, consider it the cost of doing business, and go back to life as normal, nothing changes. Nothing."
Warren has proposed stronger rules for bankers who break the law, arguing that unless bankers fear jail time they won't change their practices.
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