Senate banking chair bashes Wells Fargo, wants executives to testify before the panel

For Wells Fargo, the public criticism just keeps coming.

U.S. Sen. Sherrod Brown, D-Ohio, on Tuesday decried the bank’s “history of consumer abuses and gross mismanagement,” and called on Wells Fargo officials to testify before the Senate’s Committee on Banking, Housing and Urban Affairs at its annual Wall Street oversight hearing. Brown chairs the committee.

Brown’s comments were prompted by a May 19 article from The New York Times. The story stated that the bank had a number of “fake” interviews with female applicants or job candidates of color, improving Wells Fargo’s diversity efforts on paper even when positions had already been promised to other candidates.

In a letter to Wells CEO Charlie Scharf, Brown said he expected the bank to “finally reform” its internal structures so that it “rights past wrongs and lives up to the many promises that Wells Fargo has made to its customers and their communities.”

“Wells Fargo’s continued inability to manage the basic requirements of serving its customers means that consumers, investors and employees continue to pay the price,” Brown said in the news release.

Wells Fargo did not respond to a request for comment Tuesday from The Charlotte Observer.

The bank has been under intense scrutiny from lawmakers and regulators alike over the last several years. Most of it traces back to the bank’s 2016 fake accounts scandal, when it was discovered that employees created millions of fraudulent accounts for customers without their knowledge.

The bank is based in San Francisco but has its largest employment hub in Charlotte, with more than 27,000 workers here.

Other issues at Wells Fargo

Brown’s rebuke comes on the heels of several high-profile stories about the bank’s internal practices.

In March, a Bloomberg investigation found that the bank approved fewer than half of Black homeowners’ mortgage refinancing applications in 2020, compared with 72% of white applicants.

That led to 11 senators calling for a review of the bank’s mortgage refinancing processes, and an updated class action lawsuit from renowned civil rights attorney Benjamin Crump and others on behalf of affected borrowers.

Then, The New York Times reported in May that the bank conducted “fake” job interviews to give the appearance of diversity in recruitment. According to a number of current and former workers, bank employees would interview women and people of color for positions that had already been promised to other candidates, the Times reported.

Regulatory concerns

The bank also has continued to wrestle with a number of regulatory problems.

Last week, the bank’s broker-dealer business, Wells Fargo Advisors, settled with the Securities and Exchange Commission for $7 million on charges related to anti-money laundering law violations

Wells Fargo Advisors failed to timely flag dozens of suspicious transactions on its customers accounts, the SEC said. Wells Fargo did not admit or deny wrongdoing in the settlement.

And last fall, the Office of the Comptroller of the Currency fined the bank $250 million in September for failing to properly compensate customers affected by the bank’s prior “unsafe or unsound” home lending practices.

‘A long way to go’

Those recent events add to a “laundry list of consumer abuses and compliance breakdowns,” Brown said, that had led to a government-imposed growth cap in February 2018.

Under that restriction — the most significant of several outstanding regulatory constraints — the bank can’t grow its balance sheet beyond $1.95 trillion in assets.

“It is clear that Wells Fargo still has a long way to go to fix its governance and risk management before it should be allowed to grow in size,” Brown said in Tuesday’s news release. “It is unacceptable that after years of failed attempts, nothing seems to have improved.”

Brown is working to schedule this year’s Wall Street oversight hearing.

If Wells CEO Charlie Scharf does testify before senators, it wouldn’t be his first such appearance before lawmakers. Scharf previously testified before the House Financial Services committee in March 2020 and in May 2021.

And the bank came under blistering congressional scrutiny during a 2019 hearing before the same committee, in the wake of a series of consumer-related scandals.

Members of congress pressed former CEO Tim Sloan on what the bank would do to bring an end to its many scandals.