Jun 6, 2022

Senate Banking Cmte Chair Calls on Wells Fargo to Finally Fix Long-standing Problems

Jun 6, 2022 | Banks, Market

By: Ken Chase.

Senate Banking Committee Chair Sherrod Brown this week urged Wells Fargo CEO Charles Scharf to make real progress in fixing the bank’s hiring practices, risk management, governance, and other long-standing issues. In a letter to the company’s head, Brown suggested that years of announced plans and efforts had produced little or no improvement.

According to the Senator, “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. It is unacceptable that after years of failed attempts, nothing seems to have improved.”

In recent years, Wells Fargo has been at the center of several high-profile banking scandals, including a scheme that saw millions of savings and checking accounts created without customers’ consent. Other bad practices included hidden mortgage refinance fees for veterans, and a practice of charging bank customers for unnecessary vehicle insurance products.

The fraudulent account creation scheme ultimately led the Federal Reserve to replace four Wells Fargo board members in 2018 and freeze the bank’s assets at below $1.95 trillion. In September 2021, Fed Chairman Jerome Powell confirmed that the cap would remain in place until the company demonstrated real progress in correcting the systemic problems that enabled its bad practices. Powell’s comments came on the heels of Wells Fargo’s acceptance of a $250 million fine for noncompliance with the 2018 order.

Reporting on the recent letter, Reuters noted that Brown expects the Wells Fargo CEO to be in attendance along with other bank CEOs at a currently unscheduled Senate hearing sometime this year. At press time, the bank had not responded to Reuter’s request for comment.

Meanwhile, the Democrat-controlled Congress has continued to scrutinize the U.S. banking industry, questioning everything from overdraft fee policies to mergers and the industry’s efforts to fuel positive social change. Senator Elizabeth Warren has even gone so far as to urge the Federal Reserve to force Wells Fargo to separate its banking operations from its other businesses.

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