According to the committee, an internal CFPB memo – which the committee said was “improperly withheld” for more than a year – reveals that the CFPB failed to adequately investigate Wells Fargo in the wake of the scandal, in which it was revealed that the bank had opened millions of customer accounts without those customers’ knowledge or consent.
Instead, the committee said, the CFPB “rushed to settle” with the banking giant, ultimately settling the matter for less than 1% of the agency’s own estimate of the bank’s monetary penalty. The House committee said that the memo called into question CFPB Director Richard Cordray’s statement that the agency had conducted an “independent and comprehensive investigation.”
“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. “The premature suspension of its investigation means that the CFPB potentially lost the opportunity to discover recently revealed evidence of further consumer harm.”
In recent months, it has been revealed that Wells Fargo radically understated the number of phony accounts opened by its employees. The bank has also been in hot water for changing customers’ mortgage terms without their consent and placing unnecessary insurance on customer auto loans.
The CFPB memo may indicate that those other scandals could have cost the bank quite a bit had the agency known about them at the time. The memo stated that the CFPB estimated the bank’s potential liability for the fake-accounts scandal at $10 billion – more if the CFPB determined the fraudulent behavior was reckless or knowing as opposed to merely negligent, or if other violations came to light.
Instead of $10 billion, however, the agency settled with Wells Fargo for just $100 million.
“Today’s report confirms what everyone already knew – the CFPB lacks accountability and oversight,” said Rep. Ann Wagner (R-Mo.), chair of the Oversight and Investigations Subcommittee. “While everyday Americans suffered at the hands of Wells Fargo, Director Cordray evaded the truth before Congress and the CFPB settled for pennies on the dollar after being caught asleep at the wheel.”
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The Consumer Financial Protection Bureau rushed to settle with Wells Fargo over the bank’s fake-accounts scandal, ultimately collecting less than 1% of the penalty it should have charged, the House Financial Services Committee said.