Wells Fargo claims to have changed after its fake accounts scandal made headlines last year, but the bank still seems poised to rip off customers and workers, Senate Democrats said on Tuesday.
At a hearing before the Senate Banking Committee, they questioned the integrity of Wells executives and said the framework is still there for the bank to continue to push the boundaries of legality and ethics.
“The Federal Reserve should remove all of the current board members who served during the fake accounts scam,” Elizabeth Warren (D-Mass.) told Wells Fargo CEO Tim Sloan on Tuesday, repeating a call she has made for months.
“You say you’ve been making changes at Wells Fargo for 30 years,” she added, “but you enabled this fake accounts scam, you got rich off it and then you tried to cover it up.”
Warren had cited a number of statements Sloan had made to investors and the press, in the past few years.
At various points, throughout the propagation of the phony accounts, the current CEO–as chief financial officer and chief organizing officer–praised Wells sales targeting practices.
“At best you were incompetent, at worst you were complicit and either way you should be fired,” Warren concluded.
Sloan vigorously denied that he attempted to cover up the accounts scandal. But in July 2016, while privately disciplining Carrie Tolstedt, head of the Wells consumer unit fired for the unauthorized accounts, Sloan staunchly defended sales targets in an interview.
It was made public two months later that Wells was settling with three financial regulators for $185 million–for over 2.1 million unauthorized accounts opened between 2011 and 2015.
In the months since that revelation, it has emerged that the scandal goes far deeper—with bill payment services, car insurance, and mortgage adjustment foisted upon more than a million customers without their consent. Wells also discovered an additional 1.4 million unauthorized credit card and bank accounts, in an extended review of retail operations spanning from 2009-2016
Senate Banking Committee Chair Mike Crapo (R-Idaho) agreed to hold Tuesday’s hearing after the developments came to light. He was pushed to do so last month by Democrats, led by Warren. Former CEO John Stumpf resigned amid the fallout of the scandal last year, after testifying before the committee.
Though Warren’s criticism may have been the most forceful—Crapo unusually agreed to give her extra time to speak, after he gave Sloan an opportunity to directly respond to her criticism—Democrat-after-Democrat teed off on Wells Fargo and on Sloan himself.
Vice chair Sherrod Brown (D-Ohio) railed against Wells Fargo’s use of forced arbitration, in which the bank uses fine-print to get customers to relinquish their rights to redress grievances in court. Brian Shatz (D-Hawaii) suggested that federal regulators could revoke Wells’ operating charter—a move that would shutdown the bank entirely. Chris Van Hollen (D-Md.) suggested Sloan may have committed perjury during his testimony.
“I don’t know if you were sworn in today or not,” Van Hollen told Sloan, claiming inconsistencies between his testimony and the bank’s own court filings.
Even reliably centrist Democrats thundered at Sloan. Sen. Jon Tester (D-Mont.) had browbeat him into promising not to pursue mandatory arbitration, in the case of fake accounts—the eventual subject of Van Hollen’s accusations. Heidi Heitkamp (D-N.D.) berated Sloan for claiming to be unaware of ongoing litigation over the scandal, and recent NPR reporting on Wells’ wrongful car repossessions.
“This is problematic for us,” Heitkamp said. “We need to see that there’s actually a culture change.”
She recalled the build-up towards last year’s settlement, and how it involved the firing of thousands of low-level employees who were caught opening phony accounts, and the simultaneous the dismissal of colleagues who blew the whistle.
“You also fired employees who refused to play the game,” Heitkamp said.