Federal Reserve Board Chairwoman Janet Yellen on Wednesday blasted Wells Fargo & Co. for its “egregious and unacceptable” sales scandal and said the regulator might take action against the bank.
It’s the latest fallout for Wells, which continues to be dogged over last September’s revelations that employees for years opened unauthorized customer accounts to meet high-pressure sales goals.
Wells agreed last year to $185 million in fines to settle the allegations, which have tarnished its reputation, sparked federal and state probes and led to the toppling of its former chief executive officer.
“Let me say that I consider the behavior of Wells Fargo towards its customers to have been egregious and unacceptable,” Yellen said at a press conference following the Fed’s two-day monetary policy meeting. She added the Fed is “attempting to understand what the root causes of those problems are and to address them.”
Though Yellen said she could not discuss what actions the Fed may take or when, she noted: “We’re committing to taking the actions we regard as necessary and appropriate to make sure that the right set of controls are in place in that organization.”
Her comments came a day after internal documents showed another regulator could have fined Wells Fargo in excess of $10 billion for its illegal sales practices. Instead, the Consumer Financial Protection Bureau settled for $100 million, according to the agency’s internal documents released by congressional Republicans.
The CFPB also had evidence that the bank’s sales problems went back to at least 2006, far earlier than the 2011 to 2016 timetable that Wells Fargo originally admitted to, the documents show.
In a statement to the Observer, Wells Fargo said its board and management team have taken many actions in response to the scandal. Those include changes in senior leadership, eliminating product sales goals for retail bankers and “numerous steps to make things right with any customer” affected by the scandal, the statement said.
San Francisco-based Wells remains under investigation for the fake accounts and other practices disclosed since the scandal, including claims that it improperly charged customers to lock in mortgage interest rates.
The company has also come under scrutiny this summer for its auto-insurance practices. And it’s faced even more criticism over the sales scandal following a disclosure in August that the number of potentially fraudulent accounts could total 3.5 million — a nearly 70 percent jump over its initial estimates.
Amid the mounting issues, Massachusetts Democratic Sen. Elizabeth Warren has continued to urge the Fed to remove Wells board members in place during the years when the accounts scandal was happening. Warren reiterated those calls on Tuesday.
“I really want to see the Fed step up here,” Warren told CNBC’s Jim Cramer. “The Fed has the power to do it. They just need to step up and do it.
This summer, Wells announced some planned changes to its board, including the departure of chairman Stephen Sanger.
The CFPB documents were released as part of a report issued by the staff of House Financial Services Committee Chairman, Rep. Jeb Hensarling of Texas, a critic of the CFPB. Hensarling, along with other House Republicans, has called for the firing of CFPB Director Richard Cordray, an appointee of President Barack Obama, as well as new laws to curtail the bureau’s authority over the financial services industry.
The report and publicly disclosed documents imply that the CFPB went easy on Wells Fargo.
However, Cordray accused House Republicans of “Monday-morning quarterbacking.”
“The fact is that the CFPB worked effectively with our partners to expose the Wells Fargo scandal and put a public spotlight on their practice of secretly opening unauthorized accounts,” Cordray said in a statement. “In response, we levied our largest fine ever and secured broad, nationwide relief for consumers.”
The Associated Press contributed.
