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Congressional report says Wells Fargo not complying with regulatory settlements

Stock MarketsMar 04, 2020 10:00PM ET
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© Reuters. Congressional report says Wells Fargo not complying with regulatory settlements

WASHINGTON (Reuters) - Wells Fargo (NYSE:WFC) is not complying with the terms of multiple settlements related to its sales scandal, according to a Congressional report released on Wednesday that also faulted regulators for failing to aggressively enforce the agreements.

The U.S. House of Representatives Financial Services Committee released the findings of its year-long probe into the bank ahead of hearings next week that will see its new chief executive, Charles Scharf, and its chair, Betsy Duke, testify before the committee for the first time.

Drawing on internal emails and meeting notes, the report paints a picture of a complacent Wells Fargo board and management who did not take seriously settlements the bank agreed with federal regulators between 2016 and 2018 to resolve charges it had abused customers.

A spokeswoman for Wells Fargo said the bank was reviewing the report.

Specifically, according to the report, Wells Fargo's board of directors allowed management to repeatedly submit materially deficient plans to regulators in response to the consent orders. The report said the regulators, for their part, failed to hold Wells Fargo accountable for its wrongdoing.

The report also says former Wells Fargo CEO Tim Sloan gave "inaccurate and misleading testimony" to Congress during a March 2019 committee hearing when he said the bank was in compliance with a 2018 consent order issued by the Office of the Comptroller of the Currency (OCC) relating to mis-selling of mortgages and auto loans.

Emails between OCC staff-members late showed that the bank was not in compliance with one of two aspects of the order's customer remediation plan, and that the OCC staff concluded that Sloan gave inaccurate testimony to Congress, the report says.

Sloan could not immediately be reached for comment on Wednesday evening. Spokespeople for the OCC did not immediately reply to a request for comment.

Wells Fargo has paid out more than $7 billion in fines and penalties related to the scandal since 2016, including to the U.S. Department of Justice. Internal and external probes have uncovered issues in each of Wells Fargo’s major business lines, including wealth management and the commercial bank.

Over the past three years, Wells Fargo has taken various steps to fix the issues and rebuild trust with customers, investors and regulators. That includes changes to its board, centralizing risk teams and hiring an external chief executive.

Congressional report says Wells Fargo not complying with regulatory settlements
 

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