House Republicans faulted the Consumer Financial Protection Bureau Tuesday for settling with Wells Fargo for $100 million when it could have sought $10 billion for the megabank’s fake accounts scandal.
Members of the House Financial Services Committee argued that the agency rushed to cut a deal to penalize Wells Fargo without proper investigation or enforcement.
Republicans on the panel have sought to portray the agency as negligent in stopping Wells Fargo from creating millions of unwanted accounts for its customers. The creation of the fake accounts was revealed by the Los Angeles Times, rather than by regulators.
The Republicans found an internal CFPB document produced by the enforcement division suggesting that the scope of the fake accounts scandal could justify a fine of $10 billion. Nevertheless, the memo also recommends the lower fine of $100 million to reach a settlement and close the case. It maintained that the penalty would be large enough to deter future such behavior.
Rep. Jeb Hensarling, the chairman of the Financial Services Committee who has frequently criticized CFPB Director Richard Cordray, called the bureau’s handling of the case “a slap in the face” to Wells Fargo customers.
Rep. Ann Wagner, the chairwoman of the oversight subcommittee, said Cordray “evaded the truth before Congress and the CFPB settled for pennies on the dollar after being caught asleep at the wheel.” At issue was Cordray’s claim that his agency had conducted an independent investigation of Wells Fargo, which the Republicans said he did not base on new documents they unearthed.
Cordray, an Obama appointee, has faced increased resistance from Republicans during President Trump’s tenure. Republicans hope to pass legislation to reduce the CFPB’s power to regulate financial markets. Democrats defend the agency as necessary to guard consumers against fraud.
