Leading Democrats on the House Financial Services Committee said Friday they are worried schemes like the bogus bank account and debit card fraud revealed at Wells Fargo could be happening at other banks.
Wells was fined $185 million by the Consumer Financial Protection Bureau and other regulators earlier this week for issuing close to two million phony accounts and credit cards to consumers.
Maxine Waters, the lead Democrat on the committee, called the fines “a slap on the wrist."
Rep. Brad Sherman, D-Calif., quipped that the army of 5,300 Wells Fargo fraudsters was larger than George Washington’s army at Valley Forge.
Sales quotas incentives led the workers to cheat consumers, he added.
Sherman pointed out the biggest harm to the people who were given the bogus credit and debit cards weren’t the fees they had to pay (averaging $25), but the harm that was done to their FICO credit scores for having too many cards.
Lower FICO scores inevitably meant some were denied home and car loans or had to pay higher interest rates on debt, Sherman said, voicing concerns the fraud could be widespread among financial institutions.
At the same time, five Democrats on the Senate Banking Committee, led by Massachusetts Sen. Elizabeth Warren, said Wells had ample reason to take back some or all of the $155 million in bonuses and stock options given to Carrie Tolstedt, Wells Fargo’s recently departed community banking chief and the executive who ran the incentive program for the workers involved in the scheme.
The Senate Banking Committee will be holding a hearing on the Wells Fargo fraud Tuesday. Wells Fargo Chairman and CEO John Stumpf will be testifying along with CFPB Director Richard Cordray and Comptroller of the Currency Tom Curry.
Waters said House Financial Services Committee Chairman Jeb Hensarling promised her Thursday the committee will hold a Wells Fargo hearing, but no hearing had been scheduled at press time.