Consumer Protection Foe in Desperate Need of This Reality Check
WASHINGTON, D.C. – Today, at an event hosted by POLITICO, House Financial Services Chairman Jeb Hensarling (R-Wall Street) again claimed the Consumer Financial Protection Bureau (CFPB) “was asleep at the wheel” when Wells Fargo opened millions of fake accounts. In short, that is complete bullshit. Before we dig into Hensarling’s claims with a reality check, here’s some important context:
In 2016, the CFPB levied a $185 million fine on Wells Fargo, and mandated refunds for their wronged customers, for opening “as many as 2 million accounts that bank customers never wanted,” which the CFPB and others called a ‘major breach of trust’ and ‘outrageous.’” The bank claimed it fired 5,300 employees over involvement in the issue, agreed to apologize to customers, and paid $100 million to the CFPB, then “the largest fine the federal agency [had] ever imposed.” The settlements “put to rest a lawsuit filed” by Los Angeles City Atty. Mike Feuer.
The CFPB and Wells Fargo: Rhetoric vs. Reality
RHETORIC: Hensarling Says the CFPB “‘Was Asleep at the Wheel’” on the Wells Fargo Fake Accounts Issue.
- On May 17, 2018, Rep. Jeb Hensarling said the Consumer Financial Protection Bureau “‘was asleep at the wheel’” on the Wells Fargo fake accounts issue. [Katy O’Donnell, “Hensarling slams CFPB for being ‘asleep at the wheel’ on Wells Fargo,” Politico Pro, 05/17/18]
REALITY: The CFPB’s Collaboration with the Los Angeles City Attorney Allowed for “Nationwide Relief for Wells Customers.”
- Los Angeles City Attorney Mike Feuer, who brought the 2015 lawsuit against Wells Fargo over “fake accounts,” said his collaboration with the CFPB “‘enabled there to be nationwide relief for Wells customers.’” [Matt Egan, “Guy who fought Wells Fargo is angry about Republican attack on CFPB,” CNN Money, 05/15/17]
REALITY: The CFPB’s Consumer Complaint Database Was Mined by the Los Angeles City Attorney in Advance of Their Action Against Wells Fargo and “Helped Spur [the CFPB’s] Investigation and Exposure of the Bank’s Sham Accounts.”
- Los Angeles City Attorney Mike Feuer acknowledged that his office “mined” the CFPB’s public consumer complaint database before suing Wells Fargo over fake accounts. And “a wave of complaints” about Wells Fargo is credited with helping to “spur [the CFPB’s] investigation and exposure of the bank’s sham accounts. [“City Attorney Mike Feuer Statement on Consumer Financial Protection Bureau’s Acting Director, Mick Mulvaney,” Los Angeles City Attorney, 04/25/18; Stacy Cowley, “Consumer Bureau Looks to End Public View of Complaints Database,” The New York Times, 04/25/18]
REALITY: Hensarling’s Motivation to Criticize the CFPB’s Wells Effort Appears to Be Political, Not Based on Policy.
- Despite reports that the OCC was aware Wells Fargo’s accounts issue in 2010 – before the CFPB even existed – Jeb Hensarling’s House Financial Services Committee “never initiated a hearing to grill the OCC” about the scandal. [Gary Rivlin and Susan Antilla, “No Protection for Protectors,” The Intercept, 11/18/17]
Jeb Hensarling: Wells Fargo’s Friend in Congress
Hensarling Has Received $63,750 in Campaign Contributions from Wells Fargo’s PAC and Their Employees over the Course of His Career.
- Hensarling has received $4,250 in campaign contributions from employees of Wells Fargo over the course of his career. [Search for Wells Fargo Employee contributions to Jeb Hensarling, OpenSecrets.org, accessed 05/17/18]
- Hensarling has received $59,500 in PAC donations from Wells Fargo PAC over the course of his career. [Search for Wells Fargo PAC Contributions, 2016 Cycle, OpenSecrets.org, accessed 05/17/18; Search for Wells Fargo PAC Contributions, 2014 Cycle, OpenSecrets.org, accessed 05/17/18; Search for Wells Fargo PAC Contributions, 2012 Cycle, OpenSecrets.org, accessed 05/17/18; Search for Wells Fargo PAC Contributions, 2010 Cycle, OpenSecrets.org, accessed 05/17/18; Search for Wells Fargo PAC Contributions, 2008 Cycle, OpenSecrets.org, accessed 05/17/18; Search for Wells Fargo PAC Contributions, 2006 Cycle, OpenSecrets.org, accessed 05/17/18; Search for Wells Fargo PAC Contributions, 2004 Cycle, OpenSecrets.org, accessed 05/17/18; Search for Wells Fargo PAC Contributions, 2002 Cycle, OpenSecrets.org, accessed 05/17/18]
Hensarling Was Asleep at the Wheel on Wells Fargo Accountability.
- While Hensarling indicated that he would be supportive of Wells Fargo recovering pay from executives who had been “involved” in the scandal surrounding fraudulent customer accounts, he said “he would not call for the bank to take any action.” The same month Hensarling said this, Wells Fargo was fined $185 million for allegedly setting up fraudulent customer accounts. [Emily Stewart, “Wells Fargo just got fined $1 billion. Republicans cut its taxes by $3.7 billion.,” Vox, 04/21/18; “Lawmaker Hensarling in favor of Wells Fargo clawbacks,” Reuters, 09/27/16]
Hensarling’s Financial CHOICE Act Would Benefit Wells Fargo And Eliminate Safeguards like the CFPB’s Complaint Database that Helped Identify the Bank’s Fraud
- Hensarling’s Financial CHOICE Act would de-regulate Wells Fargo. One columnist stated that Wells Fargo “ably demonstrates” that the banking industry has “little understanding of ethical behavior.” [David Lazarus, “Even as Wells Fargo scandal deepens, GOP lawmakers push bank deregulation,” Los Angeles Times, 09/05/17]
- Wells Fargo’s own presentation noted that under the Financial CHOICE Act, “CFPB’s enforcement authority would be severely restricted, including the removal of the CFPB’s authority to bring enforcement actions related to ‘unfair, deceptive, or abusive acts or practices'” under provisions contained in the CHOICE Act 2.0. [2017 Financial Institutions Balance Sheet Strategy Conference, Wells Fargo, accessed 05/17/18]
- Hensarling’s CHOICE Act 2.0 would also “repeal of the consumer complaint database, established under Dodd-Frank as an integral part of the CFPB’s work.” This database was “mined” by the Los Angeles City Attorney’s Office “before suing Wells Fargo over fake accounts.” [Brena Swanson, “Say goodbye to the controversial CFPB consumer complaint database?,” Housing Wire, 02/14/17; “City Attorney Mike Feuer Statement on Consumer Financial Protection Bureau’s Acting Director, Mick Mulvaney,” Los Angeles City Attorney, 04/25/18]
Tax Cuts Supported by Hensarling Made it Easy for Wells Fargo to Afford Fines and Judgments Resulting from Its Fraud
- Wells Fargo Has Been Fined Just Over $1 Billion But Received Nearly $4 Billion in Tax Cuts. Recent CFPB and OCC fines against Wells Fargo for a variety of actions total less than one third of the value of the tax cuts Wells Fargo received as a result of the Republican tax bill. Just this year, Wells Fargo paid a $1 billion fine to the OCC and CFPB, yet received $3.7 billion in tax cuts from the Republican Tax Bill. In fact, Wells Fargo’s tax cut was more than Bank of America, Citibank, JPMorgan, Morgan Stanley, PNC Financial Services, and UBS. [Emily Stewart, “Wells Fargo just got fined $1 billion. Republicans cut its taxes by $3.7 billion.,” Vox, 04/21/18]
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