WASHINGTON - Sens. Ron Wyden and Jeff Merkley, D-Ore., along with 12 fellow senators, said Thursday they are urging the Justice Department to investigate and, if appropriate, prosecute wrongdoing by executives at Wells Fargo after revelations that the bank’s employees had opened millions of accounts without customer approval.
In September, the federal Consumer Financial Protection Bureau issued its largest penalty to date – more than $100 million – to the bank as a result of this multi-year, multi-state fraud. In a letter to Attorney General Loretta Lynch, the senators called on the Justice Department to hold Wells Fargo accountable as a corporation, as well as prosecute individual executives who may have broken the law.
The senators wrote:
“A bank teller that takes a handful of bills from the cash drawer is likely to face charges for theft and prison time. She can’t hide behind an army of lawyers and corporate policies that diffuse accountability for those at the top. Meanwhile, an executive who oversees a massive fraud that implicates thousands of bank employees and costs customers millions of dollars can walk away with a hefty retirement package and millions in the bank,” they wrote.
“Every time the Department of Justice settles a case of corporate fraud without holding individuals accountable, it reinforces the notion that the wealthy and powerful have purchased a higher class of justice for themselves,” they also wrote.
The letter was signed by Senators Mazie K. Hirono, D-Hawaii, Jeff Merkley, D-Ore., Tammy Baldwin, D-Wis., Richard Blumenthal, D-Conn., Richard Durbin, D-Ill., Al Franken, D-Minn., Kirsten Gillibrand, D-N.Y., Angus King, I-Maine, Amy Klobuchar, D-Minn., Patrick Leahy, D-Vt., Ed Markey, D-Mass., Bernard Sanders, I-Vt., and Elizabeth Warren, D-Mass.
Meanwhile, at a news conference Thursday outside a Wells Fargo branch in Portland, Merkley and Sen. Al Franken, D-Minn., announced they are calling on federal officials to pursue a robust criminal investigation into the actions of the bank and its executives.
Last month, it was revealed that over the course of many years, Wells Fargo had fraudulently opened millions of credit card and banking accounts without its customers’ permission. Despite the CEO’s claim in September that he was taking “full responsibility” for the scandal, no high-level executives have been fired.
"When ordinary Americans break the law, they pay the price," said Merkley. "But time after time, when executives are involved in extensive fraud, they walk away scot-free. That must end. The fraud at Wells Fargo, involving two million phony accounts, merits a robust criminal investigation of the executives who managed the bank."
“Wells Fargo’s conduct was outrageous and unacceptable, and I believe that for too long, we’ve failed to hold executives accountable,” said Franken. “That’s why Sen. Merkley and I wrote to the Department of Justice urging them to launch an investigation of the conduct at Wells Fargo. This is about justice for the millions of consumers who were victims of Wells Fargo’s scheme. And it’s about making sure that executives at big banks like Wells Fargo are held responsible for their actions.”
The senators formally made their call for an investigation in a letter with Senator Mazie Hirono (D-HI) and 13 other senators.
Dear Attorney General Lynch:
According to public filings, the Department of Justice is investigating whether Wells Fargo violated federal laws when its employees opened as many as two million deposit and credit card accounts without customer authorization over the span of several years.
As part of this investigation, we urge you to thoroughly investigate the culpability of senior executives at the bank. We believe this is a critical test of the Department’s promise last September to “strengthen [its] pursuit of individual corporate wrongdoing” and to “focus on individuals from the inception of the investigation.”
Following the 2008 financial crisis, the American people watched as senior executives repeatedly escaped accountability for actions that nearly brought down the global economy. No top Wall Street executives went to prison or even faced prosecution. Instead, the government regularly settled for a penalty that was borne by the bank’s shareholders, not its executives. Even that penalty tended to pale in comparison to the profits the bank generated from its illegal activity.
Wells Fargo spokesman Ruben Palido also issued a statement Thursday in response to the senators' letter:
“We take Congressional concerns very seriously. At Wells Fargo, our No. 1 priority is making things right with our customers and restoring the public trust, and we are dedicated to ensuring that all aspects of the Company’s business are conducted with integrity, transparency and oversight. We are working at every level to diligently respond to, investigate and resolve any issues related to improper sales practices.
“Wells Fargo has already taken a series of steps to address improper sales practices including:
· Expanding the scope of our review to include 2009 and 2010;
· Hiring Shearman & Sterling, a top multinational law firm, to lead an independent investigation into the company’s retail banking sales practices;
· Rescinding unvested equity awards valued at approximately $41 million from Chairman and CEO John Stumpf. John will also forego a bonus for 2016 and will not take a salary during the Board’s investigation;
· Rescinding former community bank executive Carrie Tolstedt’s unvested equity awards valued at $19 million.
“Most importantly, we are making critical changes in our retail bank operations to regain the trust of our customers and team members:
· We have appointed new leadership to oversee our community banking business.
· We have eliminated all product sales goals in the retail banking business to ensure that our culture aligns with our customers’ needs and values.
· We have set up a dedicated 24/7 hotline at 1-877-924-869 7to address customer concerns.
· We are contacting each of our impacted deposit account and credit card customers to ensure they still want and need their products.
“We are confident that these important steps put us on the right path to better helping our customers and to ensuring that team members feel rewarded and valued based on customer service, not product goals. We will continue to work hard to restore our customers’ faith and regain the public’s trust.”