Today, in response to the Federal Reserve’s approval of Wells Fargo's capital plan to increase dividend payments by 10 percent and spend up to $24.5 billion on stock buybacks, Congresswoman Maxine Waters (D-CA), Ranking Member of the House Committee on Financial Services, made the following statement:
“I am troubled by the Federal Reserve’s recent decision to approve Wells Fargo’s capital plan to handsomely reward its shareholders, including the megabank’s senior executives, despite engaging in a never-ending list of illicit activities. In recent years, the bank has opened 3.5 million fraudulent credit card and deposit accounts; engaged in illegal student loan servicing practices; charged inappropriate checking account overdraft fees; conducted unlawful mortgage lending practices, including overcharging veterans for refinanced loans; charged customers for auto insurance policies they did not need, which resulted in some customers losing their vehicles; and improperly sold complex financial products to retail investors.
“To date, no one has gone to jail for these crimes. While the bank was ordered to pay $1.5 billion in fines, these fines amount to the cost of doing business. Wells Fargo still racked up profits of $21 billion in 2016, $22 billion in 2017, and nearly $6 billion in the first quarter of this year, as the largest bank to benefit from the Republican tax law.
“I was pleased when the Federal Reserve, under former Chair Yellen, issued a cease and desist order in February to cap the megabank’s size until it cleans up its act. However, the Federal Reserve’s recent decision undermines that tough action and sends a terrible message by agreeing to let the bank pay out 141 percent of its expected annual earnings, the largest payout of the six largest U.S. banks. The bank’s executives should not be rewarded when the bank repeatedly rips off its customers and breaks the law.”
The Federal Reserve’s approval of Wells Fargo’s capital plan was conducted through the agency’s 2018 Comprehensive Capital Analysis and Review (CCAR).
In 2017, Ranking Member Waters introduced the Megabank Accountability and Consequences Act, which requires federal prudential banking regulators to fully utilize their authorities to shut down megabanks that repeatedly harm consumers and hold culpable executives accountable.
In 2017, Waters also released a Democratic staff report detailing a pattern of abusive business practices by Wells Fargo, as well as a Democratic staff report documenting the successes of the Consumer Financial Protection Bureau under Director Cordray, including penalties imposed on the bank for secretly opening fraudulent accounts.