Patrick McHenryChairman

Washington, March 11, 2020 -

Today, the House Financial Services Committee held its second in a series of three hearings this month on Wells Fargo. The Committee heard from Elizabeth Duke and James Quigley, former members of the Wells Fargo Board during the 2016 sales practices scandal. The third Republican staff report issued last week found that both Duke and Quigley did not ensure the company was making progress under consent orders and failed to hold former CEO Tim Sloan’s management team accountable.

While this hearing offered insight into the past mismanagement of the Bank—and provided Democrats with an opportunity to push legislation that does not align with the evidence in the Committee reports—this hearing simply reaffirmed what Republicans already found to be true. At yesterday’s hearing with new Wells Fargo CEO Charles Scharf, the Republican Leader of the House Financial Services Committee, Patrick McHenry (NC-10), called on the Committee to continue to hold Wells Fargo accountable, while using valuable Committee hearing time to better inform the public on efforts to mitigate the potential risk posed by Coronavirus.

Watch Republican Leader McHenry’s opening remarks here.

Ranking Member McHenry’s opening remarks as delivered:

“Well thank you, Madam Chair, and thank you for holding this hearing. I want to thank our witnesses for voluntarily complying with the request of the Committee to appear.

“Today’s hearing, and the legislative proposals attached to it would make Rahm Emanuel proud.  

“He once said, ‘you never want a serious crisis to go to waste.’

“Well, make no mistake – Wells Fargo has been in crisis mode for a while now. We’ll hear more about the makings of that crisis today from our witnesses. They had a front row seat. They were part of the problem in many respects.

“In that spirit, the Democrats followed Rahm Emanuel’s advice and rolled out policy proposals that would do everything from expand the scope of CFPB’s authority to automatically downsize certain banks. 

“And from those proposals, it has complete lack of connection with the evidence before us in the example of Wells Fargo. 

“We found that with Wells Fargo the problem wasn’t that the CFPB lacked certain authority—the problem was the CFPB ignored a series of red flags at Wells Fargo. That was under Richard Cordray’s leadership of the CFPB.

“We found the problem wasn’t that Wells Fargo is too big to manage. The problem was, it was deeply mismanaged. 

“My colleagues on the other side of the aisle also have some ideas about the standards to which we should hold Board members. How about we start with the proper legal framework and the standards that shareholders and the courts use?

“So, let’s start there, let’s walk through those.  

“Under the law, members of a corporate Board of Directors owe three fiduciary duties: the duty of care, the duty of loyalty, and the duty of good faith.

“Those concepts aren’t very complicated. Directors must be diligent; they must subordinate their personal interests beneath the interest of the company; and they have to act in the best interest of the shareholders. 

“Those standards make sense because at the end of the day, Directors represent the interests of the shareholders.

“Shareholders expect the Board to do three basic things. First, hold management accountable. Second, push back when management provides incomplete or overly optimistic information. And third, make sure the company has the right leaders in place. 

“It looks like, based on what we heard yesterday from Mr. Scharf, the Board might have finally got that last one right – the question of leadership. But we have a lot of questions today about everything leading up to the Board’s decision to elect Mr. Scharf.

“We need to hear why the Board chose a company insider to lead Wells Fargo back in 2016. We need to hear why the Board failed to recognize that management wasn’t fixing the company’s problems. And we need to hear why the Board stood behind that management team for so long, until the Trump administration’s regulators forced change. 

“I think there is a lot that we can learn to ensure that new decision makers deliver on the much-needed changes to this institution. I look forward to your answers today about this history. 

“Thank you, Madam Chair, for hosting this hearing, and I look forward to the questions.”

Learn more about today’s hearing here.

Learn about yesterday’s hearing with Wells Fargo CEO Charles Scharf here.

Read the Republican staff report entitled: Uniquely Flawed: An Overview of Failures and Structural Deficiencies at Wells Fargo, here.