WASHINGTON — The House Financial Services Committee said Friday it plans to open an investigation into the fraudulent account openings at Wells Fargo and will hold a hearing soon on the issue.
Chairman Jeb Hensarling said in a statement that Wells Chief Executive John Stumpf will testify at a hearing "later this month," while the panel conducts its own fact-finding. The Texas Republican said that Wells' executives, including former community banking head Carrie Tolstedt, Chief Financial Officer John Shrewsberry and Chief Operating Officer Tim Sloan, should be interviewed by panel staff.
"The committee has launched an investigation into alleged fraud that led to the opening of unauthorized customer accounts at Wells Fargo and the role of Washington regulators in monitoring and investigating this activity," Hensarling said.
He also added that the committee is requesting internal documents related to "the discovery and timing of these practices, and is asking company officials to appear for transcribed interviews."
Stumpf is already scheduled to go to Capitol Hill next week, where he will appear before the Senate Banking Committee on Tuesday.
Earlier in the week, Hensarling had suggested the panel might be too busy to hold a hearing on Wells. He said the Wells action, in which it paid $190 million in fines and restitution after it was revealed thousands of employees opened as many as 2 million unauthorized accounts, was deserving of an inquiry, but noted the panel was slated to also have hearings with Federal Reserve Chair Janet Yellen and others.
That prompted Democrats to object, saying the Wells matter must be investigated promptly.
"You cannot miss the opportunity to find out more about what took place at Wells Fargo and to not talk only about further investigation but punishment for those responsible," Rep. Maxine Waters, D-Calif., said on a call with reporters Friday.
Waters said that she knows Stumpf "very well" and that he called her earlier this week to take responsibility for the bank's misconduct. Waters did not say whether they discussed an appearance at the House panel but said, "I would want him there."
She also said she would like to hear from the employees who were fired to get a better sense of whether the bank has a cultural problem.
"I would like to hear from any of the 5,300 employees who engaged in this activity and were fired. I want to hear their thoughts about the bank's culture, because they are the ones that felt compelled to take these actions," Waters said. "The question is why."
Rep. Brad Sherman, D-Calif., was alongside Waters on the call with reporters and also pointed to possible institutional problems.
"The biggest issue is how is Wells Fargo being managed. It is not like they missed one thing," Sherman said. "The way you can have a reliable bank is if you have good internal control and a good internal control system would have identified this when you had 50 accounts" that were fraudulently created.
"Makes you wonder how we can be confident in the prudential safety of the 'too big to fail' institutions," Sherman said.
The California Assembly is also set to hold a hearing on the Wells Fargo scandal Oct. 11 in Los Angeles. Plans for the hearing were confirmed by an aide to state Rep. Matt Dababneh, who chairs the state assembly's Banking Committee.
Sherman said beyond the fines already assessed, there should be further inquiry into whether investors were harmed by the bank's misrepresenting its performance with inflated account numbers.
"I and perhaps some others will be sending letters to the [Consumer Financial Protection Bureau] to look at another harm that is harder to identify and that is consumers who have had their FICO scores hurt by this," said Sherman, who noted that consumers' credit scores can be docked for having a high credit card count and may have been denied a mortgage or paying a higher rate because their credit score was tarnished.
"'Too big to fail' appears to be not only 'too big to jail' but also 'too big to manage' and also too big a risk for our financial system," Sherman said.
