Fourteen senators including Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., sent a letter Wednesday to Attorney General Loretta Lynch calling for the Justice Department to investigate possible criminal wrongdoing by senior executives at Wells Fargo.
The group of senators, led by Sen. Mazie K. Hirono, D-Hawaii, asked Lynch to not just hold Wells Fargo accountable as a corporation, but also to "prosecute individual executives who may have broken the law."
"We are not in a position to determine if any of the senior executives at Wells Fargo committed criminal conduct. That is ultimately the job of the Justice Department and courts," the letter said. "But these facts raise questions about whether senior executives, including Mr. Stumpf, knowingly allowed illegal conduct to continue.
The Justice Department is already investigating Wells after receiving a criminal referral from the Consumer Financial Protection Bureau last month. The San Francisco bank paid $190 million to regulators and the Los Angeles City Attorney's office after revelations that it fired 5,300 employees over a five-year period for illegally opening 2 million bank and credit card accounts without consumers' knowledge.
The letter cites a memo written last year by Deputy Attorney General Sally Yates that has served as a blueprint for holding individual executives accountable for misconduct. The letter also notes that Justice failed to prosecute any high-level executives in the wake of the financial crisis.
"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,'" the letter said.
The senators' letter quoted a portion of the Yates memo that stated, "The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom."
Wells did not disclose to investors or to the Securities and Exchange Commission that it had been sued in 2015 by the L.A. city attorney.
When Wells' CEO John Stumpf testified before the Senate Banking Committee last month, he said Wells did not think the investigation or the settlement were "material" to the bank.
The letter said that Stumpf's testimony "raised serious questions that demand additional answers and point to potential individual wrongdoing."
Stumpf continued "to personally benefit by pitching Wells' inflated retail account numbers to investors," the letter said.
At the Senate hearing, Warren called for Stumpf to resign after comparing his actions to those of a bank teller who had stolen $20 bills from a cash drawer. The letter made the same comparison.
"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," the letter said. "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. It's no wonder that Americans are skeptical of the effectiveness of our criminal justice system."
Lawmakers are rankled that banks regularly settle fines with the government that are paid by shareholders, not executives, and that the fines pale in comparison to the profits banks generated from illegal activity.
The letter also noted that Justice has routinely failed to hold individual executives accountable.
"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," the letter said. "Americans are rightly frustrated when they see that justice for the wealthy and powerful is very different than justice for everybody else."
Separately, Rep. Maxine Waters, D-Calif., urged financial regulators to strengthen a proposed clawback rule on when a company can revoke bonuses from senior executives.
A letter signed by 10 Democrats on the Housing Financial Services Committee cited the phony account openings at Wells Fargo as the reason to strengthen a proposal to rein in incentive-based compensation plans at financial institutions.
Lawmakers are concerned with the "excessive level of discretion" given to companies in clawing back bonus and other compensation for misconduct, fraud or misrepresentation.
