Takeaways from ex-Wells Fargo board members’ visit to Congress
WASHINGTON — House lawmakers once again aired their yearslong grievances with Wells Fargo in a hearing Wednesday that, this time, featured two former members of the embattled bank's board of directors.
Elizabeth “Betsy” Duke, who formerly chaired the board, and James Quigley resigned just days before testifying to the Financial Services Committee. Their abrupt departures followed a scathing House Democratic report that criticized Wells Fargo's board over its handling of the bank's efforts to comply with various regulatory consent orders.
While the criticism of Wells Fargo in the wake of the 2016 fake-accounts scandal has often been bipartisan, the hearing highlighted some partisan divisions in lawmakers' attitudes toward the bank nearly four years later. Still, lawmakers of both parties were critical of the decisions Duke and Quigley made as members of the board.
Here are some takeaways from Duke and Quigley's day on Capitol Hill.
Duke regrets comment revealed in report, but both witnesses defended board's actions
The Democrats’ report on Wells Fargo, which was released last week, brought to light a comment Duke had made questioning why she was being copied on messages from the Consumer Financial Protection Bureau. The report implied Duke was neglecting her duty to be accountable for the bank's regulatory compliance.
According to the report, Duke told a CFPB staffer, "Why are you sending it to me, the board, rather than the department manager?"
At the hearing, Duke said she “never should have” made those comments. Yet she also pushed back by taking issue with the approach of the CFPB staffer in question.
“The individual there, we did meet with him on numerous occasions,” Duke said. “I found him difficult. I found him not knowledgeable about what was going on in Wells Fargo. And I found that he did send us letters on details that really belong somewhere else.”
And in response to lawmakers' questions about the amount of time it has taken for Wells Fargo to address regulators' concerns and change its culture, Quigley touted the board's decision to bring in Charlie Scharf as CEO.
“While there is more to be done, undeniably, I believe Wells Fargo is making progress,” Quigley said. “First, the board oversaw a huge investment to strengthen the compliance function of Wells Fargo. … I personally devoted much of 2019 to leading the search for a new CEO and I am confident that we selected the best candidate to lead the bank.”
GOP members questioned the purpose of the hearing
At a hearing Tuesday with Scharf, Rep. Patrick McHenry, R-N.C., questioned the necessity to bring in the board members to appear before the committee after they had already resigned. He suggested the Democratic side was just trying to score political points.
“Tomorrow we are going to drag up two former board members for the sole purpose of embarrassing them,” said McHenry, the committee's top Republican.
At Wednesday’s hearing, McHenry criticized Democrats for using Wells Fargo's many scandals to bolster their own policy aims. He referenced a famous line by former Obama Chief of Staff Rahm Emanuel that "you never want a serious crisis to go to waste."
McHenry said the Democrats were doing Emanuel "proud" by trying to advance proposals that were not related to Wells' issues.
“The Democrats … rolled out policy proposals that would do everything from expand the scope of CFPB’s powers to automatically downsize certain large banks,” McHenry said. “The problem with those proposals is that they lack any connection to the evidence before us.”
Rep. Andy Barr, R-Ky., agreed that the committee should be focused on other issues, rather than spending time questioning two former board members.
“There are pressing issues that are affecting our economy that this committee should focus on,” Barr said. “Instead we are spending time, energy and resources speaking to two former board members of a company whose CEO testified yesterday.”
Members of both parties still have concerns about where Wells Fargo goes from here
Democrats and Republicans largely disagree about whether Wells Fargo’s size has had anything to do with its regulatory problems.
But there were two notable points of agreement between the two sides at the hearing Wednesday.
The first was related to compensation of board members.
In response to Waters, Duke said that she was compensated roughly $630,000 in the past year as chair of the board, and Quigley said he was paid roughly $417,000.
Rep. Roger Williams, R-Texas, criticized their compensation given their lack of knowledge about a number of the bank’s issues.
“That ‘I don’t know’ attitude has really run rampant and I hope that your leadership level will stop that,” Williams said. “And I still can’t believe how much money they pay you as board directors.”
Waters said, “Me either, Mr. Williams.”
Meanwhile, committee members from both parties complained that no higher-level executives at Wells have yet faced criminal prosecution.
Rep. Al Green, D-Texas, said that if a small institution committed similar conduct to Wells Fargo, the people responsible would be prosecuted.
“Is it the case that if you become so big and you create such a grand scheme that you are beyond the law?" Green said. “The law ought to apply to Wells Fargo … just as it would apply to any small bank in this country. Wells Fargo cannot be too big to prosecute. It can’t be too big to jail.”
And Rep. Warren Davidson, R-Ohio, criticized Quigley for not saying whether those responsible for the phony-accounts scandal should be prosecuted. (Duke said she thinks individuals should be prosecuted.)
“It wasn’t the ATMs, it wasn’t the conference rooms that committed crimes,” Davidson said. “Someone that worked for Wells Fargo committed crimes. … I don’t know what to say. I’m glad you’re not on the board there, frankly.”