Even after regulators fined Wells Fargo $1 billion in 2018 for misdeeds including creating fake accounts in its customers’ names, the bank was facing a slew of other investigations.
House Democrats say the bank found an ally in Eric Blankenstein, a political appointee high up in the Consumer Financial Protection Bureau, the agency created to guard against the abuse of mom-and-pop customers.
Mr. Blankenstein, an enforcement official at the agency, privately offered reassurances to Wells Fargo’s chief executive at the time that there would be “political oversight” of its enforcement actions, according to a report issued Wednesday by the House Financial Services Committee. The report said the agency had promised that the unresolved regulatory matters, such as an inquiry into the bank’s aggressive practice of closing customers’ accounts, would be settled in private, without further fines.
Those findings and others were released after an investigation by Democrats on the committee. Wells Fargo’s recently appointed chief executive, Charles W. Scharf, is set to testify next week before the committee, which is led by Representative Maxine Waters of California. The bank’s board chairwoman, Betsy Duke, is also expected to testify.
A Wells Fargo spokesman did not immediately respond to a message seeking comment.
According to the report, Mr. Scharf’s immediate predecessor, C. Allen Parker, explicitly told a member of the bank’s board in May that Mr. Blankenstein had promised him that the Trump administration would continue to smooth the way for the bank — even after Mr. Blankenstein resigned that week over racist statements he had made as a law student.
“Eric also assured me that there would continue to be ‘political’ oversight of the engagement with us, although he wasn’t yet sure who his successor would be,” Mr. Parker wrote to the board member, James Quigley.
Given their conversations with Mr. Blankenstein, the bank’s leaders were expecting to be able to resolve the active investigations with the agency in private, without paying any more fines. They expressed surprise, according to the report, when members of the agency’s staff said two months later that they were not aware of Mr. Blankenstein’s assurances.
The report also said Wells Fargo had dragged its feet on fixing internal controls and that Ms. Duke, while vice chairwoman, complained in 2017 about being included on emails from the consumer agency to the bank instructing it on how to improve its operations.
“This committee staff report shines a much-needed spotlight on ‘The Real Wells Fargo,’” Ms. Waters said in a statement Wednesday evening. She called the bank “a reckless megabank with an ineffective board and management that has exhibited an egregious pattern of consumer abuses.”
Less than two months after Mr. Blankenstein left the consumer agency, he was hired by the Department of Housing and Urban Development.
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