Wells Fargo has faced numerous challenges regarding their sales practices with clients. But perhaps the issue is not specifically with their sales efforts but rather a more general internal cultural issue that does not sufficiently value clients and transparency. As reported in the New York Times, the US House of Representative Financial Services Committee issued a report Wednesday that noted an individual at the Consumer Financial Protection Bureau, the regulator responsible for monitoring Wells Fargo, “privately offered reassurances to Wells Fargo’s chief executive at the time that there would be “political oversight” of its enforcement actions.”
The New York Times further noted: “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.” These private assurances have not remained private with this congressional investigation.
That leaves for me the question as to why the individuals involved both at Wells Fargo and the CFPB thought it was a good idea not to have the sun shine on those actions that were not in the clients’ interests. And leads me to conclude that transparency for both banks and their regulators is a key element for ensuring that banks serve society.
Update: 9 March 2020:
Since I published this post the Wells Fargo story continues to develop. Slate had an extensive article highlighting the many times there have been regulatory issues. As noted in Slate: “Good Jobs First’s Violation Tracker lists 136 separate fines and penalties paid by the bank since 2000, totaling about $17.3 billion.” Not a small sum of money nor just a few violations. Furthermore today it was announced that two board members will resign.
