April 13, 2024

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US Senators Call For Wells Fargo CEO Removal

U.S. Sens. Elizabeth Warren (D-Mass.) and Sherrod Brown (D-Ohio) on Friday urged the ousting of Wells Fargo and Co.’s chief executive Tim Sloan.

The two lawmakers sent a letter to the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau, calling on the agencies to “use their powers” under a consent order with Wells Fargo to remove Tim Sloan as the bank’s leader.

The two say the move is necessary after Wells Fargo allegedly failed to comply with the order and neglected to “adequately compensate customers harmed by its auto loan scandal.” They also wrote to Federal Reserve Board Chairman Jerome Powell to request he keep a restriction on Wells Fargo’s business growth until Sloan’s removal. The restriction was placed in 2018.

Wells Fargo did not respond to a request for comment in what is the latest turn in an ongoing stream of bad news for the company since 2016.

It was that year that the bank was ordered to pay $185 million in fines and $5 million to its customers following a scandal in which accounts were created without consumers’ consent — at a cost. In the years following, that scandal grew as more unwanted accounts were allegedly uncovered, and other controversies surfaced, such as accusations the bank improperly repossessed servicemembers’ cars and trucks, charged auto-loan customers for insurance without telling them, and improperly made borrowers pay for “mortgage-rate lock” extensions.

But it was a February Capital Forum report that was used by the senators to justify seeking Sloan’s exit.

“According to the report, Wells Fargo’s steps to identify and compensate affected customers were rushed and disorganized,” said the two in a press release that also calls on Wells Fargo to hire an independent third party to monitor its remediation program.

Nearly a year ago, the Bureau of Consumer Financial Protection along with the Office of the Comptroller of the Currency reached a settlement with Wells Fargo Bank over its auto-loan and mortgage practices, resulting in the consent order.

Wells Fargo was ordered to “remediate harmed consumers and undertake certain activities related to its risk management and compliance management” and was hit with a penalty from the two agencies totaling a $1 billion.

The bank was later hit with additional fines by the Justice Department for “misrepresenting loan quality in mortgage-backed securities,” according to earlier reporting by TheStreet.

Wells Fargo shares closed down 3.1% at $48.31 on Friday.

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