Watchdog on defense
Richard Cordray, head of consumer bureau, says he’s ‘quite proud’ of Wells Fargo probe.
WASHINGTON — The federal government’s consumer financial watchdog is defending its handling of the Wells Fargo & Co. unauthorized accounts scandal in the face of Republican charges that the agency failed to catch the problem and has stymied a congressional investigation into how it handled the case.
Richard Cordray, director of the Consumer Financial Protection Bureau, said he is “quite proud” of the team that looked into Wells Fargo’s sales abuses.
“Clearly our team, along with our partners, has performed a tremendous public service here,” Cordray wrote last week to Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee.
The letter is the latest salvo in a battle between Cordray, a Democrat who heads the powerful agency created in the aftermath of the 2008 financial crisis, and Hensarling, who has called for President Trump to fire Cordray and is pushing legislation that would gut the bureau’s power.
Hensarling’s bill, which passed the Republican-controlled House on a party-line vote this month, would strip the bureau of its ability to closely monitor financial firms for compliance with consumer protection laws and eliminate public access to the bureau’s database of consumer complaints, among other changes.
The letter was first reported by the Wall Street Journal.
In September, Wells Fargo agreed to pay $185 million to settle investigations into its sales practices by the bureau, the Office of the Comptroller of the Currency and Los Angeles City Atty. Mike Feuer. The bank did not admit any wrongdoing but said its employees had opened millions of checking, savings and credit card accounts that customers never authorized.
The scandal was made public by the Los Angeles Times in December 2013.
Congressional Republicans have said the consumer bureau failed to catch Wells Fargo’s problems until The Times brought it to light and Feuer began an investigation that culminated in a 2015 civil lawsuit.
“The only conclusion there is to draw regarding the Wells Fargo scandal is the CFPB was asleep at the wheel,” Rep. Ann Wagner (R-Mo.) told Cordray during a contentious April hearing. “The L.A. Times, the [comptroller’s office] and the L.A. city attorney all got there before you did, Mr. Cordray.”
Cordray has testified that the bureau began looking into Wells Fargo’s practices after receiving whistleblower tips in mid-2013.
The House Financial Services Committee has been investigating Wells Fargo’s practices and the performance of regulators in the matter. On June 6, the committee staff issued a report saying the bureau has produced no records indicating that it began investigating the matter before Feuer filed his suit.
The report threatened Cordray with contempt of Congress for not providing documents related to the bureau’s Wells Fargo investigation that the committee had subpoenaed.
The report said the bureau had turned over just 1,010 pages of records that duplicated those produced by the OCC and Wells Fargo. And the report said it has received no documents corroborating Cordray’s statements that the bureau had “engaged in supervisory activity” regarding Wells Fargo’s sales practices before Feuer filed suit against the bank in May 2015.
In his letter to Hensarling on Wednesday, Cordray said the bureau had provided the committee with more than 57,000 pages of documents “in an effort to comply with the committee’s broadly worded requests.”
Cordray said the bureau’s supervision of Wells Fargo’s practices began before it formally contacted the bank about the problems. Cordray said that he and the committee staff “seem to have differing interpretations of what is meant by the phrase ‘supervisory activity.’ ”
“We did not contact Wells Fargo directly regarding these practices until the spring of 2015,” Cordray wrote. But the bureau began internal work on the matter in 2014 and its regional supervisory staff made the decision to schedule an examination of Wells Fargo’s practices in 2015.
Jeff Emerson, a spokesman for Hensarling, said Monday that the explanation fell short and “calls into question whether Director Cordray misled Congress.”
“The committee cannot complete its Wells Fargo investigation until Director Cordray produces all agency records subpoenaed by the committee,” Emerson said. “If Director Cordray truly wishes to correct the record, he should stop ignoring his legal obligations. What is he trying to hide?”
In the letter, Cordray more broadly defended his agency, noting that it only began operation in July 2011 and its staffing was not up to full speed until 2014. Wells Fargo has said the problem of unauthorized accounts began in 2002.