Banking Committees Probe Wells Fargo Report, Reforms
SACRAMENTO, CA – Senator Bill Dodd (D-Napa) and Assemblymember Matt Dababneh (D-Encino), held a joint oversight hearing to probe the recently released report on Wells Fargo’s fake account scandal. The hearing brought together the Senate and Assembly Banking Committees on Wednesday to scrutinize the Sales Practices Investigation Report prepared for Wells Fargo’s board of directors. That report identified serious issues involving the company’s sales culture, performance management metrics, and levels of internal oversight.
“Wells Fargo has publicly apologized, but it will take significant reforms and follow-through for Wells Fargo to earn the public’s trust,” said Senator Dodd. “It is critical that victims are made whole and that concrete steps are taken to ensure it doesn’t happen again.”
“The information received in today’s hearing will help the legislature provide important consumer protections as we move forward and prevent this type of fraud and deception from occurring in the future,” stated Assemblymember Dababneh. “This is why I am co-authoring SB 33, to make sure consumers who are victims in these situations are not forced into arbitration and have access to our justice system.”
In December, Senator Dodd introduced a bill to help victims of mass fraud and identity theft. Senate Bill 33, co-authored by Assemblymember Dababneh, would eliminate the use of forced arbitration clauses in fraudulently created contracts. Wells Fargo had used arbitration clauses to keep claims out of court. By allowing victims to access public courts, the bill empowers them to recover damages and can help prevent more victims by putting an end to illegal business practices. That bill is currently awaiting a vote by the state Senate.
Testifying at the hearing were Anat Admati, Professor of Finance and Economics at the Stanford University Graduate School of Business, Tim Schaefer, Deputy Treasurer in the Office of Treasurer John Chiang, and Aeisha Mastagni, Portfolio Manager for Corporate Governance with the California State Teachers’ Retirement System.
“The report before us describes symptoms of a much deeper and much more pervasive governance problem at Wells Fargo and beyond,” said Professor Anat Admati. “The report is full of flimsy excuses that leave numerous questions about why what happened happened as it did and in the timing it did. It fails to see the true and much deeper roots of the problem. The reality is that to a disturbing degree Wells Fargo and institutions like it achieve their financial success by practices that expose the public to excessive harm and risk.”
Senator Dodd and Assemblymember Dababneh have closely monitored these issues since state and federal regulators announced enforcement actions against Wells Fargo last September. At the hearing, both legislators expressed that they are troubled by Wells Fargo’s misuse of sensitive customer information and the slow reaction of Wells Fargo’s management to halt the inappropriate activity. The Sales Practice Investigation Report prepared for the Wells Fargo Board of Directors can be found here.
"I am resolute in holding Wells Fargo accountable for its latest marketing slogan, 'On the side of customers," said state Treasurer John Chiang in a statement issued following the hearing. "This means making full restitution to Californians victimized by the bank's fraudulent practices, a complete re-tooling of a corporate culture that valued profit over principles, and letting go of the morally-reprehensible position that its victims cannot have their day in court."