Lawmakers angry about Wells Fargo want to put down the watchdog
Well, it didn’t take long for the Wells Fargo scandal to become a partisan issue.
In the congressional hearings and throughout the media, for awhile at least, both aisles exhibited a united front against the bank’s fraudulent banking practices, which involved 2 million accounts being created without consumer permission.
But in the Financial Services Committee’s hearing with Wells Fargo CEO John Stumpf on Thursday, Republican lawmakers went after the government watchdog agency created for the consumer’s protection by the Dodd-Frank Act of 2010 after the financial crisis.
Several representatives volleyed attacks at the Consumer Financial Protection Bureau (CFPB), including the chair of the committee, Rep. Jeb Hensarling of Texas. In his remarks, Hensarling went after the CFPB and the Office of the Comptroller of the Currency, an independent Treasury bureau tasked with regulating national banks.
“Perhaps our federal regulators deserve a pat on the back, but perhaps they deserve a swift kick on the backside,” he said. “We’ll find out which.”
Hensarling did not elaborate what this swift kick to the backside would look like, but the CFPB has been under siege by anti-regulation Republican lawmakers since its creation, who have been looking to strip it of funding, reduce its power, or kill it outright, as Ted Cruz proposed with legislation last year.
The reasons frequently cited for killing the CFPB? That the CFPB’s regulation hurts economic growth and objections over the CFPB’s executive power, which Democrats say it needs to act swiftly, is unchecked. And now, because it didn’t find out about Wells Fargo’s sales tactics earlier.
“Once again the financial regulators were completely asleep at the wheel as massive fraud was occurring,” said Rep. Scott Garrett of New Jersey, turning to the regulators after expressing outrage at the bank’s fraud. “If you look at one of those, the CFPB…they completely blew it.”
On CNBC, Los Angeles City Attorney Mike Feuer said the CFPB reached out when the city filed its initial suit into the bank’s conduct and commended the agency for its work.
Garrett or Hensarling didn’t explicitly say once again they intended to deregulate banking in the face of scandal, but they sure implied it. While Stumpf was the one in front of them in the hearing, the lawmakers shifted blame away from the CEO and onto the regulators, letting him off the hook for 100% of the responsibility.
But representatives like Garrett has worked to declaw the CFPB since its creation. “We don’t need a CFPB,” he said in 2010. And now, based on the hearing, it’s unlikely he supports strengthening it, even though there beefed-up policing is clearly warranted.
It sounds like a big contradiction: Using a financial scandal to argue for stripping regulation, and it was shared by many lawmakers, including Missouri’s Blaine Luetkemeyer and Ann Wagner.
Consumerist, a consumer advocacy website, sought to explain why. In a post after the hearing, the website pointed to information gathered from OpenSecrets.org, a non-partisan research group that tracks money in politics, that showed Hensarling had received $33,000 from Wells Fargo and its executives since 2011 and more than $500,000 from the financial industry during this election cycle.
Ditto for Garrett, who had received $20,250 from Wells Fargo and its executives since 2011, and $350,000 during this election cycle from the financial services industry.
Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumerism, tech, and personal finance. Follow him on Twitter @ewolffmann.
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