The Wells Fargo illegal accounts scandal is more evidence that big Wall Street banks need to be broken up, according to one lawmaker.
Amid withering criticism from both Republicans and Democrats of the nation’s second-largest bank by assets, Rep. Brad Sherman said the bank’s conduct and culture duped investors and turned workers into criminals.
“We have institutions that were too big to fail. In 2008, we found they that were too big not to bail,” the California Democrat said during an acrimonious hearing with Wells Fargo CEO John Stumpf. “We now learn that they’re too big to manage, too big to regulate. It’s time to break them up.”
Wells has paid a $185 million penalty in connection with civil charges that it illegally enrolled customers in bank programs without their consent. The Wells board is looking to claw back $41 million in stock rewards from Stumpf.
The bank fired 5,300 workers in connection with behavior that stretched back to 2009.
“You fired 5,300 people, you took 5,300 good Americans and turned them into felons with a system that you created, benefited from and drove your stock price up by bragging about your levels of new accounts,” Sherman said.
Stumpf took issue with Sherman’s characterization. The CEO said during the hearing that he accepted responsibility, while denying that there were systemic issues with the bank.
Rep. Michael Capuano, a Massachusetts Democrat, predicted there would be more ramifications for the bank. He said Stumpf and some of his colleagues are guilty of conspiracy to commit fraud, conspiracy to commit identify theft, racketeering and “probably a dozen other crimes.”
“Your problem is coming. It’s not today. You think today’s tough? It’s coming,” Capuano said. “When the prosecutors get hold of you, you’re going to have a lot of fun.”