Sen. Elizabeth Warren renewed her attack on Wells Fargo & Co., urging the Federal Reserve to remove the 12 directors who were on the board when bank employees set up legions of fake customer accounts.
Congress empowered the Fed to remove board members if they violate the law or engage in unsafe business practices that cause banks with federal deposit insurance to suffer losses, Warren, D-Mass., wrote in a letter Monday to Fed Chairwoman Janet Yellen.
"I urge you to exercise your legal authority to remove the holdover Wells Fargo board members," Warren wrote. "The board did nothing to stop rampant misconduct" that led to "more than 5,000 bank employees creating more than 2 million fake accounts over four years" between 2011 and 2015, Warren added.
Wells Fargo has faced a barrage of criticism from Warren and others since it was fined $185 million in September for opening retail bank accounts without customer approval. The scandal triggered public complaints and congressional hearings, prompting the San Francisco-based bank to name new leaders, claw back pay and find new ways to encourage sales. In April, shareholders voted narrowly to re-elect all 15 board members after some proxy advisers and large investors had urged that the majority be voted off.
Wells Fargo has "taken many actions in response to its retail sales practices, including changes in senior leadership, executive accountability actions and numerous steps to ensure we make things right with any customer affected," spokeswoman Jennifer Dunn said in a statement. "That work continues and remains a core part of our efforts."
Warren's real goal probably isn't to oust the firm's board, but to use the Wells Fargo scandal as a means of rebutting Republican calls for broad bank deregulation, said analyst Isaac Boltansky, at Compass Point Research & Trading.
"It's about defending the regulatory regime," he said in a phone interview. "Senator Warren's big fear is that the call for medium-size and smaller bank deregulation will be used as a Trojan horse" for easing rules against the biggest lenders.
Both parties have tried to leverage the scandal to further political goals. GOP Rep.Jeb Hensarling, R-Texas, who chairs the House Financial Services Committee, has used it to criticize the Consumer Financial Protection Bureau, contending its regulators should have spotted the fraud before the bank flagged it. On the Democratic side, Warren said during hearings last year that former Chief Executive John Stumpf should face criminal prosecution, while Rep. Brad Sherman, D-Calif., is sponsoring a bill to prohibit banks from using arbitration agreements to limit consumers' ability to pursue claims.
Meanwhile, the federal government's consumer financial watchdog is defending his handling of the Wells Fargo scandal in the face of GOP 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," he wrote last week to Hensarling.
The letter is the latest salvo in the acrimonious 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 gutting the bureau's power.
Hensarling's bill, which passed the GOP-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 Los Angeles Times contributed to this report.