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Wells Fargo may face more than financial penalties for ‘staggering fraud’

Posted at 11:44 AM, Sep 16, 2016
and last updated 2016-09-16 11:44:35-04

NEW YORK — Wells Fargo’s headaches are quickly piling up. The bank is now facing a potential grilling in front of the powerful House Financial Services Committee over the opening of millions of fake accounts.

Rep. Maxine Waters, a Democrat from California, where Wells Fargo is based, on Friday signaled that the House Financial Services Committee will hold a Wells Fargo hearing.

Waters said during a press call that Republican Rep. Jeb Hensarling, chairman of the committee, personally assured her that he’s committed to holding a hearing on the scandal.

Hensarling’s office did not respond to a request for comment on when a hearing will be held. It’s not clear whether embattled Wells Fargo CEO John Stumpf will be asked to testify like he’s expected to at a Senate hearing Tuesday.

“I remain concerned that mere financial penalties may not be enough to prevent this from happening again,” Waters said in a statement last week, after Wells Fargo agreed to pay $185 million in fines over the fake accounts scandal.

The issue is likely personal for Waters as her district includes parts of Los Angeles, the city that filed a landmark lawsuit against Wells Fargo in 2015. The scandal was first brought to light by the L.A. Times, which in 2013 chronicled the pressure-cooker sales culture at Wells Fargo that led to the illegal activity.

Wells Fargo is grappling with further fallout. The Department of Justice recently issued subpoenas to Wells Fargo as part of a federal investigation, a U.S. official told CNN on Wednesday.

And on Tuesday, Stumpf will be in the hot seat as Elizabeth Warren and her colleagues on the Senate banking committee hold a Wells Fargo hearing. Warren has already suggested she’s skeptical Wells Fargo management was unaware of the illegal activity of this scale.

“This was a staggering fraud,” Warren told CNN recently. “Come on…this went on for years and they didn’t smell anything in the air about fake accounts?”

If Wells Fargo senior executives were truly in the dark, Warren also said that means “this is simply a bank that is too big to manage.”