Two former board members of Wells Fargo, Elizabeth “Betsy” Duke and James Quigley, faced bipartisan criticism from the members of the House Financial Services Committee in a Tuesday hearing, the latest in a long series of Congressional castigation of the bank.
The chair of the committee, Rep. Maxine Waters, D-Calif., had asked for the pair to resign after the release of a report by the panel’s Democrats last week which found that Wells Fargo’s board had failed to do proper oversight of the bank.
For over a decade, Wells Fargo engaged in widespread sales misconduct, most prominently creating millions of fake accounts in customers’ names without their consent. Currently, the bank is restricted from growing past its 2017 size by the Federal Reserve as punishment for the practices.
On Sunday, ahead of Wednesday’s testimony, the pair, who had both been on the board since before the scandal was widely known, resigned.
While there was some debate regarding whether the pair would testify after their resignations, the testimony continued as scheduled.
“Their resignations do not absolve them of their failures,” said Waters. “While Ms. Duke and Mr. Quigley said they resigned to ‘avoid distraction,’ let me be clear that this is not a distraction — we are examining misconduct and dereliction of duty”.
Evidence in the report, and in a report released by the committee’s Republicans, indicate that regulators didn’t think Duke, who had served as chair of the board since 2018, and the board were an effective check on the bank.
Duke supported former CEO Tim Sloan even when regulators were clear that they wanted him gone, according to the reports, and told one regulator that she didn’t want to be included on important communications between the bank and the agency.
Recently, the focus in the Wells Fargo fake accounts scandal has shifted from the bank’s management to the board’s oversight of that management.
The two Congressional reports found that the bank’s board did not fulfill its role as a check on the management of Wells Fargo.
“It’s clear from the documents that the majority and the minority have that we have the same findings of facts,” said N.C. Rep. Patrick McHenry of Cherryville, the top Republican on the panel. “There are severe deficiencies in management practices, they were unique to Wells Fargo and unique failures of this board of directors.”
From 2002 to 2016, Wells Fargo committed a wide range of sales misconduct, most prominently creating millions of fake accounts in customers’ names without their consent. In February, the bank agreed to a $3 billion settlement with the federal government to resolve the probes into the practice, and, in settling, acknowledged many of the practices.
‘I did my very best’
For the most part, the former board members defended their tenures.
Quigley, a former Deloitte CEO, said, “I know what I’ve done as a board member of Wells Fargo. I am comfortable with that work and the way that I performed that role. I did my very best. I could do nothing more.”
Duke said she regrets telling a regulator, “Why are you sending this to me?” when sent messages regarding supervision of the bank when she was vice-chair of the board. “I know better than to do that,” she said.
Although, she added, the individual to which the message was sent was “difficult” and “not knowledgeable about what was going on in Wells Fargo.”
On Tuesday, the CEO that Quigley and Duke picked to run the bank last year, Charlie Scharf, testified before the panel. For the most part, he dodged the hostility that his predecessors faced when testifying to Congress.
Both Democrats and Republicans expressed optimism towards his tenure. But such optimism was not reserved for Quigley and Duke.
“Something is rotten in the cotton here. You all are not coming with the truth. On yesterday, we spoke with your chief executive officer, he had an excuse,” as he was recently hired, said Rep. David Scott, D-Ga.
“But you two have been on this board throughout the entire germination of this shameful attack on the trust and confidence of the American people and your bank,” he said. “What a sorry excuse for a board.”
Headquartered in San Francisco, Wells Fargo has 27,000 Charlotte employees, a legacy of the bank’s purchase of Wachovia in 2008.
©2020 The Charlotte Observer (Charlotte, N.C.)