Today, at a press conference to unveil Congresswoman Maxine Waters’ (D-CA), Ranking Member of the Committee on Financial Services, groundbreaking legislation titled the Megabank Accountability and Consequences Act (H.R. 3937), Ranking Member Waters delivered the following remarks:
As Prepared for Delivery
Good afternoon, and welcome.
I would like to thank Representatives Green, Ellison, Kaptur, Sarbanes and Jayapal for being here today. I would also like to recognize the consumer groups in the room, including Americans for Financial Reform, Public Citizen, Allied Progress and the Center for Responsible Lending.
Since we first learned of Wells Fargo’s fraudulent account scandal, in which the bank opened up 3.5 million accounts without the knowledge of their customers, I have made it clear that I believe the bank needs to face real consequences for its deeply harmful behavior. Last week, I released a Democratic staff report examining Wells Fargo’s egregious consumer abuses.
This report is truly eye-opening. It shows that Wells Fargo has made a routine practice of ripping off and preying on their customers, in a seemingly never-ending avalanche of scandals in which servicemembers, minorities, homeowners, small business owners and many other consumers have been targeted and abused by the bank. In addition to the fraudulent account scandal, Wells Fargo has engaged in illegal student loan servicing practices and mortgage lending practices, charged customers for auto insurance policies they did not need, and charged inappropriate checking account overdraft fees.
Yet, the fines that prudential regulators have required Wells Fargo and other megabanks to pay for their wrongdoing have seemingly amounted to simply the cost of doing business. It is clear that steeper penalties need to be used when a megabank demonstrates a pattern of egregious consumer abuse. But the prudential regulators, which have the capability of shutting down a recidivist megabank, have not exercised that capability, even in the most appalling cases of repeated wrongdoing.
So today, I am introducing the Megabank Accountability and Consequences Act to require the federal prudential banking regulators to fully utilize existing authorities—such as the ability to shut down a megabank and ban culpable executives and directors from working in the banking industry—to stop megabanks that clearly and repeatedly engage in practices that harm consumers. The bill also clarifies and enhances the set of tools available to regulators to ensure that megabanks and their executives will be held accountable for repeatedly breaking the law and harming consumers.
The bill gives federal prudential banking regulators 90 days to review the megabanks they supervise that operate in the United States to see if they have engaged in a pattern of repeated law violations that harmed consumers. A megabank is defined in the bill as a global systemically important bank or GSIB. For any megabank determined to have any such violations, the federal prudential banking regulators must, within 120 days of enactment, initiate proceedings available through existing authorities to wind down the bank and bar responsible executives from working at another bank. This process is subject to judicial review, and the federal prudential regulators must testify before Congress to discuss their findings.
Going forward, the bill tasks the Consumer Financial Protection Bureau with issuing regulations to further define what constitutes a pattern or practice of violations of federal consumer protection laws by megabanks that warrants severe penalties, such as restricting certain lines of the bank’s business, removing and banning culpable executives from working at another bank, or winding down the bank. Federal prudential banking regulators must regularly review megabanks under their supervision, in consultation with the Consumer Bureau, and enforce severe penalties on any megabank that engages in a pattern or practice of violations of consumer protection laws.
Importantly, my bill would also enable the Consumer Bureau, states and local government authorities to petition the prudential regulators to hold a hearing on whether a megabank engaged in such consumer abuse. The prudential regulators themselves will now be accountable to Congress and the American public, and have to regularly determine that the megabanks are doing what they are supposed to do—serving their customers and not ripping them off.
The bill also heightens accountability for bank executives and directors. Executives and directors of all megabanks will be required to annually provide a written attestation that they have reviewed the bank’s lines of business and that the megabank is in substantial compliance with all applicable federal consumer protection laws. In addition, megabank executives and directors will be subject to enhanced civil and criminal liability for knowingly violating federal consumer protection laws.
It is time we truly hold megabanks that demonstrate a pattern of harming consumers accountable. These institutions must no longer be allowed to abuse hardworking Americans.
Thank you, and with that, I’m pleased to introduce Congressman Al Green, Ranking Member of the Subcommittee on Oversight and Investigations.