Waters: GAO Report is More Evidence That Regulators Need to Get Tougher on Megabanks

WASHINGTON, D.C. - Today, following the Government Accountability Office’s (GAO’s) release of a report entitled “Large Bank Supervision: Improved Implementation of Federal Reserve Policies Could Help Mitigate Threats to Independence,” Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, made the following statement:

“This report is yet more evidence that the Federal Reserve and other prudential regulators need to take the supervision of large banks much more seriously. Regulators must strengthen the independence of their large bank supervisory programs and fully enforce the law when it comes to wrongdoing by megabanks.

“The top offender in this category is Wells Fargo, a bank with an egregious pattern of ripping off and harming their customers. Wells Fargo has opened millions of fraudulent accounts without their customers’ consent, enrolled consumers in life insurance policies without their consent, fraudulently modified mortgages to collect government subsidies, delayed mortgage closing dates to charge customers additional fees, and forced nearly a million Americans to purchase auto insurance they didn't need. That’s just a partial list of their offenses in recent years. It’s very clear that this bank needs to face real consequences for their constant wrongdoing.

“In October, I introduced the Megabank Accountability and Consequences Act, a bill to require banking regulators to severely penalize megabanks like Wells Fargo that repeatedly harm consumers. Penalties would include restricting certain lines of a bank’s business, removing and banning culpable executives from working at another bank, or winding down a bank. These are the sorts of actions that prudential regulators must take when a megabank repeatedly runs afoul of consumer protection laws.”

The GAO report makes a series of recommendations “to help improve the Federal Reserve’s implementation of [enterprise risk management] and to strengthen internal controls to more effectively mitigate risks of regulatory capture and threats to supervisory independence across the [Large Institution Supervisory Coordinating Committee (LISCC)] program.”

The GAO report was requested by Ranking Member Waters and Congressman Al Green (D-TX), Ranking Member of the Subcommittee on Oversight and Investigations.

In October, Ranking Member Waters introduced the Megabank Accountability and Consequences Act, which requires the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board to fully utilize their authorities to shut down megabanks that repeatedly harm consumers and hold culpable executives accountable.

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