Report: The CFPB Has Some Explaining to do on Botched Wells Fargo Investigation

The Consumer Financial Protection Bureau–you know , the Elizabeth Warren brainchild that was supposedly set up  to protect consumers–appears to have botched the investigation and subsequent handling of one of the biggest consumer rip-offs in recent memory.

A House report on CFPB asks,"Did the CFPB Let Wells Fargo 'Beat the Rap'?" in the matter of the fraudulent accounts that some Wells Fargo reps set up in the names of unknowing bank customers. The report was issued by the House Financial Services Committee, which is chaired by Rep. Jeb Hensarling.

The report has not been officially adopted and may not reflect the views of all the committee members, but it is a fascinating account of how CFPB reportedly let Wells Fargo off the hook, for example, allowing the bank to settle for one cent on the dollar (a decision that was never explained, according to the report).

The report could be bad news for the virtually fireproof director, Richard Cordray, whom many Republicans would like to see gone from the job. An excellent piece in the American Banker summarizes the House report:

Consumer Financial Protection Bureau Director Richard Cordray allegedly misled Congress about the agency's investigation into Wells Fargo's illegal sales practices and may have rushed a settlement with the bank, according to a new report by the Republican staff of the House Financial Services Committee.

The 32-page report, released Tuesday, says that GOP staff could not corroborate Cordray's claim in congressional testimony that the CFPB was actively investigating Wells' illegal sales practices prior to May 4, 2015, when the Los Angeles city attorney's office filed its complaint against the bank. The report also said that CFPB could have demanded as much as $10 billion from Wells as a result of its phony-accounts scandal, but ultimately settled for $100 million because it wanted to close out the case.

The report alleges that the CFPB never conducted its own investigation but rather "relied primarily, if not exclusively, on the PricewaterhouseCoopers" report.

"Internal CFPB records obtained by the committee raise grave questions as to whether Director Cordray, other senior CFPB officials, and CFPB oversight attorneys engaged in actions that had the effect of obstructing the committee’s lawful oversight related to the Wells Fargo account scandal," the report stated.

That included withholding key information, said the report, which was prepared under the auspices of House Financial Services Committee Chairman Jeb Hensarling. Previous reports by the panel staff have threatened to hold Cordray in contempt for failing to turn over crucial documents.

According to Dodd-Frank, which set up the CFPB, Cordray can only be fired "for cause." If some of the questions raised in this report turn out to be true, Cordray might find himself looking for a new job.