Wells Fargo, CFPB Cited in U.S. Senate Race in Pennsylvania

By Jeff Bater

Sept. 21 — The Consumer Financial Protection Bureau has become a campaign issue in a close U.S. Senate race in Pennsylvania, where Democrats are questioning incumbent Pat Toomey's commitment to consumers amid the Wells Fargo crackdown.

Democratic challenger Katie McGinty joined Sen. Elizabeth Warren (D-Mass.), who is a champion of the embattled agency, on a media call Sept. 21 criticizing Toomey, a member of the Senate Banking Committee.

Toomey sharply questioned Wells Fargo CEO John Stumpf at a Sept. 20 committee hearing examining revelations that bank employees secretly opened more than 2 million unauthorized accounts to hit sales targets, which prompted $185 million in fines from the CFPB, the Office of the Comptroller of the Currency and the city of Los Angeles.

Toomey attacked the company's sales culture and accused the financial giant of fraud, but Warren and McGinty questioned his commitment to consumers, noting he has supported legislation that would curb the CFPB’s independence.

‘Horse Thief.'

“Pat Toomey makes a big show of criticizing a horse thief while he tries to fire the sheriff for doing his job. Just how does Pat Toomey plan to prevent massive bank fraud like Wells Fargo when he's trying to pull the ‘P' out of the CFPB,” Warren told reporters.

Toomey co-sponsored legislation (S. 1383) introduced last year by Sen. David Purdue (R-Ga.) that would bring the CFPB under the annual congressional appropriations process. Currently, the bureau receives direct funding from the Federal Reserve. Purdue introduced a similar bill (S. 3318) on Sept. 13.

Toomey's office released an e-mailed statement to Bloomberg BNA after the McGinty-Warren media call, saying he “believes that the guilty employees and negligent management should be held accountable.”

“But let’s be clear. CFPB did not discover the wrongdoing by Wells Fargo,” the Toomey statement said.

“Unlike the OCC and the L.A. City Attorney, the CFPB continues to refuse to provide evidence that it played any role in unearthing or cleaning up the mess other than collecting the $100 million fine from the bank – not a penny of which the CFPB will give to the victims,” Toomey’s statement said.

If poll numbers are any indication, Toomey is in the middle of a tough re-election battle. A Morning Call/Muhlenberg College poll released Sept. 17 showed McGinty, a former Clinton administration and Pennsylvania state environmental official, ahead of Toomey, 43 percent to 38 percent.

At the national level, Democratic presidential nominee Hillary Clinton defended the CFPB in an open letter Sept. 20 on Wells Fargo, in which she said, “I’ll protect the CFPB and make sure it can continue its essential work on behalf of the American people.”

House Hearing

Democrats and Republicans will have a chance to spar over Wells Fargo and the CFPB next week.

The House Financial Services Committee plans to hold its hearing on the scandal Sept. 29. Stumpf has been invited to testify — and the hearing will also discuss settlement agreements with the Los Angeles city attorney and federal regulators.

“We recognize that his (Stumpf's) Senate hearing was hostile,” Cowen and Company analyst Jaret Seiberg wrote in a note. “The House hearing could be even tougher. As a general rule, House members are more vocal and more radical. There will be multiple lawmakers who subject Stumpf to Elizabeth Warren-like cross examinations.”

To contact the reporter on this story: Jeff Bater in Washington at jbater@bna.com

To contact the editor responsible for this story: Mike Ferullo in Washington at mferullo@bna.com

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