WASHINGTON, D.C. – U.S. Senator Angus King (I-Maine) today led a letter calling on the Federal Reserve Bank of San Francisco’s Board of Directors to not reappoint John Stumpf, the CEO of Wells Fargo, to another term on the Federal Advisory Council. The Council, of which Stumpf is currently a member, is responsible for consulting with and offering direct insight to the Board of Governors of the Federal Reserve System on a broad range of economic, monetary, and financial issues.

“It would be ironic if the Federal Reserve, a key federal banking regulator tasked in part with ensuring the fair and equitable treatment of consumers in financial transactions, continued to receive special insights and recommendations from senior management of a financial institution that just paid a record-breaking fine to the Consumer Financial Protection Bureau for ‘unfair’ and ‘abusive’ practices that placed consumers at financial risk,” Senator King and his colleagues wrote.

Senator King’s letter, which was also signed by Senators Elizabeth Warren (D-Mass.), Jeff Merkley (D-Ore.), Ron Wyden (D-Ore.), and Maria Cantwell (D-Wash.), comes after revelations that Wells Fargo, under Stumpf’s leadership, opened roughly two million checking and credit accounts without the knowledge of their customers.

“We do not wish to suggest that declining to reappoint Mr. Stumpf to a customary third term on the advisory council is the single corrective action to right all wrongs in this situation. Far from it. United States Senators both on and off the Banking Committee have publicly offered stronger tools for enhanced accountability, including recouping compensation from senior management,” the Senators continued. “To overlook this option, however, would represent a failure on our part to review and identify all measures available to hold Mr. Stumpf personally accountable for the misconduct that took place on his watch. Perhaps even more distressing, it would leave a corporate voice that has admitted to betraying customer’s trust on a powerful and reputable federal advisory body. This must and can be rectified.”

The complete text of the letter can be read below:

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  September 22, 2016

Roy A. Vallee

Chairman of the Board, San Francisco Board of Directors

Federal Reserve Bank of San Francisco

101 Market Street

San Francisco, CA 94105

Dear Chairman Vallee:

           Given the importance of emphasizing both personal accountability at the senior management level and a healthier internal banking culture in the aftermath of the serious problems that provoked allegations of fraudulent activities at Wells Fargo, we write to urge you and the San Francisco Board of Directors not to reappoint John Stumpf to the Federal Advisory Council for a third one-year term in January 2017.

As you are well aware, the twelve members of the Federal Advisory Council are chosen by the Reserve Banks to represent the twelve Federal Reserve Districts at the Federal Reserve Board. The Council normally meets four times a year, and each member typically serves three one-year terms. Section 12 of the Federal Reserve Act grants the Council power to consult directly with the Board of Governors of the Federal Reserve System on a broad range of economic, monetary, and financial issues. Members are asked for individual insights into regional trends as well as recommendations in regard to key decisions made by the central and Reserve Banks.

It would be ironic if the Federal Reserve, a key federal banking regulator tasked in part with ensuring the fair and equitable treatment of consumers in financial transactions, continued to receive special insights and recommendations from senior management of a financial institution that just paid a record-breaking fine to the Consumer Financial Protection Bureau for “unfair” and “abusive” practices that placed consumers at financial risk.

We do not wish to suggest that declining to reappoint Mr. Stumpf to a customary third term on the advisory council is the single corrective action to right all wrongs in this situation. Far from it. United States Senators both on and off the Banking Committee have publicly offered stronger tools for enhanced accountability, including recouping compensation from senior management. To overlook this option, however, would represent a failure on our part to review and identify all measures available to hold Mr. Stumpf personally accountable for the misconduct that took place on his watch. Perhaps even more distressing, it would leave a corporate voice that has admitted to betraying customer’s trust on a powerful and reputable federal advisory body. This must and can be rectified.

Please be advised that this situation may offer lessons for Congress should it seek to improve, through legislation, the membership of the Federal Advisory Council and similar advisory bodies at other federal banking regulators.

In closing, we appreciate your consideration of our suggestion as you prepare to reappoint a member to the Federal Advisory Council in January 2017.

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