The bank is attempting to pass along the cost of its own misdeeds, lawmaker says
A Democratic lawmaker has slammed Wells Fargo for passing on the costs of its numerous scandals to third-party vendors.
Last year, the lending giant pressured 14 of its IT vendors to return 2.5% of what they’d earned from the bank in 2018. The bank said it was requesting “voluntary rebates” from the vendors because they’d benefited from increased business as a result of its never-ending parade of scandals and regulatory woes.
At least seven of the vendors reportedly agreed to issue the rebates, with many feeling that a refusal to do so could cost them Wells Fargo’s business as the bank reduced its use of outside contractors.
But now Rep. Katie Porter (D-Calif.), who’s gained a reputation in the House as a fierce critic of Wall Street, is accusing Wells Fargo of trying to pass on the costs of its own misdeeds and demanding that the bank refund the rebates, according to a Reuters report.
“These small businesses played no role in the misdeeds committed by the Bank,” Porter wrote in a letter to Wells Fargo CEO Charles Scharf.
Porter said that linking the “voluntary rebates” to regulatory costs undermined the regulatory actions themselves, Reuters reported.
“When federal watchdogs … assess fines against bad actors, a major purpose of those fines is to discourage continued bad behavior,” she wrote. “When those bad actors then pass the cost of those fines down to their vendors … the purpose of the fine is subverted.”
Porter asked Wells Fargo to return the rebates by Jan. 30, Reuters reported.
Wells Fargo has said that it would not consider whether vendors paid the refunds or not when awarding future contracts, but many still felt compelled to do so, according to a November Reuters report. At least two refused to do so out of principle, reportedly expecting their relationship with the bank to end as a result.
