Secretary Elaine Chao served on Wells Fargo’s board of directors during years of fraud and scandal
WASHINGTON, D.C. – Preceding a series of congressional hearings to hold Wells Fargo senior officials accountable for failing to protect consumers from the bank’s series of predatory practices, two Wells Fargo board members who were set to testify this week resigned after the House Financial Services Committee released a scathing report calling for their removal.
But there is one former member of the Wells Fargo board who has gotten away unscathed by taking an exit ramp into Trump’s administration, while 12 of her 15 fellow board members from her final full year on the board have either been ousted by the scandals surrounding fraud and abuse or resigned. Restore Public Trust released the following memo about one of the hearings’ most glaring omissions — former director and current transportation secretary Elaine Chao.
To: Interested Parties
From: Restore Public Trust
Date: March 10, 2020
Re: Former Board Member Chao Must Testify on Wells Fargo Abuses
In advance of the House Financial Services Committee’s series of hearings holding Wells Fargo responsible for failing to protect consumers from predatory practices, the committee released a scathing report blaming the board of directors for its oversight failure, which helped allow the bank to defraud potentially millions of consumers. Following the report’s release, two senior Wells Fargo board members, including its chairwoman, resigned in disgrace.
But the report failed to mention a prominent former board member who has yet to be held to the same high standard as those who served alongside her: Transportation Secretary Elaine Chao.
Secretary Chao was a director on Wells Fargo’s board from 2011 until 2017, a period marked by non-stop scandals, before she resigned to become President Donald Trump’s transportation secretary. As a board member, Chao sat on Wells Fargo’s Corporate Responsibility committee, which was charged with overseeing the mega bank’s ethics and fair corporate practices. At the same time, Wells Fargo committed massive fraud against its customers, including improperly repossessing veterans’ cars and wreaking havoc on their credit. Chao oversaw Wells Fargo’s residential lending practices that led to hundreds of customers being improperly foreclosed on and losing their homes. Additionally, Wells Fargo charged more than half a million borrowers for insurance they did not want nor need while Chao served on its board.
But just as concerning as these abuses is the fact that Chao is among the board members who ignored employee whistleblowers for years and delayed changing sales goals that the bank only met by opening illegal accounts without customers’ consent. Last year, a federal judge approved insurers to pay out a staggering $240 million to shareholders who sued Wells Fargo representatives, including Chao, for shirking their responsibilities.
In fact, the Committee’s report blames Wells Fargo’s board members for myriad offenses including:
- Failing to establish safeguards to protect consumers, resulting in consumer abuses that potentially affected millions;
- Failing to ensure that management could address deficiencies in risk management;
- Allowing management to submit deficient plans;
- Prioritizing financial gain over fixing issues identified by regulators; and
- Failing to hold senior management accountable for not meeting expectations of federal regulators.
Perhaps worst of all, Chao, who now serves the American people and is paid by taxpayer dollars as a member of Trump’s cabinet, is still getting paid by Wells Fargo. Her compensation from serving on the Wells Fargo board includes stock payouts of up to $5 million over the course of five years — 15 percent of which she received in March of last year. Chao continues to rake in cash while Wells Fargo customers still struggle to recover from the bank’s fraudulent schemes against them.
Wells Fargo defrauded potentially millions of innocent people during Chao’s tenure on the board of directors, leading families into financial ruin. That’s why 12 of 15 of the board members from Chao’s last year on the board were either ousted or resigned in disgrace. But Chao got a soft landing. While many victims are still struggling to financially recover, Chao continued to earn money from her role as recently as last March. Wells Fargo’s victims and all Americans deserve to know the extent to which Secretary Chao and her fellow board members knew or approved of these consumer abuses. Congress must call Chao to testify about her role in letting massive corporate fraud and abuse unfold on her watch.
See our previous report about Chao’s scandal-plagued tenure on the Wells Fargo board here.