WASHINGTON (Reuters) - A consumer watchdog agency could have levied $10 billion in penalties against Wells Fargo & Co last year for opening unauthorized customer accounts, but settled for a fraction of that to resolve the matter quickly, according to regulatory documents released on Tuesday.

FILE PHOTO - A man walks by a bank machine at the Wells Fargo & Co. bank in downtown Denver, Colorado, U.S. on April 13, 2016. REUTERS/Rick Wilking/File Photo

The documents, unveiled as part of a report written by congressional Republicans, look set to heighten a fierce partisan debate about the future of the U.S. Consumer Financial Protection Bureau (CFPB).

Set up by Democrats in the aftermath of the 2007-2009 financial crisis to protect consumers against abuses by large institutions, the CFPB is loathed by Republicans who criticize it as a wayward agency that lacks proper oversight.

Last year, the CFPB and two other regulators reached a $185 million settlement with Wells Fargo after discovering the third-largest U.S. lender had opened as many as 2.1 million bank and card accounts in customers’ names without their permission. The number of potentially affected customers has since grown to 3.5 million as Wells has expanded its probe of sales abuses.

The CFPB’s portion of that settlement was $100 million, making it the largest fine in the agency’s short history.

But the regulator could have made a claim for over 100 times that amount, if it multiplied statutory penalties outlined in consumer law by the number of potential violations, according to a memo staff sent to CFPB Director Richard Cordray in July 2016, which Reuters saw on Tuesday.

Staff recommended the smaller figure, however, saying it was large enough to be an effective deterrent and would allow the parties to reach a settlement quickly, according to the memo.

The memo was included in a report written by Republican staff on the House Financial Services Committee whose chairman, Representative Jeb Hensarling, has repeatedly criticized the CFPB and Cordray, and tried to undercut the agency’s powers through legislation. The 929-page report is titled, “Did the CFPB let Wells Fargo ‘beat the rap’?”

CFPB spokesman David Mayorga said the agency has not had a chance to review the report, but defended its work policing Wells Fargo.

“We ordered Wells Fargo to pay the largest penalty we have ever imposed and achieved relief for millions of customers harmed by the bank’s egregious and illegal conduct,” said Mayorga. A Wells Fargo representative said the bank was reviewing the report, emphasizing its efforts to overhaul its sales practices and regain the public’s trust.