Wells Fargo review reveals more fake accounts
Wells Fargo & Co. raised its estimate for how many bogus accounts employees may have created, a sign the bank is still struggling to move past a scandal that sparked record fines and congressional investigations.
An outside review into more than 165 million deposit and credit-card accounts found an additional 1.4 million that were potentially unauthorized, bringing the total to about 3.5 million, according to a statement Thursday from the San Francisco-based firm. The revised estimate covers January 2009 to September 2016, almost twice as long as the period examined in the initial review.
The disclosure of even more fraudulent accounts threatens to catapult Wells Fargo back into the political crosshairs just as Congress returns Sept. 5 from its summer recess. The scandal came to light almost a year ago after regulators slapped Wells Fargo with fines of US$185 million over its sales practices, prompting congressional hearings and resulting in the bank naming new leaders, clawing back executives’ pay and beginning an overhaul of its retail division.
“New data should cause some lawmakers to reengage on the issue,” Isaac Boltansky, an analyst with Compass Point Research & Trading, said before the new tally was announced. Democrats will again argue it proves Washington needs to keep rules tight on financial firms, while Republicans will continue to fault Consumer Financial Protection Bureau officials for not spotting the misconduct themselves, Boltansky said.
Wells Fargo expanded its review after Washington lawmakers lambasted the company following former chief executive officer John Stumpf’s testimony last September about the bank’s sales practices. Under pressure, the bank agreed to review records dating back to 2009 rather than through 2011 as it initially did.
The company said it has paid or identified US$10.7 million in customer compensation related to the investigation. The figure includes US$7 million of refunds, up from US$3.3 million the bank had previously disclosed. It also includes US$3.7 million related to what it described as the “complaints process/ mediation.”
“There’s never just one cockroach in the kitchen,” Berkshire Hathaway Inc. CEO Warren Buffett, whose firm is the largest shareholder in Wells Fargo, said Wednesday in an interview on CNBC. “Anytime you put the focus on an organization that has hundreds of thousands of people working for it, you may very well find it wasn’t just the one that misbehaved.”
The expanded review also uncovered about 528,000 potentially unauthorized online bill-pay enrolments, highlighting users with one “minimal” payment and no further use of the service. Wells Fargo said in a statement affected customers will be refunded US$910,000 for related fees.