NEW WELLS WELT
Auto insurance scandal rocks embattled bank
The wheels are coming off the wagon at Wells Fargo again.
The beleaguered bank, which lost its CEO last year because of a wide-ranging fake accounts scandal, admitted that it has overcharged about 800,000 of its customers with $80 million worth of unnecessary car insurance.
Wells discovered a year ago that for several years, it was charging its auto-loan customers for collision protection insurance — coverage that many of them didn’t need because they were already paying for private insurance, according to a statement the bank released late Thursday.
Sen. Elizabeth Warren (DMass.) — who famously told former Wells Fargo CEO John Stumpf last year that he should be “criminally investigated” — demanded that several members of Wells Fargo’s board be canned after Friday’s revelations.
“This is a full-blown scandal — again,” said New York City Comptroller Scott Stringer, who controls pension funds that hold 11.6 million Wells Fargo shares. “It’s unbelievable, outrageous, sad, and yet quintessential Wells Fargo.”
On Friday, Stringer demanded the ouster of Wells Fargo chairman Stephen Sanger.
In a letter sent to Fed Chair Janet Yellen, Warren said the auto-insurance scandal signals “deep risk management problems,” and called for the ejection of all directors who served from 2011 to 2015, when the activity reportedly occurred.
The San Francisco lender “has a lot of explaining to do, and we cannot let up until every single customer is made whole,” added Sen. Sherrod Brown (D-Ohio).
The extra expenses affected veterans and active military customers, according to the New York Times, which first reported the story.
Even after customers complained, it took another two months, until September — just weeks before then-CEO Stumpf would resign for the fake accounts scandal — before the bank discontinued the program of automatically charging customers for insurance, the company said.
Wells Fargo, now run by CEO Tim Sloan, told regulators in July about the problem, a bank source told The Post.
The bank takes responsibility for its “failure to appropriately manage” its insurance program, said Franklin Codel, head of Wells Fargo’s consumer lending business.
When a reporter asked what took Wells Fargo so long to disclose the problem, Codel said that the bank wasn’t prepared and wanted to avoid “customers start calling and asking when they’re going to get their money,” according to a Reuters report on Friday.
A Wells Fargo exec later complained that the quote was cut short and taken out of context, saying the reason customers weren’t informed was that the bank didn’t know the full scope of the problem.
Wells Fargo said it will work with credit reporting companies to repair customers’ credit reports that may have been damaged by the car-insurance scheme.
Wells Fargo has been grappling with systemic problems since last year, when it settled with three government agencies over two million fake accounts and credit cards that had padded its bottom line. The bank had fired 5,300 employees for sales abuses before getting caught.