Wells Fargo could find more fakes
Wells Fargo & Co., reeling from a scandal over fake accounts that erupted in September, said it’s expanding a review that could lead to the bank finding “significantly” more cases.
The San Francisco bank’s “reasonably possible” legal charges could surpass its reserves by $3.3 billion as of June 30, up from an estimate of $2 billion at the end of March, the lender said in a regulatory filing Friday. The company also disclosed a new investigation into a separate matter by the Consumer Financial Protection Bureau.
The board of directors is also reviewing its own “structure, composition and practices,” which will lead to actions announced this quarter, according to a separate statement from CEO Tim Sloan.
The consumer bureau is looking at
whether consumers were “unduly harmed” by the bank freezing and closing accounts that had suspected fraudulent activity.
Also on Friday, Wells Fargo settled an 11-yearold lawsuit with the U.S. government that claimed the lender overcharged veterans under a federal mortgage-refinancing program.
The bank will pay $108 million to the government to resolve allegations that some loans it made under a U.S. Department of Veterans Affairs program shouldn’t have been eligible for guarantees by the agency, Wells Fargo said. It denies the allegations in the lawsuit, which was originally filed in 2006 by two mortgage brokers.
Wells Fargo and other banks were accused of defrauding veterans and the U.S. out of millions of dollars under a loan refinancing program. The lenders allegedly overcharged veterans and concealed their conduct from the government to obtain guarantees for the loans, according to filings. Most of the banks have settled the lawsuits.
Wells Fargo has been struggling with scandals in its consumer bank over the past 11 months, beginning with revelations in September that its employees may have created millions of fake accounts without customers’ knowledge. In July, it said it may have pushed thousands of car buyers into loan defaults and repossessions by charging them for unwanted insurance.