The Mercury News
Wells fakery hit small firms
10,000 bogus accounts among 2 million for consumers were opened “It’s become clear that fraud is part of the broader culture at Wells Fargo.”
Wells Fargo on Tuesday confirmed that it opened unauthorized accounts for thousands of small businesses, spurring allegations of widespread fraud from a U.S. senator as he demanded details about the business accounts.
About 10,000 small business accounts were part of the estimated 2 million bogus accounts that Wells Fargo employees opened without authorization. The bank declined Tuesday night to officially confirm a specific number of affected business accounts.
“It’s become clear that fraud is part of the broader culture at Wells Fargo,” U.S. Sen. David Vitter, R-La., said in a prepared release.
Vitter, chairman of the Senate’s Small Business and Entrepreneurship Committee and a member of the Senate’s Banking Committee, wrote to Wells Fargo officials last week demanding new details about the business accounts.
“Considering their major role in small-business lending, Wells Fargo needs to make public the extent to which any small-business clients may have been defrauded and what corrective actions will be taken,” Vitter said.
San Francisco-based Wells Fargo, as part of a settlement with the Consumer Financial Protection Bureau, on Sept. 8 agreed to pay $185 million in fines as punishment for its actions.
“While the vast majority of accounts in the settlement were consumer accounts, to the extent there were small-business accounts included, all were previously reported in the total number of potentially impacted accounts,” said Jim Seitz, a Wells Fargo spokesman.
“We will be addressing the requests in the letter from Sen. Vitter in a timely manner,” Seitz said.
The bank fired 5,300 workers for their role in opening the millions of unauthorized accounts.
Wells Fargo’s small-business accounts problem isn’t trivial. In October 2015, statistics from the U.S. Small Business Administration revealed that during the 12 months that ended in September 2015, Wells was the top SBA lender for small businesses.
The bank approved 7,254 loans, totaling $1.9 billion, to small businesses in that one-year period.
“Wells Fargo’s problems are not going away easily,” said Ken Thomas, a Miami-based banking analyst. “They will continue to have dings against their business, and that’s going to be bad for the bank.”