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.”

- By George Avalos gavalos@bayareanew­ — Sen. David Vitter, R-La.

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.”

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