In a sign Wells Fargo & Co is still struggling to move past a scandal that sparked record fines and congressional investigations, the bank raised its estimate for how many bogus accounts employees may have created.
According to a statement on Thursday from the San Francisco-based firm, an additional 1.4 million that were potentially unauthorized deposit and credit-card accounts when an outside review into the more than 165 million such accounts was done. The total number has now increased to about 3.5 million. Noting almost twice as long as the period examined in the initial review, the revised estimate covers January 2009 to September 2016.
Just as Congress returns Sept. 5 from its summer recess, Wells Fargo is threatened to be thrown back into the political crosshairs by the disclosure of even more fraudulent accounts. After regulators slapped Wells Fargo with fines of $185 million over its sales practices, prompting congressional hearings, the scandal came to light almost a year ago. The result was that the bank had to appoint new leaders, and reducing pays for executives’ and initiating an overhaul of its retail division.
“New data should cause some lawmakers to re-engage on the issue,” Isaac Boltansky, an analyst with Compass Point Research & Trading, said before the new tally was announced. Boltansky said that while Republicans will continue to fault Consumer Financial Protection Bureau officials for not spotting the misconduct themselves, Democrats will again argue it proves Washington needs to keep rules tight on financial firms.
following former Chief Executive Officer John Stumpf’s testimony last September about the bank’s sales practices, Washington lawmakers lambasted the company and Wells Fargo expanded its review after that critical lambasting. rather than through 2011 as it initially did, the bank agreed to review records dating back to 2009 under pressure.
In relation to the investigation, it has paid or identified $10.7 million in customer compensation, the company said. Up from $3.3 million the bank had previously disclosed, the figure includes $7 million of refunds. $3.7 million related to what it described as the “complaints process/mediation” is also included in it.
“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 on Wednesday in a TV interview. “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.”
Highlighting users with only one “minimal” payment and no further use of the service, the expanded review also uncovered about 528,000 potentially unauthorized online bill-pay enrollments. “The analysis did not definitively identify whether an enrollment was authorized by a customer or not, and properly authorized enrollments are likely part of this total,” Wells Fargo said in the statement. For fees and charges, affected customers will be refunded $910,000, it added.
“Today’s announcement is a reminder of the disappointment that we caused to our customers and stakeholders,” CEO Tim Sloan said on a conference call Thursday with reporters. “We apologize to everyone who was harmed by unacceptable sales practices that occurred in our retail bank.”
(Adapted from Bloomberg)