Commentary

Wells Fargo Admits Fake Account Scam Much Larger Than Reported

In much the way that interest compounds, the depth and breadth of the Well Fargo scandal continues to fester. Yesterday the bank disclosed that a third-party review uncovered 1.4 million additional retail-banking accounts that had been opened without customers’ consent or knowledge.

“The bank revised the total, now up to 3.5 million, after discovering that employees may have been opening unauthorized credit card and bank accounts for customers for far longer than originally acknowledged. The eye-popping figure will likely hamper the bank’s efforts to move beyond the nearly year-long scandal as lawmakers and regulators delve deeper into its inner workings and demand changes,” writes Renae Merle for the Washington Post.

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“We apologize to everyone who was harmed by unacceptable sales practices,” Wells Fargo CEO Timothy J. Sloan — who stepped into the beaten-down John Stumpf’s shoes last October — said. “We are working hard to ensure this never happens again and to build a better bank for the future.”

Seem like déjà vu all over again?

“The additional fake accounts were discovered by a previously announced analysis that went back to January 2009 and that further reviewed the original May 2011 to mid-2015 period. About 190,000 accounts were slapped with unnecessary fees for these accounts, Wells Fargo said. That's up from 130,000 previously,” reports Matt Egan for CNN Money.

“Wells Fargo also discovered a new problem: thousands of customers were also enrolled in online bill pay without their authorization. The review found 528,000 potentially unauthorized online bill pay enrollments,” Egan continues.

“This figure is staggering — both in the size of the wrongdoing of the bank’s employees and in that we’re still getting our heads around a scandal nearly a year after it blasted onto the front pages. It comes after the bank has admitted that it erroneously charged over 800,000 customers for car loan insurance that they no longer needed. And these incidents are only some of the thousand cuts that one of the most valuable brands in banking has endured,” writes Peter Conti-Brown for Fortune.

“Repercussions for Wells Fargo since the scandal broke a year ago have been severe — it paid a $185 million fine to the federal government, it underwent Congressional hearings, its CEO quit and it has since been dogged by a dozen investigations and public backlash,” points out Luis Gomez for the San Diego Union-Tribune

“But the new revelations brought the bank to new lows. On Thursday, it faced piles of harsh criticism and more calls for oversight. So severe was the criticism that even ‘Mad Money’ host Jim Cramer called Wells Fargo a ‘rogue bank,’” Lopez continues.

That’s not all he said, as CNBC’s Berkeley Lovelace Jr. reports.

“A million extra? I mean that's not a rounding error,” Cramer tells CNBC’s David Faber. “They thought they got to the bottom of it but they left out a million accounts,” Cramer adds. “That does not seem like the bottom of this. This is so outrageous.”

And you can bet that some politicians will also be venting their outrage in the days to come.

“Did Wells Fargo mislead the United States Congress during hearings last fall when it characterized its widespread opening of unauthorized bank accounts as a one-off problem in an otherwise clean operation?” asks Gretchen Morgenson’s lede in the New York Times. “That question took on greater urgency Thursday” following the new revelations, she continues.  

Thirty-three consumer groups “led by Americans for Financial Reform and Public Citizen, two left-leaning consumer organizations, the groups sent a letter to leadership of the Senate Banking Committee and the House Financial Services Committee urging them to bring Wells Fargo executives back to Capitol Hill to answer questions about the bank’s stream of abuses,” Morgenson reports.

Wells Fargo says it stands by its previous testimony.

Warren Buffett, whose Berkshire Hathaway is Wells Fargo’s largest shareholder, had a typically colorful analogy on CNBC’s “Squawk Alley” Wednesday (before Wells Fargo issued its release): “What you find is there’s never just one cockroach in the kitchen when you start looking around,” he said. He also told CNBC’s Becky Quick that he was “standing by” the bank.

Here are three additional “life lessons you can learn” from Buffet, who turned 87 Wednesday, courtesy of CNBC’s “Make It” reporter Marguerite Ward. 

  1. Cultivate your communication skills
  2. Read more
  3. Choose your friends wisely.

Take the weekend.

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