Wells Fargo & Co. announced that employees had created 67% more fake accounts than what was thought initially, a sign the bank has continued to struggle moving past the scandal that sparked huge, record fines as well as investigations on Capitol Hill.
A review done by a third party found another 1.4 million possible accounts that were unauthorized that had been opened when the bank had been encouraging its employees to sell various products to its retail clients. That brings the total number of unauthorized accounts to more than 3.5 million.
The updated estimate is for January 2009 through September of 2016, which is twice the length as the first period from the initial review.
This disclosure of more fraudulent accounts has threatened to push the bank back into the crosshairs of Washington lawmakers just at a time when Congress will return on September 5 from summer recess.
This scandal was uncovered nearly one year ago when regulators fined Wells Fargo nearly $185 million for sales practices that prompted congressional hearings as well as resulting in leaders of the bank being forced out, pulling back pay of executives, and starting a complete overhaul of the bank’s retail division.
Democrats will argue again that it proves Washington is in need of keeping the tight rules in place for financial firms, while the Republicans will once again fault the Consumer Financial Protection Bureau officials for not seeing the misconduct on their own, said a congressional analyst on Thursday in Washington.
Wells Fargo entered into an agreement to expand the review it had after lawmakers in Washington lashed out at the company after former CEO John Stumpf’s testimony in September of last year about the sales practices of the bank. Under heavy pressure, the bank said it would review its records as far back as 2009 instead of just to 2011 as was initially done.
Wells Fargo said it paid or has identified $10.7 million in compensation for customers related to this investigation. That figure includes refunds of $7 million, which were up from an original $3.3 million the bank disclosed previously. It includes as well, $3.7 million for complaints process/mediation.
CEO Tim Sloan said in a prepared statement that today’s announcement was a reminder of the disappointment we caused our customers as well as stockholders. He added that the bank apologized to all who were harmed by its unacceptable practices in sales that took place in its retail bank.
Earlier in August, Democrats led by California Maxine Waters called for a hearing in the House Financial Services Committee about another scandal at the bank that involved car insurance that was unwanted being imposed on customers who had auto loans.