3 More Scandals That Will Have You Saying, ‘WTF Wells Fargo’
Times appear to keep getting tougher for Wells Fargo (WFC). After taking a beating publicly over the fake accounts scandal last year, the company divulged some dismal numbers in its quarterly earnings report earlier this month. The number of new checking accounts opened at the bank dropped 40% from a year earlier, with applications for credit cards falling 43%, leading to a 14% drop in profits. The bank even announced it will be closing 400 branches across the country by 2018, a reversal of its rapid expansion over the last several years. Wells Fargo also agreed to pay $185 million as a penalty for the fraud, but still has several other open investigations related to the scandal spread across several regulatory agencies.
Last week, Wells Fargo’s CEO Tim Sloan told employees that the bank was “fixing problems so that they don’t happen again” and that he believed the bank was “on the right path.” A spokesman for Wells Fargo told Fortune that the bank has formed a new ethics office and that Sloan has warned employees that there will be more “tough news” in the coming months about the bank.
Nonetheless, while Wells Fargo officials say they have got things under control, there are growing signs that the problems in the bank go well beyond its push to cross-sell customers, or even it’s phony account scandal. Here are three indications that Wells Fargo, once America’s profitable bank, is now the country’s most scandal plagued.
Retaliating Against Corporate Whistleblowers
Wells Fargo CEO Tim Sloan admitted last week that there is evidence to suggest that some employees may have faced retaliation for calling the company’s ethics hotline and reporting objectionable behavior. The bank had hired a third party to investigate instances over the last five years where an employee was fired within 12 months of calling the hotline. Often, lateness or some other trivial reason would be concocted to justify terminating a worker, according to a report in CNNMoney. The bank is now expanding the investigation, looking at the penalties some employees faced for whistleblowing that fell short of termination. As of right now, it’s unclear whether the admission will open Wells Fargo up to legal action. It is illegal for a company to suppress whistleblowing, most notably under the Sarbanes-Oxley and Dodd-Frank statues.
Adding another layer to the phony account scandal, it appears that management and employees at the bank’s branches across the country had at least 24 hours warning about when internal watchdogs were scheduled to come and perform inspections checking the validity and integrity of account handling, according to the Wall Street Journal. Such warning gave time for employees to shred incriminating paperwork and forge necessary signatures. Wells Fargo has announced new guidelines for inspections and oversight, but in many cases managers are still given advance notice in order to ensure there is enough staff on hand to deal with inspectors and customers.
Charging Bogus Mortgage Late Fees
Four former employees of the Los Angeles region claim the bank improperly charged customers with late fees to extend their promised interest rate even when the delay was the bank’s fault, according to ProPublica. The scam typically cost customers $1,000 to $1,500, depending on how big the loan was. In some cases borrowers were given unnecessary paperwork to fill out, or tasked with providing inconsequential documents in order to ensure they would not meet the deadlines. Frank Chavez, one of the whistleblowing employees, wrote a letter to Congress in November that has just became public. In it, he claims the practice amounted to millions of dollars pilfered from unsuspecting clients. Although Wells Fargo says it is conducting a thorough investigation on the matter, it appears that this scheme was limited to the Los Angeles region.