Wells Fargo bankers in Nebraska and Iowa may have created nearly 25,000 bogus accounts in customers’ names from 2011 to mid-2016, and the bank fired 47 Nebraska employees in the resulting fallout.
That’s according to a document made public this week by the California Senate Committee on Banking and Financial Institutions.
The state legislative committee’s background paper on sales practices and corporate oversight included a portion of Wells Fargo’s written responses to a Sept. 20 inquiry by the U.S. Senate Committee on Banking, Housing and Urban Affairs.
Among the documents: a state-by-state breakdown of the number of potentially unauthorized deposit and credit card accounts opened by Wells Fargo bankers from 2011 to mid-2016 that exposes the depth of the scandal that has rocked the third-largest bank in the U.S.
As many as 12,348 Wells Fargo accounts in Nebraska were opened without authorization, according to an analysis of bank records by financial consulting firm PricewaterhouseCoopers. That total was 12,630 in Iowa.
For customers who incurred fees, the bank issued refunds averaging $25 each for a total of about $9,225 to 369 Nebraskans and about $18,500 to 740 Iowans.
“We regret and take full responsibility for the incidents in which customers received a product they did not request,” bank spokeswoman Cristie Drumm said in a statement to The World-Herald. “If even one customer received a product they did not request, it is unacceptable and contrary to our culture of doing what’s right for customers.”
The San Francisco-based bank ranks No. 2 in terms of in-state deposits in Nebraska, where it had $6.7 billion as of June 30, 2016. By that measure, Wells Fargo is No. 1 in Iowa, where it had about $7.2 billion as of June 30.
In its responses to the Sept. 20 Senate inquiry — in which Nebraska Sen. Ben Sasse participated — the bank indicated that it had broken down by ZIP code the branches in all 50 states and Washington, D.C., where terminated employees worked. Wells Fargo refused a World-Herald request for that document, and the bank declined to say how many Iowa employees were terminated.
Of the 47 Nebraska bank employees who were fired due to what the bank called “sales-integrity violations” over the time period in question, about 75 percent were either personal bankers or tellers, the Senate documents show. The remainder held titles including assistant store manager, service manager and store manager.
Iowa and Nebraska rank 22nd and 23rd in terms of states with the most suspect accounts. California, with nearly 900,000, ranked first, followed by Arizona with about 179,000 and Texas with about 150,000. States like Vermont, Rhode Island, New Hampshire and Maine had only a few hundred each.
Wells Fargo offered a caveat in its Senate responses that “it is likely that not all of these (Nebraska) accounts” were opened without customer consent because the bank took an “intentionally expansive approach” to identifying as many potentially affected customers as possible.
But its own investigation “could not rule out the possibility that they were unauthorized and/or experienced simulated funding,” a practice through which Wells Fargo employees transferred funds from existing accounts into bogus ones to mimic transaction activity.
The local accounts are a smaller part of a nationwide scandal involving up to 2 million or more unauthorized accounts that prompted a massive federal regulatory crackdown in early September.
That’s when federal regulators accused the $1.9 trillion bank of alleged misconduct, claiming that its employees opened or applied for bank accounts and credit cards without customers’ consent or knowledge.
The bank settled those claims by paying $185 million in penalties to the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the City and County of Los Angeles.
Wells Fargo also set aside $5 million to refund customers for fees they unwittingly incurred.
The debacle ignited a furor that so far has included nearly $200 million in federal fines, numerous investigations, congressional inquiries and the subsequent resignation of Wells Fargo Chief Executive John Stumpf.
Stumpf and Carrie Tolstedt, a Nebraska native and the bank’s former head of retail banking operations who left the bank earlier this year, have also handed back about $60 million worth of stock rewards they accrued during their time with the bank.
Additionally, Tolstedt will not be paid severance or “retirement enhancements” related to her departure from the bank, nor will she cash out vested stock options, until the Wells Fargo board of directors completes its investigation of the bank’s sales practices.