Just when you thought the public floggings were over and another US bank proved that crime pays, it appears Wells Fargo – and its CEO – may not be as 'Teflon' as they hoped. Having told Congress under oath that his bank committed criminal activities since 2011, VICE News reports that in fact John Stumpf's banking head Carrie Tolsetedt was actually aware of the creation of fake accounts since 2006.
5,300 employees were fired over the last few years after federal regulators said Wells Fargo staff secretly created millions of unauthorized bank and credit card accounts — without their customers knowing it — since 2011.
As CNN reported at the time, Wells Fargo CEO John Stumpf apologized to customers for more than 2 million fake accounts opened in their names, but denied any orchestrated fraud by bank management.
Stumpf testified at a House Financial Services Committee hearing Sept. 29 that the company board got “reports at a committee level, at a high level, about ethics lines requests or information” as early as 2011.
In testimony to the Senate Banking Committee Tuesday, Stumpf also said the bank plans to expand the internal review of accounts and refund process by two years, starting in 2009 now.
But now, as VICE News reports, Stumpf (and Carrie Tolstedt, the head of the division where the fake accounts were created) may have bigger problems.
A Wells Fargo bank manager tried to warn the head of the company’s regional banking unit of an improperly created customer account in January 2006, five years earlier than the bank has said its board first learned of abuses at its branches.
Dennis Hambek, a former branch manager in West Yakima, Washington, sent a certified letter in January 2006 to Carrie Tolstedt, then Wells Fargo’s head of regional banking, outlining unethical “gaming” activity at area branches. In 2007, Tolstedt was made the company’s head of community banking, the division where many of the unethical practices occurred.
Hambek says a customer named Bill Moore came to his branch in July 2005 after he learned that a different Wells Fargo branch had opened checking, savings, and debit-card accounts in his name without his authorization. Hambek asked Moore to write out details of his complaint. Then, Hambek says, he reported the ethics violation to the bank’s investigations department and called a hotline employees were encouraged to use to report misconduct. He says no action was taken.
"I would hope that this type of management is only occurring in Washington and not throughout Wells Fargo," Hambek wrote in a certfied letter six months later.
It appears his hopes are dashed!
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So the questions are – Did Stumpf lie to Congress? Will clawbacks and fines increase materially due to the extra 5 years of criminal activity? Will Tolstedt end up in jail? Will Elizabeth Warren reach 100 decibels?
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