Wells Fargo reportedly faces a probe from federal prosecutors, the latest sign that the bank’s troubles are mounting a week after regulators revealed that its employees created millions of fake accounts to soak unknowing customers.
The U.S. Attorney’s Offices for the Southern District of New York and the Northern District of California are considering whether to prosecute the bank for its abuses of customers, the Wall Street Journal reported Wednesday.
That prosecution would follow the actions taken by the city attorney for Los Angeles, who announced with federal regulators last week that the bank would pay $185 million in fines for its illicit activities related to fake accounts.
While that included a $100 million fine for the Consumer Financial Protection Bureau, the largest in the agency’s short history, some bank critics said Wednesday that tougher penalties and possible prosecutions of individuals were needed.
Noting that the executive who oversaw the consumer banking division in question departed the company with a major payout, the advocacy group Americans for Financial Reform called for the government to claw bank those payments and for the consumer bureau and the Office of the Comptroller of the Currency to refer the findings of their investigations to federal prosecutors.
Others called for accountability for CEO John Stumpf and other executives.
“Either Mr. Stumpf and his senior executives set an inappropriate culture and expectations, or they can’t get their arms around their own organization, it’s as simple as that,” said Camden Fine, head of the trade group Independent Community Bankers of America, speaking in an interview on CNBC Wednesday. Fine, whose organization represents small banks, has been critical of government rescues of big banks.
Wells Fargo workers created 2 million accounts, such as credit and debit card accounts, that customers didn’t authorize in an effort to reach their sales goals and earn bonuses, according to regulators. The employees sometimes took money out of customer accounts to set up the new ones and also hit customers with fees for the accounts they didn’t know they had.
Whether or not the Wells Fargo executives face further legal repercussions, they are set to receive greater scrutiny. Stumpf will appear before the Senate Banking Committee next week, along with the heads of the consumer bureau and the Office of the Comptroller of the Currency.
