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Wells Fargo opened

many more fake accounts
than it !rst said

U P D AT E D O N : A U G U S T 3 1 , 2 0 1 7 / 1 2 : 1 4 P M / C B S / A P

Wells Fargo's (WFC) banking scandal is

growing even bigger.

The bank is now saying it has found 3.5

million fake accounts, a dramatic
increase from the 2.1 million accounts it
originally estimated.

In the weeks and months after the bank

acknowledged in September 2016 that its
employees opened 2.1 million accounts
without getting customers' permission,
the bank agreed to look for fake accounts
going back an additional two years to
2009. This was because news reports
showed that problems at Wells started
before 2011, which is what Wells
originally admitted.

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"We apologize to everyone who was

harmed by unacceptable sales practices
that occurred in our retail bank," said
Wells Fargo CEO Tim Sloan.

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The disclosure prompted new calls from

some lawmakers and consumers for
additional changes at the bank, and one
analyst said it's likely to keep a regulatory
spotlight on the company. Senator
Elizabeth Warren, D-Massachusetts,
called for removal of the bank's board
members who had served during the
scandal. "Unbelievable," she wrote on
Twitter about the revelation of the
additional fraudulent accounts.

Elizabeth Warren
@SenWarren

The @federalreserve should remove

every @wellsfargo Board member who
served during this scandal. I don't
know what they're waiting for.
10:50 PM · Aug 31, 2017

9.6K Reply Share this Tweet

Read 335 replies

"This raises the probability that Congress

this fall holds hearings on the ever-
expanding Wells Fargo fake account
controversy," wrote Cowen analyst Jaret
Seiberg in a research note. "As a result,
we believe the political and regulatory
spotlight will continue to shine brightly
on Wells Fargo. That is likely to limit the
ability of the bank to grow aggressively."

Both parties are likely to use the

revelation as an argument either for and
against the Consumer Finance Protection
Bureau, he added. The Republicans will
likely point to the scandal as an example
of the ine"ectiveness of the consumer
watchdog agency, while the Democrats
will say it shows the CFPB is needed
because #nancial institutions can't be
trusted, he said.

"For us, the big question is how the bank

responds now?" Seiberg wrote. "On that
front, Hurricane Harvey provides Wells
Fargo with the opportunity to create
political capital if it is seen as taking the
lead in helping individuals and
businesses recover from the disaster."

Wells Fargo said it's donating $1 million

to Harvey relief e"orts and is waiving
fees in areas hit by the storm, yet that is
similar to steps that other banks are
taking.

Wells plans to pay out an additional $7

million in refunds to the impacted
customers. The new analysis found that
about 190,000 accounts incurred fees
and charges, compared with the 130,000
previously identi#ed accounts.

Separately Wells also found 528,000

customers were signed up for online bill
pay when they did not ask for it. The
bank will give $910,000 in refunds to
those customers.

The sales-focused culture at Wells Fargo

is blamed for creating incentives for
employees to open fake accounts, with
some of those workers fearful they would
lose their jobs. One former Wells Fargo
banker told CBS MoneyWatch that her
branch "doubled our goals and
decreased our performance pay," leading
to stress and managers looking the other
way at unethical behavior.

Wells Fargo earlier this year clawed back

more than $75 million of pay from its
former CEO, John Stumpf. The
company's "broken" sales model was
overseen by retail bank leader Carrie
Tolstedt, who in an internal investigation
was described as a defensive boss
obsessed with stamping out negative
views about her division.

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First published on August 31, 2017 / 10:15 AM

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This material may not be published, broadcast,
rewritten, or redistributed. The Associated Press
contributed to this report.

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