Sen. Warner questions Wells Fargo on overdraft fees
Sen. Mark Warner (D-VA), a member of the Senate Banking Committee, joined colleagues in asking Wells Fargo’s chief executive to explain whether the bank’s recent surge in income from overdraft charges had any connection to the scandal over its fraudulent sales practices.
In their letter to Wells Fargo Chief Executive Timothy Sloan, the Senators expressed concern with a recent Financial Times report on how the bank’s income from overdraft charges grew by 7.5 percent between July and September. According to the Financial Times, that was five times faster than the rate of Wells Fargo’s main U.S. competitors – including JPMorgan Chase, Bank of America, TD Bank, and US Bank – which had an average increase of 1.3 percent during the same period.
“Even if these overdraft revenue increases are not directly related to the fraudulent account openings, we are concerned that they may reflect similar troubling consumer sales practices,” the Senators wrote in the letter. “It would be particularly distressing if Wells Fargo were pursuing an increase in revenue from overdraft fees to compensate for the bank losing customers as a result of the fake accounts scandal.”
The Senators also noted that Wells Fargo’s rise in overdraft over occurred at the same time the bank reached a $185 million settlement with the Consumer Financial Protection Bureau and other government entities over its phony accounts scandal. Wells Fargo was fined for illegal sales practices that included opening as many as two million fake accounts without customers’ knowledge or consent.
In September, Sen. Warner and Banking Committee Democrats to asked Wells Fargo to answer dozens of questions for the record to clarify and supplement the Sept. 20 testimony of the bank’s former chief executive, John Stumpf, before the Banking Committee. Wells Fargo’s response on Nov. 15 either ignored or provided insufficient responses to a host of the Senators’ questions. In several instances, Wells Fargo declined to provide direct answers, citing the ongoing investigation that its board launched on Sept. 27.
In their letter today, the Senators pressed Mr. Sloan for more information on Wells Fargo’s overdraft products, including a monthly breakdown of the bank’s overdraft income since 2007, and any policy changes dating over the last 18 months. The Senators also requested details on how many employees received pay raises for meeting sales goals related to overdraft products, and the number of employees disciplined for not meeting those goals.
In December of last year, Sen. Warner introduced legislation, the Justice for Victims of Fraud Act, that would provide customers victimized by Wells Fargo the opportunity to take the banking giant to court.