Wells Fargo Bank Just Got Downgraded
Dr. John E. Warren | 4/19/2017, 1:28 p.m.
Following a series of high profile lawsuits and allegations of misconduct, the embattled Wells Fargo Bank just suffered another loss in the form of a rating downgrade.
Late last month, the Office of the Comptroller of the Currency downgraded Wells Fargo’s rating from an "Outstanding" to a "Needs to Improve" rating.
The Office of the Comptroller of the Currency is an independent government agency within the U.S. Treasury Department that supervises all banks and federal savings associations. The downgrade comes on the heels of an agreement by Wells Fargo Bank to pay $110 million to settle a class action suit involving customers, who discovered that the bank opened fake accounts in their names.
The amount might seem small compared to the revelation last September that the bank had opened over two million fake accounts in customers' names without their permission.
In September 2016, Wells Fargo agreed to pay $185 million in fines and penalties and to refund customers $5 million.
The latest settlement covers at least 10 other lawsuits.
“These payouts are on top of the $3.2 million Wells Fargo has paid to customers on over 130,000 potentially unauthorized accounts or services,” CNNMoney reported. “That works out to a refund of roughly $25 per account.”
The closer one looks at Wells Fargo’s practices, the further back the bank’s problems go.
According to a September 2016 article by CNNMoney, “six former Wells Fargo employees filed a class action lawsuit in federal court against the bank seeking $7.2 billion or more for workers who were fired or demoted after refusing to open fake accounts.”
CNNMoney article continued: “The federal class action suit accuses Wells Fargo of orchestrating a ‘fraudulent scheme’ to boost its stock price that forced employees to ‘choose between keeping their jobs and opening unauthorized accounts.’
Some of the legal allegations arising from the case include: wrongful termination, violations involving the California labor code, and failure to pay wages and other charges.
“The suit represents California employees who worked at Wells Fargo in the past 10 years or who continue to work there and were fired, demoted or forced to resign due to not meeting their sales quotas,” CNNMoney reported.
Another federal class action involving the beleaguered bank, alleged that Wells Fargo violated the Dodd-Frank Wall Street Reform and Consumer Protection Act and a section of Sarbanes-Oxley Act, that prohibits retaliation against whistleblowers. That lawsuit also alleged that the bank violated the overtime provisions of the Fair Labor Standards Act covering hours of work. These lawsuits paint a far different picture than the one Wells Fargo offered when it fired more than 5,000 employees, after the bank’s own investigation into the fake accounts. The mass firings suggested that the employees who were terminated, opened the fake bank accounts on their own and without the bank’s knowledge or participation. The class action lawsuits involving former bank employees shed light on a shadowy pattern of practices that can’t be explained away as a handful of rogue tellers working on their own to defraud customers.