Wells Fargo is in boiling hot water. Again.
One day after the NYT reported the latest major scandal involving Warren Buffett’s favorite bank, in which the bank was busted less than a year after its miss-selling fraud cost the former CEO his job, revealing that the bank charged some 800,000 customers for auto insurance they did not need (with some still paying for it), the demands for resignation have arrived.
In a statement from NYC Comtroller Scott Stringer, he demands that Wells Fargo must immediately “jump-start” necessary board change by replacing Chairman Stephen Sanger with a new independent chairperson following the latest “mismanagement” revelations.
In surprisingly harsh words, Stringer does not hold anything back against the worst performing bank stock today (WFC -2.8%):
“This is a full-blown scandal — again. It’s unbelievable, outrageous, sad, and yet quintessential Wells Fargo. This isn’t just a corporate debacle. It’s caused real human harm. It’s reflective of a system that Americans feel is rigged against the little guy, and sadly symbolic of a culture that puts short-term profits ahead of creating sustainable value for shareowners. Everyday families have suffered and tens of millions of hard-earned dollars were stripped from unsuspecting Americans, many of whom are struggling just to get by. In the end, shareowners ultimately suffer the long-term consequences.
He also demands that the Wells board must immediately disclose the circumstances to investors; “we need to know what the board knew and when it knew it and how executives are being held accountable”
“We need accountability and we need it now. Investors have long said this board needs to change, and these new revelations only reinforce that urgency. Wells Fargo must immediately jumpstart this process by replacing Chairman Stephen Sanger with a new independent chairperson. Investors, as well as consumers and everyday Americans, have waited too long for accountability. This board needs to be overhauled — now.
“The Wells Fargo board must also immediately disclose to investors the circumstances of this new scandal. We need to know what the board knew and when it knewd it and how executives are being held accountable. While we appreciate that these findings emanated from a report the company itself launched, full transparency and accountability are non-negotiable.”
Meanwhile, realizing that the second round of Congressional hearings are imminent, the bank promptly pulled off the best apology it could: Wells Fargo began examining the way its auto lending unit enrolled borrowers into insurance policies a year ago, but did not plan to disclose problems it uncovered until it was ready to issue reimbursements to affected customers, its head of consumer lending told Reuters on Friday.
In an interview, Franklin Codel said the business started noticing elevated customer complaint volumes in July 2016. It quickly suspended its auto collateral protection insurance (CPI) program and escalated issues to senior management, the board and regulators, he said.
“The problem with disclosing to the marketplace today or several months ago is customers start calling and asking when they’re going to get their money,” he said.
But of course, why would Wells lie about something which reads like clear fraud, especially when one reads it in the NYT and not in a press release? As for customers asking for money, the total amount demanded – and paid out – is about to get much higher.
Finally, we wonder if and when Warren Buffett, whose choice it was to keep the current board after last year’s scandal, will have something to say about this latest fraud at America’s largest mortgage lender.