“Wait—Wells Fargo is a top business scandal of 2020? Didn’t that mess happen in 2016?
Turns out it’s more accurate to say the scandal started in 2016. Four years later it’s still going strong, meriting a Special Achievement Award among business scandals and thus a place on our list.
D-Day was Sept. 8, 2016, when news broke that the bank had created more than 2 million fake accounts and would pay $185 million in penalties. That spectacular revelation led the news; within weeks congressional committees held hearings, and CEO John Stumpf abruptly retired. With penalties paid and leadership changed, the trouble seemed well on its way to resolution. But it wasn’t.
Fast-forward to 2020: In January, Stumpf agreed to pay a $17.5 million fine to the Office of the Comptroller of the Currency for his role in the scandal, and the OCC sought $37.5 million in fines from five other ex-officers. Wells Fargo in February agreed to pay $3 billion to resolve federal criminal and civil investigations of the scandal—an amount that was “appropriate given the staggering size, scope, and duration of Wells Fargo’s illicit conduct,” said U.S. Attorney Andrew Murray. In November, Stumpf agreed to pay the Securities and Exchange Commission a $2.5 million fine. The SEC also brought charges against Carrie L. Tolstedt, who led Wells Fargo’s retail bank when the fake accounts were created.
And those are just the main developments of 2020. In the intervening years the scandal got bigger, not smaller. The bank discovered it had created 3.5 million fake accounts, not 2 million. It also discovered it had charged more than 800,000 car loan customers for auto insurance they didn’t need or even know about (fine: $1 billion; class-action lawsuit settlement: about $400 million).
Most damaging of all, the Fed in 2018 prohibited Wells Fargo from growing its assets beyond their level at the end of 2017, $1.95 trillion—an unprecedented sanction. That’s a major reason Wells Fargo has badly underperformed the S&P 500 and the other biggest banks (JPMorgan Chase, Bank of America, Citigroup) since the scandal began.
Wells Fargo’s February settlement with the Justice Department includes a deferred prosecution agreement that’s contingent on the bank “continuing to cooperate with further government investigations.” Further investigations? After four years, this epic scandal is still far from over. —Geoff Colvin“
All readings above are provided from Fortune.
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