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Sen. Warren Presses Wells Fargo on Fees for Closed Accounts

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Sen. Elizabeth Warren has asked Wells Fargo for details on alleged fees being imposed on clients months after they’d closed certain accounts. In some cases, the overdraft fees totaled “hundreds or even thousands of dollars,” she said in a letter sent to the bank Wednesday.

The request by Warren (D.-Mass), who is running for president, follows a report last week in The New York Times that uncovered the bank “routinely” keeping open accounts closed by bank customers, she said. The paper reported that bank clients have complained to the Consumer Financial Protection Bureau and to the bank about the charges.

“These new revelations raise grave concerns that despite these assurances, Wells Fargo is still fundamentally broken and has not only continued to scam customers out of thousands of dollars with impunity, but has even targeted customers who were attempting to leave the bank — and may have been victims of previous scams — to unfairly collect one final set of lucrative fees for Wells Fargo,” Warren wrote.

Banks typically “stop honoring all transactions on the specified account closure date,” she explained. 

Warren requested that the bank answer a series of questions about the closed-account matter by Sept. 3, brief her staff on it by Sept. 12 and waive “supervisory privilege” so details about the issue can be given to her staff by federal regulators.

String of Woes

Wells Fargo drew regulators’ attention about three years ago over more than 1 million fake accounts. Currently, it is operating without a permanent CEO. Interim CEO Allen Parker, the bank’s general counsel, was appointed in late March, when then CEO Tim Sloan left amid intense scrutiny from Warren and others. 

In the second quarter, the bank had a 19% jump in net income to $6.2 billion, benefiting from a gain on the sale of its Pick-a-Pay loans. Earnings improved about 33% to $1.30 per share, but revenue was flat at $21.6 billion.  

As for Wells Fargo’s wealth operations, total assets under management declined 1% to $1.9 trillion. The unit had a 35% jump in net income, though, to $602 million.

The firm lost 3% of its advisors vs. Q2’18. It now has 13,799 — down 29 from the prior quarter, 427 from last year and 1,287 from Sept. 30, 2016. It recently named a new wealth leader, Jim Hays, who took the reins from David Kowach — now leading the bank’s community banking and retail operations.

“This new report suggests that rather than truly committing itself to vital reforms, Wells Fargo is still scamming customers, charging them fees on accounts they thought were closed,” Warren added in her letter. “This greed has boosted the company’s bottom line, but left customers with lasting negative effects.”

See a Timeline of Wells Fargo’s Scandals.