Louisiana’s Republican Senator David Vitter sent a letter on September 29, which was viewed by Reuters, to John Stumpf, chief executive of Wells Fargo, asking him to provide a “full accounting” of customers affected by their improper sales practices.
As a member of the US Senate’s banking committee and the head of its small business committee, Vitter wrote that discussions between congressional staffers and Wells Fargo representatives “have indicated that the fraudulent activity of your employees was not limited to Wells Fargo’s consumer banking operations. Thousands of small business owners were impacted by this fraud.”
Investigations by Vitter’s committee can point to Wells Fargo’s fraudulent practices being directed to about 10,000 small businesses in addition to the possible 2 million consumer accounts which Wells Fargo opened fraudulently. This new revelation comes about one month after the bank reached a settlement of $190 million with its customers for opening accounts for them without their knowledge.
The news of the bank’s behavior caused a sensation among consumers, resulting in the firing of about 5,300 employees for opening up accounts improperly.
Stumpf appeared before two congressional committees, and other oversite governmental authorities such as the Justice and Labor Departments, which led to investigations into the bank’s sales practices.
“While the vast majority of accounts in the settlement were consumer accounts, to the extent there were small business accounts included, all were previously reported in the total number of potentially impacted accounts,” said Wells Fargo spokeswoman Jennifer Langan. “As stated earlier, Wells Fargo has already refunded 115,000 accounts. The impacted accounts, including Small Business, were part of our Retail Bank business.”
But a Consumer Financial Protection Board spokesman said Langan’s words were incorrect. The two million accounts in the settlement did not included any small business accounts.
According to the Bureau of Labor Statistics, the United States added 151,000 jobs to the job market, helping to bring the unemployment rate down to 4.9 percent.
The figure of 151,000 was lower than expected and was a sharp decline from the number of jobs that were added in December, which was 292,000. The lower figures were pushed down due to the loss of jobs in education and transportation.
General US economic growth slowed as well, down to an annual rate of only 0.7 percent during the last quarter of 2015. Third quarter growth was measured at 2 percent in 2015.
The statistics have investors worried, reflected in a downturn in the Dow Jones average which closed lower by 215 points, or 1.3 percent. For other investors the news is a sign that the Feds will most likely not raise interest rates.
“I’m a little surprised the markets reacted somewhat negatively to it,” said Sean Lynch at the Wells Fargo Investment Institute. “It is actually a pretty good number that should be welcomed by the equity markets, it takes some of the concern the Fed moves too quickly off the table a little bit.”
According to a recently published study from the Urban Institute, 35 percent of Americans have had their debt and other past due bills reported to collection agencies.
Caroline Ratcliffe, a senior fellow at the Urban Institute, a Washington-based think-tank, explained that often consumers get behind on their credit card payments or their hospital bills. Mortgages, car loans and student loans are also put aside, unpaid. Sometimes gym membership fees and cellphone bills can also go to a collection agency if they remain unpaid for too long. Once debt ends up in the hands of a collection agency credit scores and job opportunities can be negatively affected.
“Roughly, every third person you pass on the street is going to have debt in collections,” Ratcliffe said. “It can tip employers’ hiring decisions, or whether or not you get that apartment.”
The results of the study showed that 35.1 percent of all people with credit cards have been reported to collection agencies for debt averaging $5,178, based on records from September 2013.
The vast majority of this debt is concentrated in southern and western states. Texas is overly represented to collection agencies, with 44.3 percent in Dallas, 44.4 percent in El Paso, and 51.7 percent in McAllen. Las Vegas has about half of its residents with debt in collections.
Ratcliffe blames frozen salaries for much of the debt problem in the worst hit states. In many places wages have been struggling to keep up with inflation during the past five years of economic recovery. In an unrelated survey Wells Fargo discovered that after-tax income dropped for the lowest 20 percent of earners during the same time frame.