Jim Cramer appears to have had enough of Wells Fargo (NYSE: WFC) in the wake of the bank's latest revelation that its employees potentially opened more than a million more unauthorized accounts than the bank had previously disclosed.
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The bank had estimated last year that 2.1 million unauthorized accounts had been opened for customers between 2011 and 2015. But its latest estimate, reported after a third-party review, places the figure at 3.5 million dating back to 2009.
"This is a rogue bank," Cramer said on Thursday.
A million extra? That's not a rounding error. That's not embarrassing. That's rogue.
Cramer's criticism of Wells Fargo may seem like just another negative headline heaped on top of the nation's third-biggest bank, but it has a deeper significance.
It was on his show last September, that former Wells Fargo CEO John Stumpf made his first public appearance to atone for the bank's sins. He did so, presumably, because he assumed that Cramer's show on CNBC would be a friendly venue, which at the time it turned out to be.
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Stumpf offered the usual platitudes, but he also almost immediately pushed responsibility for the companywide scandal down to the lowest levels:
We have at any one time 100,000 team members in our branch and retail bank network. And we hire people and people turn over, of those 100,000 the vast majority do the right thing, they come to work. Their life's work and mission is to help people. And I love these people. Every year -- on average for the last five years 1,000 did not do the right thing.
It was around this same time that Warren Buffett, who leads Wells Fargo's biggest shareholder, Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), told Stumpf that the bank executive wasn't taking the scandal seriously enough, and that its magnitude shouldn't be judged solely by the short-term impact on Wells Fargo's income statement, which at the time seemed like it'd be immaterial.
Almost on cue, the media was soon awash with reports that Wells Fargo had spent years silencing and retaliating against whistleblowers within the bank who had tried to bring the unfolding scandal to the attention of their supervisors, members of the bank's board, and even Stumpf himself.
Stumpf subsequently resigned, and had nearly $70 million worth of stock and options clawed back by the bank.
Yet, even after all of this, there were still more revelations that would come out. This past July, the bank revealed that it had inappropriately charged 570,000 auto loan customers for a type of car insurance that they should never have been charged for. Those payments forced approximately 20,000 to default on their loans and have their cars repossessed.
And then, of course, there was Wells Fargo's disclosure this week, in which it upped its estimate of fake-account openings by 67%, or 1.4 million additional accounts.
The good news for Wells Fargo is that it still hasn't lost the admiration of its biggest shareholder, Buffett's Berkshire Hathaway -- though you'd certainly be excused for assuming that Buffett would be circumspect when it comes to publicly criticizing one of Berkshire's biggest stock holdings.
But the bad news is that Wells Fargo has lost Cramer. Maybe that means something, maybe it doesn't. But when one of the stock market and corporate America's biggest proponents starts calling a company "rogue," it's worth taking note.
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