Wells Fargo Snafu Postpones Deposits for UCLA, Others
A data-processing problem at Wells Fargo Bank delayed the deposit of $40.3 million in paychecks and other funds for thousands of employees of UCLA and 118 other companies and institutions, the bank confirmed Thursday.
University of California officials and others say the problem is the most severe in a string of complications arising from Wells Fargo’s April takeover of First Interstate Bank. Wells Fargo, however, said the problem stemmed from human error and was not merger-related.
The bank declined to identify the affected institutions but said that they included several UC campuses in addition to UCLA.
At UCLA, 6,500 of the total 12,500 direct-deposit paychecks may not have been posted to individual bank accounts as expected Thursday, prompting university officials to issue a memo campuswide informing workers that their accounts might be credited late. UCLA’s payroll office was swamped with calls.
Wells says that the problem has been fixed and that the direct deposits should be accessible no later than today.
Businesses and individual customers have been complaining for weeks about merger-related problems, ranging from the inconvenience of branch closures to delays in the wire transfer of hundreds of thousands of dollars of escrow money.
The complaints appear to be escalating as Wells intensifies the process this week of closing branches, converting accounts and merging operating systems.
Analysts who observe bank mergers say most such problems are to be expected when two massive institutions attempt to marry their personnel, facilities and practices.
“When you merge two computer systems and two branch systems, you’re going to have some people who experience adjustment problems,” said J. Kimball Dietrich, associate professor of finance and business economics at USC’s School of Business.
But they add that they are unfamiliar with a problem of the magnitude of the UCLA payroll mix-up.
“That would be a pretty big problem, and I would think they’d be careful about protecting those kinds of big accounts,” said John Schrup, a 15-year veteran of First Interstate who is now a senior vice president with Sanwa Bank California.
Schrup says his bank has seen the number of defectors from Wells/First Interstate increase by 50% since Wells began closing old branches a week ago.
As of Thursday, UC officials had still not received an adequate explanation for the delay, though they held out hopes that employees would be able to access their funds by today.
But this and other problems are prompting UC officials to consider dumping Wells Fargo and finding another bank to handle the nine-campus system’s tens of millions of dollars of electronic and check disbursements to employees and vendors.
“We need an efficient banking system like everyone else,” said Greg Colley, assistant director of cash and banking operations, in the treasurer’s office of the UC headquarters in Oakland. “We don’t want to spend a lot of personnel time chasing our tails like this.”
Wells spokeswoman Lorna Doubet said the problem was unrelated to the consolidation of Wells’ and First Interstate’s automated clearinghouse operations, which handle complicated computerized fund transfers. That merger of the operations occurred about a week ago. Rather, she said, the problem was due to human error in the data processing department--an error that took three to four hours to correct, causing the bank to miss crucial deadlines for the electronic transfer of funds to other banks.
“We missed deadlines with the Federal Reserve and Visa, which, in turn, distribute those files to recipient banks around the country. . . . And the direct deposits were not made on time,” she said. “We’re very sorry about it.”
But customers such as the UC’s Colley are skeptical that the problem isn’t the direct result of the merger. “This is all taking place in the context of Wells’ conversion to the First Interstate accounting system . . . last week,” he said.
For UC, the problem is only the latest in a series of much more minor irritations that have plagued the UC’s relationship with the bank, he said. As an example, under Wells’ old system, UC could make changes to its automated payroll files after sending them to the bank, provided there was adequate lead time.
But Wells changed the system without notifying UC officials, Colley said.
“We have been very frustrated with Wells Fargo,” he said. “The process by which they are merging those operations that we use as a large [institution] has been done with relatively little contact with us, with the exception of statements. . . . It has not been a transparent change.”
The UCLA payroll problem came to light Wednesday evening, when an expected package of direct-deposit paychecks was not received by UCLA employees’ federal credit union. The credit union called UCLA payroll, which, in turn, called Wells.
Upon discovering the delay, UCLA officials offered to provide interim credit, call banks and provide letters to ensure that employees didn’t bounce any personal checks as a result of the mix-up.
A total of 12,500 UCLA employees have their paychecks directly deposited into their bank accounts, representing a payroll of about $33 million. Of those, about 6,000 got their accounts credited as usual Thursday, said Mary E. “Pixie” Ogren, UCLA’s director of payroll systems and services.
