Wells Fargo is back in the cross hairs…again!
Bad actors are just a gift that keeps on giving for Wells Fargo & Co. The bank cannot catch a break. Just when investors felt like the worst was over and were getting their arms around the unprecedented penalty the Federal Reserve imposed on the bank for bad behavior, their patience will be tested again. According to InvestmentNews, details are emerging on yet another scandal.
Earlier this month, the bank reported it faces a new inquiry into its purchase of low-income housing credits. And just before the weekend, Bloomberg Opinion Columnist Stephen Gandel reported that the Justice Department is looking into whether Wells Fargo and other banks colluded with developers on bids for the tax credits.
Blood on the floor?
Until this latest misstep, reports were that Investors were taking some comfort from Wells Fargo’s statements that the Fed penalty — that restricts the growth of the firm until it sufficiently improves its governance and controls and the regulators decide it has fixed its missteps — was having a smaller impact than first expected. In fact, at the beginning of the summer, the bank announced a big increase in dividends and stock buybacks, and the stock jumped about six percent in the past three months.
But now? Now shareholders must decide if the latest disclosures mean they have to rethink that more optimistic view.
Grand jury convenes
The U.S. Attorney’s office in Miami convened a grand jury to look into the accusations against Wells Fargo and subpoenas have been issued to Wells Fargo and developers who have done the deals with the bank. The disclosures add to almost two years of revelations about probes, misconduct and other lapses that have taken a toll on the firm’s reputation, business, and relations with regulators.
Fed Chairman Jerome Powell said in a May letter to Massachusetts Senator Elizabeth Warren that Wells Fargo’s asset cap won’t be lifted until the Fed’s board agrees that the bank has made sufficient progress. Wells Fargo executives have said the company plans to operate under the cap through the first part of 2019.
“We are unable to comment beyond the information provided in the 10-Q,” Beth Richek, a spokeswoman for Wells Fargo, said in an emailed statement, referring to the firm’s regulatory filing.
How much more can one bank take?
Good question. Fines. Penalties. Regulatory oversight. Reputational damage. Was it worth it? Of course, we’re “Monday Morning Quarterbacking” it. But really. Especially when the cost to do the right thing can be so inexpensive. Is it worth it the exposure, fines, and worse? That’s a question only you can answer. But that’s also where Patrina can help. We’ve built a business on helping organizations stay on the “straight and narrow” efficiently and cost-effectively. So, let’s talk. Call 212-233-1155 to ask about Patrina’s cost-effective and comprehensive, 8-module compliance solution, and compliant data capture, file storage, and records archiving specifically designed for the financial services community. Be smart. Be covered.