Nine Reasons Why Wells Fargo Still Faces an Uphill Climb

Wells Fargo & Co and its new CEO would like to think that the worst is behind them after paying off more than $4 billion in fines over the past four years. However, the bank’s troubles are still closer to the front windshield than the rearview mirror.

Here are nine reasons why Wells Fargo still has a long way to go before they are out of the woods.

1. The Department of Justice is still considering if executives were forthcoming in providing information regarding false accounts during the height of its problems.
   
   
2. The Department of Labor is checking to see if Wells Fargo acted on whistleblower complaints and the Securities and Exchange Commission is checking if there was backlash against whistleblowers.
   
   
3. The United States Securities and Exchange Commission is also investigating if the bank inflated performance metrics.
   
   
4. Wells Fargo is under tough regulatory watch to make sure it has fixed all procedures that allowed employees to commit fraud. Reuters stated that the watch dogs for procedures include at least the OCC, SEC and the Consumer Financial Protection Bureau.
   
   
5. Wells Fargo still must repay more customers for costs that came with the abuses.
   
   
6. Wells Fargo has an asset cap that limits the bank’s ability to grow until the government feels comfortable with its risk management controls.
   
   
7. Wells Fargo is under scrutiny from the Community Reinvestment Act which is focused on service for poor communities. The bank’s rating right now is “needs to improve.” This can limit acquisitions and branch expansion. Certain business funding requires a strong CRA rating.
   
   
8. Wells Fargo’s bank executives may still be required to testify in front of Congress regarding the bank’s practices. This would potentially continue under a new administration focused on stricter regulations. While the new CEO would like to avoid that, Wells Fargo is a case study on how difficult it is to restore a damaged brand. Banking scandals seem to play well for certain politicians determined to be seen as defending the common consumer.
   
   
9. Analysts expect that mergers and acquisitions will continue to heat up in the banking industry, and that community banks may be acquired by the nation’s largest financial institutions. With Wells Fargo under scrutiny, it is unlikely that they will be able to take advantage of strong M&A opportunities that present themselves in 2020 and 2021.