Fed lifts restrictions placed on Wells Fargo in 2018 because of its fake-accounts scandal

Yahoo

2 days ago

NEW YORK (AP) — The Federal Reserve said Tuesday that Wells Fargo is no longer subject to the restraints the Fed placed on the bank in 2018 for having a toxic sales and banking culture.
It's a win for Wells Fargo, which has spent nearly a decade trying to convince the public and policymakers that it had changed its ways.
"We are a different and far stronger company today because of the work we've done,' said Wells Fargo CEO Charlie Scharf in a statement. Scharf also announced that each of the 215,000 employees at Wells Fargo would receive a $2,000 award for turning the bank around.
Wells Fargo used to have a corporate culture where it placed unreasonable sales goals on its branch employees, which resulted in employees opening up millions of fake accounts in order to meet those goals. Wells' top executives called its branches 'stores' and employees were expected to cross-sell customers into as many banking products as possible, even if the customer did not want or need them.
After an investigation by The Los Angeles Times, Wells Fargo shut down its sales culture and fired much of its leadership and board of directors. The fake accounts scandal cost Wells Fargo billions of dollars in fines and lost business, and permanently tarnished its reputation, particularly because the scandal broke only a few years after the Great Recession and financial crisis. It was later revealed that Wells Fargo opened up roughly 3.5 million accounts that were not wanted or needed by customers.
In order to push Wells to fix itself, the Federal Reserve took the unusual step of placing Wells Fargo in a program where the bank could grow no larger than it was in 2018. No bank had previously been placed into such a program, known as an asset cap.
Since taking over in 2019, Scharf's goal has been to convince the Federal Reserve that Wells Fargo had fixed its toxic banking practices.