One of the nation’s oldest and most influential banks is Wells Fargo. As a result of an infamous scandal that is still ongoing, its reputation is in ruins today.
In 2013, the first allegations of fraud in Wells Fargo’s sales division appeared. According to Harvard Business School experts, the bank opened at least 3.5 million fictitious accounts for unknowing clients. The government has regularly fined the bank as a result of these and other problems.
Banking, consumer, trading, and workplace safety regulators are still keeping a tight eye on Wells Fargo. The bank claims it is making efforts to abide by a flurry of consent orders issued by the government beginning in 2016. In addition to fines, the Federal Reserve imposed an asset cap on Wells Fargo in 2018.
At a news conference in late 2021, Federal Reserve Chairman Jerome Powell said, “We continue to hold the firm accountable for its deficiencies with an unprecedented asset cap that will remain in place until the firm has remedied its problems.
The Wells Fargo problems are continue developing. Charles Scharf, the newest CEO of Wells Fargo, was singled out by lawmakers for his company’s corporate governance flaws during hearings before the House and Senate banking committees in September. Scharf, a protégé of Jamie Dimon, CEO of JPMorgan Chase, claimed he was hired to bring about significant reforms at the bank. In his second day of hearings, Scharf stated that “seventy percent of our company’s operating committee is new from when I started.”
Given the reputation senior management has developed for putting strict business objectives on its personnel, experts said the government has broad jurisdiction to impose restrictions on Wells Fargo. These high expectations may have encouraged workers to act dishonestly and occasionally illegally.
According to Saule T. Omarova, a professor at Cornell Law School, “it is remarkable that a huge institution of such prominence was yet able to participate in fraud and essentially criminal operations on such a scale.”
Wells Fargo said in a statement to CNBC that the bank is overhauling its culture and practises as well as its management, risk, and control structures. The bank stated that “there is more work we must do to rebuild confidence, and we are dedicated to undertaking that effort.”