This is what the Wells Fargo cross-selling scandal means for banks | Techy Kings

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Wells Fargo is one of the oldest and most powerful banks in the United States. His reputation today is in tatters, following a notorious scandal that is still going on.

Reports of fraudulent activity in Wells Fargo’s sales department first surfaced in 2013. The bank opened at least 3.5 million fraudulent accounts for unwitting customers, according to researchers at Harvard Business School. These and other issues have caused the government to fine banks repeatedly.

Regulators for banking, consumer protection, commerce and workplace safety continue to monitor Wells Fargo. The bank said it was working to comply with a series of consent orders issued by the government since 2016. In addition to fines, Wells Fargo has faced limits on its assets, issued by the Federal Reserve in 2018.

“We continue to hold the firm accountable for its shortfalls with unprecedented asset limits that will remain in place until the firm resolves its problems,” Federal Reserve Chairman Jerome Powell told reporters at a press conference in late 2021.

The issue at Wells Fargo is still ongoing. In September hearings before the House and Senate banking committees, lawmakers singled out Wells Fargo’s newest CEO, Charles Scharf, for his company’s corporate governance issues. Scharf, a protégé of JPMorgan Chase CEO Jamie Dimon, said he was brought in to make big changes at the bank. “Seventy percent of our company’s operating committee is new since I joined,” Scharf said on the second day of his hearing.

Experts say the government has broad powers to limit Wells Fargo, given the reputation senior management has earned for imposing demanding business goals on its workforce. These lofty goals may have led employees to engage in deceptive and sometimes allegedly illegal behavior.

“The fact that such a large institution with vested interests is able to engage in fraud and illegal transactions so effectively on such a scale — that’s shocking,” said Saule T. Omarova, a professor at Cornell Law School.

In a statement to CNBC, Wells Fargo said the bank is reviewing its management, risk and control frameworks while changing company culture and policies. “[T]it’s more work we have to do to rebuild trust, and we’re committed to doing that work,” the bank said.

Pay attention videos to see how the Wells Fargo scandal positions banks in 2022.

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