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Wells Fargo (WFC) Faces Probe Over Consumer Deposit Accounts

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Per Wells Fargo & Company’s (WFC - Free Report) regulatory filing, the Consumer Financial Protection Bureau is currently investigating the company’s practice of freezing consumer deposit accounts. The probe is based on suspicions of fraudulent activity by any third parties or account holders themselves.

The regulator is also reviewing some historical disclosures made by Wells Fargo to customers regarding the minimum qualifying debit card usage required for them to receive a waiver of monthly service fees on certain consumer deposit accounts.

Further, the United States Department of Justice is investigating certain activities in the company’s foreign exchange business, including whether customers may have received pricing inconsistent with commitments made to them.

Troubles at Wells Fargo started post breakout of the bogus account openings scandal in late 2016. Wells Fargo was subjected to investigations of several departments and businesses. As a result, a cap on its asset growth was imposed by the authorities. This will remain in place until the bank is able to give a reasonable assurance of staying out of trouble. The revelation also led to several layoffs and restructuring of operations.

The company continues to enhance compliance and operational risk management systems, along with timely remediation practices. Also, Wells Fargo is spending more on technology to ensure better data management and cybersecurity. These activities, along with close supervision of regulatory authorities, might help Wells Fargo move past the scandals and make way for growth.

As of Mar 31, 2021, Wells Fargo expected high end of losses it could face regarding the legal actions above what has been accrued for to be $2.6 billion, up from $2.4 billion at the end of 2020.

Shares of Wells Fargo have gained 92.6% in the past six months compared with 47.5% growth registered by the industry.

Currently, the stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

JPMorgan Chase & Co. (JPM - Free Report) has witnessed an upward earnings estimate revision of 16.6% for 2021 over the past 30 days. Its shares have gained 37.5% over the past six months. The company currently flaunts a Zacks Rank #1.

Fifth Third Bancorp (FITB - Free Report) 2021 earnings estimates have increased 10.2% over the past 30 days. The company’s shares have gained 57.8% over the past six months. At present, it carries a Zacks Rank #2 (Buy).

M&T Bank Corporation (MTB - Free Report) has witnessed an upward earnings estimate revision of 6.3% for the current year over the past 30 days. It currently carries a Zacks Rank of 2. The stock has gained 31.2% over the past six months.

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