Per a Congressional report released recently, Wells Fargo WFC is not complying satisfactorily with the multiple settlement terms imposed on it as a consequence of the sales scandal.
The report published by U.S. House Financial Services Committee is a result of a year-long research on Wells Fargo’s compliance with five regulatory orders issued in response to widespread consumer abuses and compliance breakdowns.
The report has questioned regulators for not making aggressive efforts to ensure that Wells Fargo meets the terms. In fact, the report mentioned that regulators were aware that the bank was lagging at correcting past mistakes, as recently as December.
Chairman AL Green said, “This report demonstrates not only that Wells Fargo is failing to comply with the terms of multiple settlement agreements dating back to 2016 and 2018, but also that our federal regulators have simply failed to enforce those agreements, despite having ample tools and authorities under existing law to do so.”
Further, the report specifically mentions instances of various communications between Wells Fargo’s representatives and regulators, which show that the bank’s board and management did not take the settlement seriously.
As a conclusion drawn from the report, the committee finds that Wells Fargo still has the potential to cause widespread consumer harm. Also, it said that the former CEO Timothy J. Sloan gave inaccurate and misleading testimony to the Congress during March 2019 hearing.
Keeping in mind welfare of consumers, the committee has recommended regulators to strengthen authority and enhance bank management and board accountability. Also, it has asked to improve transparency.
Chairwoman Maxine Waters has convening three hearings on Wells Fargo to be held this month. She said, “Wells Fargo has clearly demonstrated an unwillingness and inability to stop harming its customers, so this Committee is working overtime to make sure consumers are never subjected to the types of abuses and failures committed by this megabank again.”
Wells Fargo has been embroiled in a slew of scandals ever since the revelation of the sales scandal, which was followed by disclosure of issues in its auto-insurance business, online bill-pay services, and the Wealth and Investment Management segment. With the ongoing review process of business practices, more wrongdoings may be reported, consequently straining the top line.
Over the past six months, shares of Wells Fargo have lost 19.6% compared with 3.3% decline recorded by the industry.
Currently, the company carries a Zacks Rank #4 (Sell).
A few better-ranked stocks from the same space are mentioned below. Each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
JPMorgan’s JPM Zacks Consensus Estimate for current-year earnings has been revised upward by 2.8% over the past 60 days. Moreover, the stock has rallied 10.7% in the past 12 months.
State Street STT has witnessed upward earnings estimate revision for the current year over the past 60 days. The company’s shares have gained 15.6% in the past six months.
The consensus estimate for earnings of Citigroup C has been revised upward for the current year over the past 60 days. The stock has gained 2.5% over the past 12 months.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>