Bank Regulation

Wells Fargo CEO Says Cost Controls Are Improving At The Bank

Tim Sloan, CEO of Wells Fargo & Company, said Tuesday (Sept. 12) that the company is improving its cost controls in relation to revenue as it claws its way out of its fake account scandal.

Speaking during an investor conference hosted by Barclays and covered by Reuters, Sloan said expenses should account for 60 to 61 percent of revenues in the second half of this year, which is down a bit from the past three quarters. He did note that guidance does not include costs associated with litigation, which surpass the amount Wells Fargo already set aside. While the company wouldn’t say how much it has in reserves for lawsuits, Wells Fargo disclosed in a financial filing during the second quarter that costs could surpass the amount by as high as $3.3 billion.

Sloan also said he expects the company to go back to a long-term target efficiency ratio of 55 to 59 percent sometime in 2018. When asked if the bank foresees more issues, the executive said, “I can’t promise it’s exactly over.” The Wells Fargo CEO did say that management changes, internal reviews and other measures have been ongoing since the fake account scandal came to light.

In August, the bank revealed in a Securities and Exchange Commission (SEC) filing that the Consumer Financial Protection Bureau (CFPB), a government regulatory agency, is investigating if it closed accounts of customers who needed them. According to a Reuters news report citing the regulatory filing, the CFPB is looking into whether Wells Fargo hurt customers by shutting off their access to funded accounts.

In some of the Wells Fargo scandal cases, the actions occurred after customers’ accounts were breached. Reuters reported that a review uncovered several cases in which customers claimed they experienced financial hardship after Wells Fargo unexpectedly froze or closed an account. According to news from Reuters, some of the complaints referenced fraudulent deposits made to accounts. Some customers who were victims of identity theft said that Wells Fargo canceled their accounts but wouldn’t reopen them or give them new ones.

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