Wells Fargo is facing calls from lawmakers to press pause on creating more partnerships with colleges.
According to news from The Wall Street Journal, citing a letter Senator Dick Durbin, a Democrat from Illinois, sent to the bank this week, Durbin is asking the financial institution (FI) to stop adding more colleges to its partnership program until the order by the Federal Reserve last month that caps Wells Fargo’s growth is addressed.
In what was seen as an unprecedented move in February, the Federal Reserve said it would not allow the bank to grow in size or scope beyond the slightly less than $2 trillion on the books, in effect curbing asset growth beyond 2017 — a limit that will remain in place until “sufficient improvements” are made that address “widespread consumer abuses.”
As has been widely reported, the company has been under fire for opening accounts without customer permission and signing consumers up for auto insurance they neither asked for nor needed. The Fed has never before placed limits on how large a company can grow. However, the FI can still lend and take deposits. In reference to corporate governance, Wells Fargo has two months to boost board oversight and compliance efforts. Three board members are on track to be replaced by April and a fourth by the end of 2018.
Wells Fargo’s college program combines a student’s ID badge with a debit card. Senator Durbin wants to know if the bank has alerted students about the enforcement action.
The Wall Street Journal, 112 colleges in the U.S. received $18.7 million in fiscal 2017 from banks that included Wells Fargo. In return for those royalties, the banks got access to their students.
“Almost every week we hear new revelations about misbehavior by Wells Fargo — this time, continuing to charge students high fees for financial products that they aggressively market on campus,” Durbin said. “Students need to know the real story about this bank.”
Durbin wants the bank to stop any plans it may have in the works to expand its college campus program and wants a list of all the colleges and universities in the country with which it has contracts.