Wells Fargo sees 'possible' legal losses rising by $500 million
Wells Fargo, beset by a wave of government probes into suspected customer abuses, boosted an estimate for potential legal losses by $500 million.
The company said it might have to spend as much as $2.7 billion more than what it already had set aside by the end of December to resolve investigations and other legal claims — increasing a $2.2 billion estimate from the end of September. The bank disclosed the figure for additional "reasonably possible" legal losses — essentially a worst-case scenario — in a regulatory filing on Wednesday.
The increase "was due to a variety of matters, including the company's existing retail sales practices matters," it wrote. The bank said that it is in preliminary or exploratory discussions to resolve such probes with the Justice Department and the Securities and Exchange Commission but that "there can be no assurance as to the outcome."
Wells Fargo's scandals began in its retail business, where branch workers under pressure to meet quotas opened millions of bogus accounts, and have since emerged across other business lines. Chief Executive Tim Sloan, a three-decade company veteran who rose to the top in 2016 as scandals forced the exit of his predecessor, is facing heightened scrutiny from Washington as he seeks to resolve investigations and overhaul the firm.
He's set to appear in front of the House Financial Services Committee in March for a hearing on the bank's abuses and cleanup efforts. In a report in January, Wells Fargo said it reformed compensation practices, reorganized units and replaced directors. Still, it acknowledged there's more to do.
Last year, the Federal Reserve imposed an unprecedented sanction on the bank, forbidding it from boosting total assets beyond their level at the end of 2017 level until the bank addressed lapses to the regulator's satisfaction. The lender faces investigations from authorities including the Justice Department, the SEC and the Office of the Comptroller of the Currency.