Wells Fargo dam­age be­comes ap­par­ent

Wells Fargo’s dam­age be­comes ap­par­ent

Daily Local News (West Chester, PA) - - FRONT PAGE - By Ken Sweet

In the wake of the bank’s scan­dal, it’s go­ing to get worse for Wells Fargo be­fore it gets bet­ter.

It’s go­ing to get worse for Wells Fargo be­fore it gets bet­ter.

In the wake of the big­gest scan­dal in the bank’s 164-year his­tory, distrust­ful cus­tomers are not open­ing as many check­ing ac­counts or ap­ply­ing for credit cards, and branch vis­its and meet­ings be­tween cus­tomers and bankers are down, too.

Wells has also been hit with sev­eral law­suits from cus­tomers, em­ploy­ees and share­hold­ers. There are calls from politi­cians for fraud charges against the bank. And Wells al­most surely faces set­tle­ments and fines way be­yond the $185 mil­lion it agreed to pay reg­u­la­tors when the scan­dal broke wide open last month.

Or, as Wells Fargo ex­ec­u­tives put it to Wall Street an­a­lysts, us­ing what has be­come a re­mark­ably com­mon term in this age of cor­po­rate malfea­sance, the bank’s le­gal ex­penses are likely to be “lumpy.”

Wells Fargo ex­ec­u­tives, in­clud­ing newly ap­pointed CEO Tim Sloan, are hav­ing trou­ble quan­ti­fy­ing what the long-term ef­fect on the bot­tom line will be.

In­vestors ex­pect Wells to walk away from this cri­sis mostly in­tact, but it is ap­par­ent that the bank’s re­cov­ery will be long and ar­du­ous.

For now, “our im­me­di­ate pri­or­ity is restor­ing trust in Wells Fargo,” Sloan said in a con­fer­ence call with in­vestors Fri­day.

The San Fran­cisco-based bank is en­gulfed in a cri­sis that started in mid-Septem­ber, when Wells reached a set­tle­ment over al­le­ga­tions that its em­ploy­ees opened up to 2 mil­lion bank and credit card ac­counts with­out cus­tomers’ au­tho­riza­tion in or­der to meet high sales goals.

Un­der pres­sure from politi­cians and in­vestors, CEO John Stumpf abruptly re­tired on Wed­nes­day.

On Fri­day, Wells re­ported third-quar­ter earn­ings of $5.6

AP PHOTO/LYNNE SLADKY, FILE

Cus­tomers walk into a Wells Fargo bank in Pem­broke Pines, Fla.

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