Wells Fargo quashes hope scandals are over

Bank CEO warns analysts that probes are likely to drag on.

Wells Fargo & Co.’s finance chief was promising analysts they would be kept abreast of the bank’s efforts to resolve scandals when his new boss chimed in.

“I just want to be clear, I’m not suggesting here that any of these public issues will be closed this year,” Chief Executive Officer Charlie Scharf said earlier this month. “The time frames will be driven by when we accomplish that work and when the regulators are satisfied by it.”

It was a telling moment in Scharf’s first earnings call since taking over a bank mired in revelations about customer abuses. Two years after the company launched an ad campaign called “Re-Established” to announce it was ready to start anew, a dark reality is sinking in: It has a long way to go.

“This has dragged on far longer than we would’ve hoped,” Piper Sandler analyst Scott Siefers said in an interview. “This is a cultural issue as much as it is anything else, so I think most of us haven’t seen something of this order or fashion before. It’s new for all parties.”

The Office of the Comptroller of the Currency last week announced civil charges against eight former senior executives, including ex-CEO John Stumpf. Stumpf accepted his penalties while five of the others are fighting the accusations, raising the prospect of keeping the firm’s missteps in the news for years.

After the OCC unveiled a 100-page complaint laced with previously confidential emails, internal memos and testimony, Scharf pledged Wells Fargo will conduct its own review.

The firm has yet to reach settlements with the U.S. Department of Justice and the Securities and Exchange Commission after setting aside more than $3 billion for litigation in the second half of last year. Justice Department staff also scrutinized the actions of individual executives, people familiar with the matter have said. And in its quarterly filings, the bank lists an array of other openended probes, investigations and sanctions including a Federal Reserve-imposed growth cap.