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Wells Fargo still has 'substantial' work to resolve asset cap


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Wells Fargo still has 'substantial' work to resolve asset cap

Wells Fargo & Co. booked a significant litigation accrual in the third quarter, as executives said the bank was still working to resolve its regulatory and legal issues.

In its quarterly earnings, the bank recorded a $1.6 billion litigation accrual related to its retail sales practices. Wells Fargo has been struggling to shake its fake-accounts scandal since first paying a fine to the Consumer Financial Protection Bureau in 2016. Other scandals have emerged in the years since, causing the Federal Reserve to place an asset cap restriction on the bank's growth in 2018, a restriction that remains in effect.

Speaking on an earnings call, President and interim CEO C. Allen Parker said the bank has made progress on the Fed's consent order but did not pledge a near-term exit.

"The feedback that we are getting from the Fed on a constant basis is enabling us to continue to make progress in terms of responding to their expectations. We're a good ways down the road, but I think it's fair to say that we have a substantial amount of additional work to do," Parker said.

During the call's question-and-answer period, analysts asked about the litigation accrual, but management declined to provide much detail. Parker said he could not offer much color and noted that the bank never discloses how much of an accrual was tied to a specific piece of litigation.

"Our discussions with the [Department of Justice] and the SEC are ongoing. And when we have more information to disclose, we'll, of course, do so," he said.

In August, The New York Times reported that the bank was still charging fees on accounts that had been closed. Asked about the report on the call, Parker said the bank is looking into it and has been in contact with regulators on the matter.

"We're at the point now where we're coming to some conclusions about what happened, but it would frankly be premature at this point for me to really give you any information in that regard," Parker said. "We're taking a look at what happened. We're trying to determine the veracity of what was said in The New York Times."