Question

How did the Wells Fargo scandal affect the company financially?

Please provide a financial ratio analysis

Answer 1

Wells Fargo, from 2002 and 2016, falsified the bank records, unlawfully misused the personal information of customer, harmed the customer's credit ratings, and wrongfully collected millions of dollars in interest and fees. Wells Fargo scandal caused a great dent in the public image of the company. Wells Fargo market value also took a tumble as company shrank it's profit, loans, deposits and revenue due to the fraud. The company seen a huge reduction in the new checking account and less cross-selling and thus declined the profits for the bank. The company was fined $3 billion by federal authorities for settling the charges on the fraudulent practices in sales for more than a decade. However the company still faces an even bigger headache on the regulatory. Federal Reserve's unprecedented sanctions in early 2018 prevents Wells Fargo from increasing its assets beyond $2 trillion otherwise the asset cap will not removed soon. Because of it the company may not be able to advance the loans required to increase the profits