3 Reasons Wells Fargo Won't Be Broken Up
Wells Fargo (NYSE: WFC) found itself in national headlines again recently when Sen. Elizabeth Warren (D-Mass.) urged the Federal Reserve to annul the megabank's financial holding company license. She further asked the Fed to essentially break up Wells Fargo, making it sell its non-banking business units and investment banking operations, saying that "continuing to allow this giant bank with a broken culture to conduct business in its current form poses substantial risks to consumers and the financial system."
Such a strong request from Warren -- a member of the Senate Banking Committee and a staunch advocate for breaking up the nation's largest banks -- coupled with Wells Fargo's longstanding regulatory issues over consumer abuses and compliance failures, could leave some investors worried that the Fed or other regulatory agencies might indeed try to split up the bank. But I still think this is an extremely unlikely scenario. Here are three reasons why.
Wells Fargo's biggest regulatory issues stem from its phony accounts scandal, in which thousands of employees at the bank opened millions of depository and credit card accounts for customers without those customers' approval or knowledge. It was one of the biggest scandals in banking history, but it had little to do with the institution's investment banking or non-bank activities. It had everything to do with Wells Fargo's high-pressure sales culture and its lending practices.
Source Fool.com
