Wells Fargo is one of those banks who cannot seem to get things right as of late. After their account fraud affected thousands of customers, they are now in trouble yet again. Federal regulators have hit the bank with new sanctions after they failed to dismantle itself in case a bankruptcy would happen. It is evident this bank is on the brink of collapsing, and consumers should pull their funds out as quickly as possible.
Wells Fargo Failed Another Stress Test, of Sorts
Things are not looking all that great for what one was touted to be one of the top financial institutions in the world. Wells Fargo, as well as any other US bank, required having a contingency plan in place as a result of the Dodd-Frank regulation. Part of these requirements includes having a “will” for the bank should it be faced with bankruptcy. Unfortunately, WF’s plans to accommodate such a drastic change is insufficient.
It has to be said; Wells Fargo is the first bank to be penalized for their lack of contingency plans, although they will not be the last. Regulatory officials are conducting these stress tests at an accelerated pace as of late. Whether or not that indicates a financial collapse is imminent, remains unknown. But it is clear some major US banks are in troubled waters, to say the least.
Unfortunately for Wells Fargo, these new sanctions come in a long line of other sanctions, backlash, and scrutiny over their practices as of late. Not adequately remedying all of their deficiencies is a very troublesome sign. Especially when considering how these concerns were initially raised back in April of 2015, and nothing has been done to alleviate the problems.
For the time being, Wells Fargo is prohibited from establishing international bank entities, or even acquiring any non-related bank business. But that is not all, as the bank will still need to meet the requirements in a new test, which will be conducted in March of 2017. If the institution fails again, further penalties will be imposed.
To make matters even worse, the bank has a maximum of two years to address all regulatory concerns. Failure to do so may result in selling off certain assets or even cease particular operations. This is a warning sign to Wells Fargo customers that pulling out funds now is in their best interest before the entire bank collapses.
Assuming Wells Fargo would every collapse,t the current complex legal structure in place to wind down the bank is a primary concern. Back in 2008, the Lehman Brothers collapse was so troublesome due to a nearly identical legal structure. While it remains to be seen if WF will ever file for bankruptcy, once has to be prepared for all scenarios in these uncertain economic times.
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