Wells Fargo & Co. is entering 2020 with considerable work left to do in rehabilitating its reputation with federal lawmakers and consumers.
In the past week, two banking analysts predicted Wells Fargo's financial, regulatory and political challenges will continue well into the new year.
Meanwhile, Axios and the Harris Poll released a ranking of the 100 most visible companies in America by their reputations. Survey respondents were asked to rank the companies according to criteria that included "good culture," "vision" and "ethics."
Wells Fargo ranked 96th, followed by Sears at 97th, Trump Organization at 98th, Philip Morris USA at 99th and the U.S. government at 100th. The grocery store chain Wegmans was first.
The ranking for 2020 actually represented a one-spot improvement for Wells Fargo, which was listed with a "very poor" reputation status.
The main Harris Poll comment on Wells Fargo was that the bank "is in the middle of a major apology and rebranding cycle" that began in May 2018. The "re-established 2018" marketing campaign aims to rebuild trust among customers, employees and regulators.
The poll comment included a brief synopsis of the fraudulent customer account scandal that surfaced in September 2016.
Other corporations with Triad or prominent North Carolina ties included: Amazon (2nd); Lowe's Cos. Inc. (20th); Kroger (21st, owner of Harris Teeter): Berkshire Hathaway (45th); PepsiCo. (50th); American Airlines (80th); and Bank of America Corp. (92nd).
On the congressional oversight side, Cowen analyst Jaret Seiberg cited comments made by Rep. Maxine Waters, D-Calif., and chairwoman of the House Finance Services committee.
Waters, along with Sen. Elizabeth Warren, D-Mass., and a 2020 Democratic presidential candidate, has been among the most vocal critics of Wells Fargo's executive management and board of directors.
On Sept. 1, 2017, the bank confirmed that at least 3.53 million checking and credit-card accounts were affected by the scandal. The bank has said it cannot rule out that 38,722 unauthorized customer accounts were established in North Carolina and 23,327 in South Carolina.
On Oct. 16, Wells Fargo executives told analysts the scandal did not appear to have a short-term ending in sight related to quarterly accruals that have reached at least $3.9 billion as of June 30.
Since the fall of 2016, Wells Fargo has agreed to pay more than $4 billion to settle various regulatory disputes, including $2.09 billion announced in August 2018, $1 billion announced in April and $575 million in December 2018.
Waters has said she wants "special attention" in Congress placed on the bank's new chief executive, Charles Scharf, and a board that had underwent significant personnel changes the past 3¼ years.
Scharf took over as chief executive Oct. 21, coming over from Bank of New York Mellon as the fourth executive to serve in that Wells Fargo role since September 2016.
"The company itself obviously has a series of extraordinary businesses and there is no difference now," Scharf told analysts Sept. 27. "There are challenges and the company is clearly focused on putting them behind us. I won't come in with any preconceived notions.
"My job is to ensure that work continues to get done while we build upon the strengths of the business."
Waters told Politico that Wells Fargo may need to be broken up because she believes it has become too big for Scharf and the board to effectively manage.
Seiberg said that while it is very unlikely Congress would agree to break up Wells Fargo, he pointed out Waters' comments "are limited to Wells Fargo," and not the other three so-called too-big-to-fail national banks JPMorgan Chase & Co., Bank of America and Citigroup.
"It seems like that Scharf will have to testify this spring," Seiberg said.
"We could also see Wells Fargo Chairwoman Betsy Duke summoned to Capitol Hill."
Along with the U.S. Justice Department, the Securities and Exchange Commission, Comptroller of the Currency, the Consumer Bureau of Financial Protection, U.S. Labor Department, various state attorneys general and Congress have investigated the bank's overall sales practices.
Seiberg said "the worse outcome is for Wells Fargo to become part of the 2020 presidential election," particularly if raised by Warren.
"Wells Fargo is likely to remain in this spotlight until at least after the election. And if Democrats win, the bank will be even more exposed to onerous policy developments."
The biggest regulatory shadow hanging over Wells Fargo is the Fed's order, issued Feb. 3, 2018, that does not allow the bank to increase its total assets beyond the $1.93 trillion it had on Dec. 31, 2017.
"Given this political environment, it is hard to see how the Federal Reserve could vote to lift the asset cap on the bank next year," Seiberg said.
"We also question if it would matter if the Federal Reserve lifted the asset cap, as we continue to believe that the Comptroller of the Currency has separate enforcement actions in effect. These orders are confidential, which both sides are barred from disclosing the contents."
Dick Bove with Odeon Capital, lowered on Dec. 19 his ranking on Wells Fargo from "hold" to "sell," saying it "appears to be directionless at the moment ... the company is formulating its new business model so its future direction is unclear ... moreover, in the mean time, a series of events are likely to push earnings lower."
Bove, who has a well-earned reputation for pulling no punches with his analysis, had raised Wells Fargo from "hold" to "sell" in August.
He said at that time "I am convinced that the company will recover."