Wells Fargo Struggles as Profit Tumbles Following Scandal

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The fall of Wells Fargo is deepening due to its scandal that has been in the news for the past year.

The bank posted profits that disappointed on Friday, bucking a trend that other big rivals had set earlier in the week. The Ohio government has extended its ban of working with Wells Fargo and lawmakers have questions if the bank has paid a sufficient price for the scandal.

Wells Fargo was knocked of the perch of being the most valuable bank in the world after it was hit by the scandal, but is slipping further down. Profits were down close to 19% to just over $4.57 billion for the just ended third quarter, in comparison to last year during the same quarter of $5.64 billion.

Revenue was down 2% to end the quarter at $21.8 billion.

Those numbers did not make Wall Street happy. The share price of the bank fell early in trading on Friday and though some losses had been parred during the day it closed 2.75% down.

While the loss was not significant, it was striking when it is compared with competitors. Bank of America and JPMorgan Chase stock prices rose 17% and 12%, respectively over the same period, with both posting revenue and profits that beat Wall Street expectations.

CEO at Wells Fargo Timothy Sloan, when referring to the poor earnings report, said that the bank was making progress in important areas, but did acknowledge it continues to struggle.

Sloan added that over the last year the bank has made many fundamental changes to transform it as part of its effort to rebuild consumer trust and a better bank.

Planning a role in what weighed the bank down during the three-month period, dated back to the era of the Great Recession. Wells Fargo had set aside more than $1 billion to settle a probe into its mortgage lending practices before the financial crisis.

However, many of its problems come from its own admissions in 2016 that it opened millions of different accounts without the consent of customers who were then wrongly charged for overdrafts and other fees which in turn hurt their credit.

The bank received immediate backlash in Washington for the scandal that forced veteran CEO John Stumpf to step down and some of the banks senior executives to give up bonuses in the millions of dollars.

The bank continues to struggle satisfying critics and received more backlash after revealing the opening of false accounts took place for far longer than officials first acknowledged.

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