Wells Fargo, one of the largest banks in the USA, ran into backlash consumers and politicians this week in connection with their move to “close all existing personal credit lines in the coming weeks and stopped offering this product ”, CNBC reports.
The news comes as the financial giant is trying to restore its image after major account scandal shook the organization in 2016… The bank was found to have pressured branch employees to open more accounts, resulting in more 3.5 million fake accounts from 2002 to 2017.
Once the lawsuit has been settled, US Federal Reserve Limited how the bank could manage financial assets until they showed that their the practice has been improved and in line with the law.
In simple terms, this means that the federal government places limitation on the number of loans, securities and other financial assets that the bank can take on. CNBC said the restrictions make it difficult for the bank to compete with competitors in the sector, including JP Morgan Chase and Bank of America.
How were members notified of the change?
Personal lines of credit to be terminated vary in cost from 3000 to 100000 dollars… Wells Fargo also discontinued several other lines of credit last year, including home equity and some of the car loans offered.
In a statement offered to CNBC, the bank said the cut in these lines of credit had been made “Striving to simplify our product offerings,“and that by canceling these loans the bank will be able to” better satisfy the borrowing needs of our clients through credit cards and personal loan products.“
However, on Wells Fargo the page offering these loans is still active although CNBC refrained from a letter stating that all accounts would be closed within the next sixty days.
The letter contained Section “Frequently Asked Questions” this warned the loan holders that this could affect their credit rating. In reply, Senator Elizabeth Warren tweeted: “None @WellsFargo the client needs to see that his credit score is suffering just because their bank is being restructured after years of fraud and incompetence… “