Factbox: Remaining hurdles for scandal-hit Wells Fargo

FILE PHOTO: An 1860’s era stagecoach is displayed at the Wells Fargo & Co. bank in downtown Denver, Colorado, U.S. April 13, 2016. REUTERS/Rick Wilking/File Photo

FILE PHOTO: An 1860’s era stagecoach is displayed at the Wells Fargo & Co. bank in downtown Denver, Colorado, U.S. April 13, 2016. REUTERS/Rick Wilking/File Photo

(Reuters) – Wells Fargo & Co (WFC.N) has racked up well over $7 billion in penalties since a sales practices scandal erupted in 2016, and continues to face headwinds.

Here are some of the remaining shoes that have yet to drop:

More hearings: The House Financial Services Committee said on Friday that it will conduct three Wells Fargo hearings next month where new Chief Executive Charles Scharf and other company officials will be probed about the scandal. The bank’s executives have in the past been called to testify before Congress about the bank’s wrongdoings and explain how the bank has changed. Scharf has tried to place the scandal squarely in the past, describing “historical” and “legacy” issues, but lawmakers will rehash Wells Fargo’s mistakes in public.

Consent orders: Wells Fargo is currently operating under roughly 14 consent orders with various regulators including the Office of the Comptroller of the Currency, Securities and Exchange Commission and the Consumer Financial Protection Bureau. Under the orders, the bank will endure intense regulatory scrutiny until it proves it has fixed procedures that allowed employees to create potentially millions of unauthorized accounts, and sell auto insurance and other add-on products that customers did not want or need. The orders also require Wells Fargo to repay customers for costs associated with its consumer abuses. So far the bank has paid out at least tens of millions of dollars in remediation.

Asset cap: The most notable consent order looming over the bank is the U.S. Federal Reserve’s asset cap, which put an unprecedented growth restriction on the bank’s balance sheet until it proves that it has overhauled its risk management and controls. Since the asset cap was announced in early 2018, bank executives repeatedly extended the timeline for getting it removed and have since stopped giving any guidance on the issue. On his first public conference call last month, Scharf did not set a new timeline.

Community Reinvestment Act (CRA) rating: Even if Wells Fargo’s asset cap is lifted, its growth could still be hampered by its CRA rating, which assesses how well banks service poorer communities. In 2017, federal regulators downgraded Wells Fargo two notches to “Needs to Improve” from “Outstanding” shortly after the scandal broke. The rating, which is typically only reviewed every five years, curtails the bank’s ability to make acquisitions and open branches, and requires Wells Fargo to seek regulatory approval in financing decisions like issuing or prepaying debt. A less than satisfactory rating also prevents the bank from courting certain government business.

Reporting by Imani Moise; editing by Nick Macfie and Cynthia Osterman