Fed reportedly rejects Wells Fargo’s reform plan for preventing further consumer abuses

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CEO and President of Wells Fargo & Company Timothy Sloan testifies during a hearing before Senate Banking, Housing and Urban Affairs Committee October 3, 2017 on Capitol Hill in Washington, DC.

The Federal Reserve rejected Wells Fargo’s plan to prevent more consumer abuses by the embattled bank, adding it needs stronger checks on the company’s management, Reuters reported citing three people with knowledge on the matter.

According to the report, the Fed thinks Wells Fargo needs to implement measures to significantly improve risk management and governance controls. Earlier this year, CEO Tim Sloan said Wells was “on the fast track” to meet the Fed’s conditions.

Shares of Wells Fargo fell 1.5 percent in the premarket following the news.

The report said Wells sent its original plan to the Fed in April with the expectation the central bank would approve it over the summer. Instead, the Fed denied Wells’ proposal.

Wells Fargo has been struggling to recover from a scandal two years ago in which it was discovered that thousands of employees opened multiple accounts in their names without their consent. Over the past two years, the stock is down more than 6 percent while the S&P 500 is up 22 percent in that time period.

Both the Fed and Wells declined Reuters’ requests for comment.

Click here to read the full Reuters report.