WASHINGTON (Reuters) - Wells Fargo & Co (WFC.N) has flunked a U.S. regulatory test on a national scorecard for community lending, the bank said on Tuesday, as it tries to repair its reputation after a phony-accounts scandal.
The Office of the Comptroller of the Currency deemed Wells Fargo a bank that “needs to improve” under the Community Reinvestment Act, a law meant to promote lending to poor neighborhoods, the bank said in a statement.
Wells Fargo had previously boasted an “outstanding” score on the Community Reinvestment Act. The new ranking gives regulators a greater say over day-to-day matters, such as branch openings.
In September, Wells Fargo said employees had wrongly created as many as 2 million accounts without customer approval.
Also on Thursday, the bank agreed to put aside $110 million to settle a class action lawsuit tied to those fake accounts.
The Office of the Comptroller of the Currency gave Wells Fargo high marks for all-around service, but the past scandal led to the downgrade.
“Violations across multiple lines of business within the bank (resulted) in significant harm to large numbers of customers,” the bank said in its filing.
Chief Executive Tim Sloan in the statement cited Wells Fargo’s track record of serving needy communities on a day-to-day basis, but said the lender had yet to see its way through scandals.
“We are committed to addressing the OCC’s concerns,” he said.
Reporting by Patrick Rucker; Editing by Dan Grebler and Richard Chang