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The Federal Reserve Board will temporarily narrowly modify the growth restriction placed on Wells Fargo in February 2020 to allow the firm to provide additional support to small businesses impacted by the coronavirus pandemic.
The change will only allow Wells Fargo to make additional loans to small businesses as part of the Paycheck Protection Program and the much anticipated federal Main Street Lending Program, according to a press release on the board’s website.
Any benefits Wells Fargo could possibly earn from participating in the PPP or the Main Street Lending Program will be transferred to the U.S. Treasury or to non-profit organizations that support small businesses and are approved by the federal board.
The federal government’s decision to step in and modify the growth restriction was due to “widespread compliance and operational breakdowns that resulted in harm to consumers and because the company’s activities were ineffectively overseen by its board of directors,” according to the release.
The modification doesn’t limit Wells Fargo from accepting customer deposits or participating in the PPP, the Main Street Lending Program or other activities, but does provide an overall cap on the size of the bank’s lending capacity. ATM Marketplace reported earlier this week on Wells Fargo hitting its$10 billioncap on the first day of loan acceptance for the SBA relief program and turning away small business clients seeking relief.
The federal board will continue to hold Wells Fargo accountable for the breakdown in compliance and any harm that was caused by their refusal to help small businesses.
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Companies: Wells Fargo & Co