Senator Elizabeth Warren beats up the financial institution over the potential creditworthiness of its clients
U.S. Senator Elizabeth Warren (D-MA) interviewed Charles P. Rettig, Commissioner of the Internal Revenue Service, during the Senate Finance Committee hearing titled The IRS Fiscal Year 2022 Budget in the Dirksen Senate Office Building in Washington, DC, Aug. June 2021.
Tom Williams | Swimming pool | Reuters
Wells Fargo’s decision to pull customer lines of credit was criticized by Senator Elizabeth Warren.
The bank has informed customers that their personal lines of credit will be closed, which could potentially affect their creditworthiness, CNBC reported Thursday.
“Not a single customer should suffer from their credit rating suffering just because their bank is being restructured after years of fraud and incompetence,” Warren, a Massachusetts Democrat, tweeted Thursday night. “A warning is just not good enough – Wells Fargo needs to correct that.”
It was the most recent controversy to hit Wells Fargo since the fake accounts scandal first emerged in 2016. It was found that bank employees illegally created millions of unnecessary accounts in order to achieve aggressive sales goals. The Federal Reserve took the unusual move in 2018 to constrain the bank’s balance sheet, a constraint that has forced it to avoid deposits and cut products.
Wells Fargo did not immediately respond to a request to respond to Warren’s comments.
The bank also failed to respond to email questions about why its customers’ creditworthiness was being impacted. However, by reducing the amount of credit available to a customer, the closings could increase credit utilization. This means that borrowers would use a larger percentage of their available credit, which can negatively affect their scores.
Wells Fargo announced to its customers that it made a decision to cut lines of credit between $ 3,000 and $ 100,000 to focus on its credit cards and personal loans. Yesterday, after the CNBC article was published, the bank made this statement:
“We recognize that change can be inconvenient, especially when customers’ creditworthiness is compromised,” said bank spokesman Manny Venegas in an email. “We offer 60 day notice with a number of reminders before closing and we are committed to helping each customer find a loan solution that suits their needs.”
This story evolves. Please check again for updates.
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