Historic Community Reinvestment Act Review: Wells Fargo Receives 'Double Downgrade'

"Wells Fargo failed its recent Community Reinvestment Act (CRA) examination," reports Oscar Perry Abello. The result: the bank's rating feel from "outstanding" to "needs improvement." The downgrade even skipped the "satisfactory" rating on its way down.

The bank announced the news about its CRA performance between 2009-2012 with a press release. "Despite citing Wells Fargo Bank, N.A.’s overall 'Outstanding' performance on the exam’s components, the Office of the Comptroller of the Currency (OCC) downgraded the bank’s final rating to 'Needs to Improve' due to previously issued regulatory consent orders," reads the release. The bank also made the entire report from the OCC available online.

Perry Abello's coverage offers additional insight about the significance of the bank's downgrade, which will implement "a number of hurdles or constraints on the bank until its next rating, including restrictions or constraints on new branch openings, branch closures, and any mergers and acquisitions." The review process is mandated by the Community Reinvestment Act of 1977, which was implemented to protect minorities from discrimination in the home loan market.

The article also devotes significant real estate on the page to consideration of the historic nature of the "double downgrade"—especially historic considering Well Fargo has a reputation for investing in low- and moderate-income communities. At a recent gathering of the National Community Investment Coalition, some attendees told Perry Abello that the OCC might have skipped "satisfactory" and given the bank the "needs to improve" rating due to the fake accounts scandal that erupted in late 2016.