(Refiled to correct dateline to Dec. 7)
WASHINGTON, Dec 7 (Reuters) - A U.S. bank regulator is ready to fail Wells Fargo on a national scorecard for fair lending, sources familiar with the decision said on Wednesday, in a move that could limit near-term expansion for the bank.
Wells Fargo is due to be deemed a bank that “needs to improve” under the Community Reinvestment Act (CRA), a law meant promote fair lending.
The move is a two-notch downgrade from the “outstanding” tag Wells Fargo has held since 2008 and the change would give regulators a greater say on day-to-day matters like opening new branches.
The ruling from the Office of the Comptroller of the Currency, the main regulator for national banks, is due by early January, said the sources with knowledge of the plans.
A Wells Fargo spokesperson was not immediately available for comment. A spokesman for the OCC declined to comment.
Wells Fargo has struggled since September to overcome its admission that employees wrongly created as many as 2 million accounts without customer authorization.
A downgrade on the bank’s community service score could further tarnish the reputation of the San Francisco-based lender at a time when it hopes to move beyond scandal.
Wells Fargo may win an appeal to the downgrade through an independent arm of the regulator but no decision has yet been made, said sources familiar with the process.
Bank regulators have a four-tier standard under the Community Reinvestment Act: “outstanding”, “satisfactory”, “needs to improve” and “substantial non compliance.”
Banks classed “needs to improve” or “substantial non compliance” are expected to upgrade their service to poor communities. (Reporting By Patrick Rucker, additional reporting by Dan Freed in New York; Editing by Meredith Mazzilli)