(Reuters) – U.S. agencies are probing Wells Fargo & Co’s handling of the Paycheck Protection Program (PPP) for coronavirus relief, the country’s fourth largest lender said on Tuesday.
The San Francisco-based bank has received “formal and informal inquiries from federal and state governmental agencies regarding its offering of PPP loans,” it said in a regulatory filing without elaborating. (https://bit.ly/3b6ctuF)
A spokesman declined to comment on the nature of the probes.
Wells Fargo faced a string federal investigations for most of the last three years after a sales practices scandal erupted in 2016. It wrapped up the last major probe into the issue in February, in a $3 billion settlement with the Department of Justice and Securities and Exchange Commission.Small businesses have filed lawsuits against U.S. banks including Wells Fargo, JPMorgan Chase & Co and Bank of America alleging unfair practices in processing loans under the program, including prioritizing larger loans over smaller ones.
Wells Fargo started taking applications for the $350 billion rescue fund on April 4, one day after the official launch and a day later than Bank of America Corp and JPMorgan Chase & Co.
As of April 27 the bank had submitted more than 100,000 PPP applications to the Small Business Administration for review, Wells Fargo spokesman Manuel Venegas said on Tuesday.
Companies with fewer than 25 employees account for 90% of those applications and 80% generate less than $2 million in annual revenue. The average loan size was less than $110,000, Venegas said.
Wells Fargo initially capped its participation in the program at $10 billion due to the U.S. Federal Reserve’s punitive curbs on increasing its balance sheet following its sales practices scandals. The bank expanded its role after getting permission to make loans under the Coronavirus Aid, Relief, and Economic Security (CARES) Act without counting them against the asset cap.
(Reporting by Bharath Manjesh in Bengaluru; Editing by Shailesh Kuber and Richard Chang)