Wells Fargo faces harsh criticism in the US

Wells Fargo did it again. The major US bank has tried in recent years to restore its reputation tarnished by major scandals; and now she's back in the spotlight. In a six-page letter received from CNBC's customers, Wells Fargo has informed its customers that over the next few weeks, it will close all existing personal credit lines - forever. In the letter, the bank said it "has recently reviewed its product offering and has decided to stop offering new personal and portfolio credit accounts and to close all existing accounts ... The closure is final". The bank said it is discontinuing the product to focus on personal loans and credit cards. Wells Fargo has not specifically said why it is pulling out of the personal loan business. According to the bank's press release, customers will be informed two months before their accounts are closed, with the remaining balances being paid off through regular minimum payments at a fixed interest rate. The revolving credit lines, which ranged from $ 3,000 to $ 100,000, enabled customers, among other things, to consolidate credit card debt at higher interest rates and avoid checking account overdraft fees. However, the bank also said closing accounts could have an impact on creditworthiness, which will upset customers and possibly regulators as well. "We know that changes can be uncomfortable, especially when the creditworthiness of customers is affected," said bank spokesman Manny Venegas to the media. That didn't go down well with some, including former presidential candidate Senator Elizabeth Warren, who tweeted that not a single customer should see their creditworthiness suffer just because their bank is being restructured after years of fraud and incompetence. "Sending a warning is just not good enough - Wells Fargo needs to get it right," wrote Senator Warren. The bank's decision comes three years after the Federal Reserve placed an asset cap on the bank to limit its ability to expand its balance sheet until it addresses the improper accounts and practices. Also in 2018, Wells Fargo was forced to pay the Consumer Financial Protection Bureau (CFPB) $ 1 billion in a settlement over allegations that the bank charged unreasonable fees from mortgage borrowers and forced loan customers to purchase auto insurance . The Justice Department also fined the bank a hefty $ 2.09 billion for selling residential mortgage loans that contained false income statements. For a comprehensive list of Wells Fargo's past scandals, click here. The entire banking sector posted a profit of $ 147.9 billion in 2020, a decrease of 36.5% year over year. And unlike other industries, the top six banks made decent profits in 2020, led by JPMorgan with $ 29.1 billion, Bank of America with $ 17.9 billion and Wells Fargo with $ 3.1 billion. And when the economy began to recover late last year, so did the banks - many of them beating estimates for Q1 2021. In May, the six largest bank CEOs appeared before the Senate for a banking committee hearing on oversight of Wall Street firms. The focus was on the fact that the pandemic did not threaten the profitability of the banks; however, the banks did not do much to help ordinary people during the pandemic. On the flip side, the total amount of US consumer debt outstanding grew by $ 800 billion to a record high of $ 14.88 trillion in 2020 - the highest annual growth in over a decade.