Wells Fargo profits fall as costs rise

Wells Fargo & Co. reported a 31% drop in third-quarter profit last Friday, due to rising costs at the bank because of the fake-accounts scandal and an increase in provisions for possible loan losses in preparation for a potential economic downturn.

The bank incurred $2 billion in operating losses due to litigation, customer remediation and regulatory aspects as a result of a six-year scandal involving its sales policies.

Mike Santomassimo, chief financial officer of Wells Fargo & Co. said unresolved litigation, customer loss remediation and other important regulatory issues remain unresolved and are likely to incur additional costs that could be significant in the next few quarters.

Charlie Scharf, CEO, stressed in a statement that their top priority continues to be improving controls and risk management, which includes addressing unresolved issues from past years and issues that will be identified as this work progresses.