Three days after Wells Fargo outraged thousands of small-business customers by taking steps that effectively cut off their access to a $349 billion emergency loan program, the Federal Reserve has relaxed the rules to allow the big bank back into the business.
Citing “extraordinary disruptions from the coronavirus,” the Federal Reserve Board announced Wednesday it was “temporarily and narrowly” modifying growth restrictions that Wells Fargo cited earlier this week in ending its participation in the Paycheck Protection Program (PPP).
“Wells Fargo appreciates the targeted action of the Federal Reserve to support the needs of small businesses through PPP and looks forward to expanding relief to many more small businesses and nonprofits,” Wells Fargo CEO Charlie Scharf said in a written statement.
“In the first two days alone, we received more than 170,000 indications of interest from our customers, and know there is much more need.”
Many Wells Fargo customers said they felt betrayed when the bank announced Sunday night that it was withdrawing from the program, saying it had reached a $10 billion lending limit linked to the growth restrictions.
“The changes do not otherwise modify the Board’s February 2018 enforcement action against Wells Fargo,” the Federal Reserve said in the announcement.
“The Board continues to hold the company accountable for successfully addressing the widespread breakdowns that resulted in harm to consumers identified as part of that action and for completing the requirements of the agreement.”
Wells Fargo said it would restart applications on behalf of its existing business customers immediately.
To qualify for the bank’s help, however, business customers must have obtained a Wells Fargo business checking account no later than Feb. 15 and be enrolled in the company’s business online-banking program.
With $10 billion in PPP loans already in the works at Wells Fargo, it is unclear how many more customers will be served by the Federal Reserve Board’s action. When asked what the new limit is, a Wells Fargo spokesman declined to answer.
After the bank stopped taking PPP applications this week, many business customers immediately went to other financial institutions in an effort to get help from the program, which offers forgivable loans of up to $10 million to businesses that spend the money on payroll, utilities and real estate costs.
Some customers said they were closing their Wells Fargo accounts in protest.