Wells Fargo will have a bumpy road, but the rough times probably won’t last too long, analyst Chris Kotowski said Thursday.
“A year from now I think most people will have forgotten this,” he told CNBC’s “Power Lunch.”
The bank has come under fire for deceptive sales practices that led to the opening of about 2 million accounts without customer authorization. After facing a grilling on Capitol Hill, CEO John Stumpf retired effective immediately on Wednesday.
Kotowski, a senior research analyst at Oppenheimer, believes Wells Fargo customers will be more forgiving than the senators and congressmen that have been hammering the bank.
“People will make their decision about where to bank based on convenience,” he said. “People hate banks but they love their local bank and their local banker and the people that they deal with all the time at their branch.”
One of Stumpf’s most vehement critics is Sen. Elizabeth Warren, D-Mass. After Stumpf stepped down Wednesday, she said he should return every nickel he made during the scam and face investigations by the Justice Department and Securities and Exchange Commission.
On Thursday, SEC Chair Mary Jo White told CNBC she is aware of the calls for an investigation but said she does not comment on whether an investigation is underway or whom the agency is investigating.
“We pay a lot of attention across, really, market participants. Obviously Wells Fargo or any other bank as a bank, you have banking regulators as the primary regulators there,” she told “Power Lunch.”
Kevin Barker, a senior research analyst at Piper Jaffray, believes the scandal will cause some customer turnover.
“I think you are going to see some financial advisors have tough conversations with their clients. I think you are going to see some customers not walk into a branch or chose something else because of the reputation of Wells Fargo,” he told “Power Lunch.”
He’s had an underperform rating on the bank since April, based on fundamentals, not any management issues.
“Their revenue was struggling to grow … and in low interest rate environment, with a lot more regulatory risk, I thought Wells Fargo was going to have difficulty continuing to grow or hit street estimates,” Barker said.
Meanwhile, the bank’s scandal will also have an impact on Wall Street.
“We’re going to have regulation upon regulation upon regulation until they’re suffocated in regulations unless the quality of management improve,” management and crisis expert Suzy Welch.
“Banks and their boards have this special responsibility to the whole system for high quality management, otherwise … the trust will go out, what’s left of it.”
For Hal Scott, Harvard Law professor and author of “Connectedness and Contagion,” the black mark on Wall Street could have serious repercussions.
“It really affects the ability of the federal government, and in particular the Fed, to be a lender of last resort to Wall Street if we go into another crisis,” he said. “The more unpopular Wall Street becomes, the less possible it is for the Fed to support it in a crisis.”