WASHINGTON, D.C. – Wells Fargo opened accounts for folks with no permission, snagged cash with reckless abandon from accounts, and committed “widespread consumer abuses,” leading to billions in fines and a growth restriction slapped on their Capitalism-at-all-cost financial and banking business seven years ago, but that restriction was lifted by the Federal Reserve this week.
NIT has previously reported on Wells Fargo’s record profits, a settlement in which Iowa got millions (for violating state consumer protection laws over several sales practices, including creating unauthorized accounts), and how the federal government ordered them to pay billions for funny business in folks’ accounts.
Wells Fargo had to pay hundreds of millions to consumers and more to the government for their alleged despicable, cutthroat conduct. In addition, in 2018, the Federal Reserve responded to widespread consumer abuses and other compliance breakdowns by Wells Fargo. The Federal Reserve Board announced that it would restrict the growth of the firm until it sufficiently improves its governance and controls. Concurrently with the Board’s action, Wells Fargo will replace three current board members by April and a fourth board member by the end of the year.
In addition to the growth restriction, the Board’s consent cease and desist order with Wells Fargo requires the firm to improve its governance and risk management processes, including strengthening the effectiveness of oversight by its board of directors. Until the firm makes sufficient improvements, it will be restricted from growing any larger than its total asset size as of the end of 2017. The Board required each current director to sign the cease and desist order.
“We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again,” Chair Janet L. Yellen said in 2018. “The enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely and with the protections needed to manage all of its risks and protect its customers.”
Now, folks might want to watch their money and accounts closely, as this week the Federal Reserve announced that Wells Fargo is no longer subject to the asset growth restriction from the Board’s 2018 enforcement action against the bank. The Federal Reserve determined that Wells Fargo has met all the conditions required by the 2018 enforcement action for removal of the growth restriction.
The Federal Reserve has completed its review of the bank’s remediation efforts and required third-party assessments, and has completed its own assessment of Wells Fargo’s corporate governance and firmwide risk management programs. The removal of the growth restriction reflects the substantial progress the bank has made in addressing its deficiencies and that the bank has fulfilled the conditions required for removal of the growth restriction. The other provisions in the 2018 enforcement action will remain in place until the bank satisfies the requirements for their termination.
“The Federal Reserve’s decision to lift the asset cap marks a pivotal milestone in our journey to transform Wells Fargo. We are a different and far stronger company today because of the work we’ve done,” said Wells Fargo CEO Charlie Scharf. “In addition, we have changed and simplified our business mix, and we have transformed the management team and how we run the company. We have been methodically investing in the company’s future while improving our financial results and profile. We are excited to continue to move forward with plans to further increase returns and growth in a deliberate manner supported by the processes and cultural changes we have made.”
“This is a huge accomplishment for the 215,000 employees of Wells Fargo, who all contributed to this milestone – whether they worked directly on the risk and control efforts, supported the work indirectly by helping us embed a different way of working into our culture, or continued to serve our customers and clients day in and day out through difficult conditions. Our employees have invested so much of themselves into the company in recent years, and as a demonstration of our appreciation for what we have accomplished together, all full-time employees of Wells Fargo will receive a special $2,000 award1. For most, it will be in the form of a restricted stock grant.