Wells Fargo Resolves Its 12th Consent Decree, Leaving Two Still Pending
In a significant development, the Federal Reserve has lifted the $1.95 trillion asset cap on Wells Fargo, a move that was imposed in 2018 following the bank’s fake account scandal. This decision allows Wells Fargo to resume growth and expand its services [1][3][5].
The lifting of the asset cap marks a significant milestone reflecting Wells Fargo's progress in addressing past compliance issues, enabling it to increase lending and market share [2][3]. The Fed's decision came after observing improvements in Wells Fargo’s risk controls and governance, though the bank is still under ongoing regulatory scrutiny for related enforcement actions [1].
The terminated order concerned the bank's compliance risk management program, a separate settlement from the one in 2018 [6]. This settlement resolves a 2020 investigation by the Office of the Comptroller of the Currency (OCC) that involved several Wells executives in the 2016 sales practices scandal [8].
The OCC issued a $100,000 civil penalty against David Julian, former chief auditor, and a $50,000 civil penalty against Paul McLinko, former executive audit director at the bank [7]. Julian was initially fined $7 million by the OCC in January for failing to plan and manage audit activity that would detect and document sales practices misconduct. McLinko was fined $1.5 million in January for similar reasons and for failing to maintain professional independence from the Community Bank [4]. The OCC asserted that Julian failed to adequately escalate the sales practices misconduct [4].
This is the 12th consent order closed by Wells Fargo since 2019, and the sixth resolved this year [9]. The other remaining consent order dates to 2015 regarding Gramm-Leach-Bliley Act violations [7]. Wells Fargo also has a formal agreement related to its anti-money laundering efforts, issued by the OCC last September [10].
The Consumer Financial Protection Bureau has terminated its 2018 consent order against Wells Fargo, which was separate from the one concerning the bank's compliance risk management program [1]. However, the spokesperson declined to comment on the asset cap [1].
Analysts view the lifting of the CFPB consent order as a signal that the Fed's asset cap might be lifted sooner rather than later [2]. The removal of both the asset cap and the CFPB consent order underscores Wells Fargo's commitment to addressing its past compliance issues and working towards a cleaner slate.
References:
- Fed Lifts Asset Cap on Wells Fargo, but Some Restrictions Remain
- Wells Fargo's Asset Cap Lifted by Federal Reserve
- Wells Fargo's Asset Cap Lifted by Federal Reserve, Signaling Progress
- OCC Fines Two Former Wells Fargo Auditors in Sales Practices Scandal
- Wells Fargo's Asset Cap Lifted: What It Means for the Bank and Its Customers
- Wells Fargo Settles with OCC Over Compliance Risk Management Program
- Wells Fargo Settles with OCC Over Sales Practices Scandal
- Wells Fargo Settles with OCC Over 2016 Sales Practices Scandal
- Wells Fargo Closes 12th Consent Order Since 2019
- Wells Fargo Agrees to OCC's Anti-Money Laundering Measures
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