From America to Wells to Fargo: This is unacceptable

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The Office of the Comptroller of the Currency, the banking regulator within the Treasury Department, told the scandal-ridden bank it had to pay $ 250 million because it couldn’t – or wouldn’t – keep his promises. The sanction stems from a 2018 order that exposed problems with the bank’s auto and home loan operations, including insufficient risk management practices and inappropriate fines imposed on customers.

At the time, as part of a billion dollar settlement, the bank agreed to improve its practices and reimburse its customers. But that’s not happening fast enough, according to the OCC.

“Wells Fargo did not meet the requirements of the 2018 OCC action against the bank. This is unacceptable,” said Acting Monitor Michael J. Hsu.

In addition to the fine, the regulator is restricting the bank’s mortgage business until it can resolve the issues.

Wells Fargo has struggled to put its house in order after a string of scandals that erupted five years ago. Since the fall of 2016, the bank has admitted to forcing customers to pay unnecessary fees and opening millions of fake accounts in what the Federal Reserve has described as “widespread customer abuse.” In 2018, the Fed put a cap on Wells Fargo’s assets, essentially preventing it from increasing its balance sheet until it remedies the compliance breaches that led to the scandals.

“The actions of the OCC today indicate that we must continue to do to address significant and long-standing shortcomings,” Charlie Scharf, Wells Fargo’s fourth CEO in five years, said in a statement Thursday. “Building an appropriate risk and control infrastructure has been and remains Wells Fargo’s top priority. ”

Wells Fargo shares were edged higher at noon Friday on Friday, signaling investors were ignoring the OCC fine.

“Overall I think it’s a modest positive for the title,” said Kyle Sanders, senior analyst at Edward Jones. Sanders noted that the action took a hit last week after media suggested bigger regulatory setbacks were imminent. “For many investors, today’s announcement was less punitive than feared.”

In addition to the regulatory headaches, Wells found himself mired in a recent PR nightmare, first canceling a popular lending tool, then partially reversing the decision after a month of outrage from consumers and consumers alike. defenders.

In his statement Thursday, Scharf announced some kind of silver lining that may have appeased investors. A separate consent order targeting the bank’s sales practices from 2016 – this one from the Consumer Financial Protection Bureau – has expired.

“We have done substantial work designed to ensure that the conduct at the heart of the consent order – which was reprehensible and utterly inconsistent with the values ​​this company was built upon – does not happen again,” said the CEO.

Scharf, who has worked on transforming the bank since taking the helm in 2019, said the bank has come a long way, but it is not out of the woods.

“Our work to build the right foundation for a company of our size and complexity will not follow a straight line … That said, we believe we are making significant progress, the work required is clear and I remain confident in our ability to complete it, ”he said.

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