Wells Fargo sheds final regulatory consent order, maintains asset restriction
In a significant development for Wells Fargo, the Office of the Comptroller of the Currency (OCC) has terminated a consent order against the bank that was issued in 2015 due to violations related to the Gramm-Leach-Bliley Act. This marks the thirteenth consent order closed by regulators since CEO Charlie Scharf took the helm of the bank in 2019 and the seventh in 2022 alone.
The 2015 consent order pertained to concerns about privacy and data security under the Gramm-Leach-Bliley Act, as well as violations related to the consolidation and management of subsidiaries. The termination of this order signifies improved compliance and regulatory standing for Wells Fargo, as it continues to streamline its business and address legacy regulatory matters.
The latest termination is not the only one for Wells Fargo this year. The bank has also recently seen the lifting of a consent order from the Consumer Financial Protection Bureau, related to its compliance risk management program. The OCC-issued agreement requires Wells Fargo to enhance its anti-money laundering (AML) and sanctions risk management practices, among other things.
Analysts predict that the asset cap, which was put in place by the Federal Reserve in 2018 following a scandal in which the bank's employees opened millions of fake customer accounts, could be lifted soon. Gerard Cassidy, analyst at RBC Capital Markets, has suggested that the asset cap could be lifted as soon as this quarter.
However, Senator Elizabeth Warren, D-MA, has opposed the removal of Wells Fargo's asset cap, claiming that a recommendation was purchased by the bank. Wells Fargo is committed to completing the work required in the formal agreement with the same sense of urgency as other regulatory commitments.
Since the regulatory clampdown, Wells Fargo has been spending about $2 billion each year on its risk and control agenda. The bank has also introduced significant leadership changes, with 150 of its top 220 executives being new appointments. The bank is now left with only one remaining consent order from 2018 with the Federal Reserve Board.
The termination of the 2015 consent order is a major regulatory milestone for Wells Fargo, indicating that the bank is making progress in addressing the issues covered under the 2015 agreements. However, it does not free Wells Fargo from OCC scrutiny, as the bank has a formal agreement with the regulator related to anti-money laundering efforts. The bank continues to focus on its core businesses while addressing legacy regulatory matters.
The termination of the 2015 consent order, issued due to worries over privacy and data security within the bank's business operations, signifies a step forward in Wells Fargo's financial compliance. Simultaneously, the bank's business operations continue to undergo scrutiny, as the OCC requires improvements in its anti-money laundering practices, among other things.
