Senate on Ending Wells Fargo License
On Sep. 14, Senate Warren calls for break up, revoking its FHC status.
- Senator Warren criticized Wells Fargo CEO, and called on Fed to revoke bank’s status as financial holding company amid ongoing failure to meet regulatory requirements.
- Follows OCC Sep. 2021 $250mn fine on Wells Fargo re lending practices, see #115602.
- Also follows OCC, CFPB 2018 $1bn fine and order for unsound practices, see #42643.
- Previously Wells Fargo was fined for deficiencies in its enterprise-wide compliance risk management program; unsound lending practices, inadequate loss mitigation program
- Practices found as not commensurate with the bank’s size, complexity, and risk profile.
- Bank has failed to meet the requirements of the OCC’s 2018 order imposed against it.
- Order restricted bank’s activities until existing problems in mortgage servicing are adequately addressed; requires bank to take broad, comprehensive corrective actions.
- Call to Revoke Holding Co. Status
- Warren issued two letters; one to Fed Chair Powell; other to Wells Fargo's board.
- In letter to Fed, Warren urged agency to take immediate action on repeated, ongoing, and inexcusable failure of bank to end abusive, unlawful practices harming consumers
- Called on Fed to use authority under Bank Holding Company Act to revoke its status as a financial holding company (FHC); require it separate bank subs from other business.
- The senator noted that the Fed had placed Wells Fargo under an asset cap in 2018 due to the bank's “widespread consumer abuses and other compliance breakdowns.”
- In the more than three years since then, said numerous additional revelations have surfaced about Wells Fargo’s continued unethical and anti-consumer conduct.
- CEO Criticism
- In letter to bank's board, Warren noted Wells has paid over $5 billion in penalties.
- She said new incident raised fresh questions about whether board, and Charles Scharf, CEO of Wells since September 2019, are capable of effectively managing the bank.
- One of Bank Holding Company Act requirements is that the entity be well managed.
- Warren recounted bank's nearly two-decade-long record of swindling its customers.
- She also added it had been 2 years since Mr. Scharf was named CEO of the bank, and last week’s OCC fine indicates he's made little progress in bank’s governance.
- Yet, Mr. Scharf has been richly rewarded for his failures, receiving over $34 million for short period in 2019 that he was employed by bank, and $20.4 million in 2020.
- Request for Information
- Warren's letter to board went on to request answers to certain questions by Sep. 23, 2021, including metrics and timelines CEO, board utilize for improving compliance.
- Asked whether metrics and timelines met; CEO 2021compensation/bonus structure.
- What portion of CEO bonus were based upon improving governance and compliance.
- Whether Wells will seek to claw back bonus awards given ongoing legal problems.
- Have any other top company executives been held accountable for ongoing failures.
||Bank; BHC; SIFI
||PR, 9/14/2021; Lt, 9/13/2021;
||Compliance; C-Suite; Market Conduct; Risk; Sales Practices; Underwriting
||United States of America
||Banking; Loan; Mortgage
|Reg. Last Update
||AML & Enforcement
Last substantive update on 09/15/2021