April 09, 2019

Regulators Unsatisfied with Wells Fargo, Prepared to Ensure the Bank's Compliance with Consent Orders

Fed, OCC, and CFPB Agree with Senators Warren and Brown on Wells Fargo's Inadequate Progress

Washington, DC - United States Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Subcommittee on Financial Institutions and Consumer Protection, and Senator Sherrod Brown (D-Ohio), Ranking Member of the Senate Banking, Housing and Urban Affairs Committee, today released new letters from the Federal Reserve (Fed), the Office of the Comptroller of the Currency (OCC) and the Consumer Financial Protection Bureau (CFPB) in response to inquiries that they sent the regulators in March 2019. 
The regulators told Sens. Warren and Brown that Wells Fargo has not satisfied its obligations under existing consent orders, which require the bank to remediate customers harmed by its wrongdoing and impose reforms to end Wells Fargo's unlawful activity.

In separate letters sent to the OCC and CFPB and to the Fed last month, the senators expressed concern about Wells Fargo's apparent unwillingness to compensate customers harmed by the bank's illegal auto-lending practices, despite an obligation to do so under its settlement with the OCC and CFPB, and urged the agencies to use their enforcement tools to remove then-CEO Tim Sloan. The senators' letter to the Fed also cited a recent Securities and Exchange Commission settlement fining the bank $17.4 million for overcharging retail mutual fund investors in 2014-2015, more evidence of illegal activity at the bank. Wells Fargo announced Mr. Sloan's retirement last month, only days after the senators' letter, but must take additional actions to address its history of misconduct.

"As I have previously stated, we expect Wells Fargo to comprehensively address its weaknesses. Federal Reserve staff will continue to engage with the firm, including its new leadership, to ensure it makes appropriate progress," wrote Federal Reserve Chairman Jerome Powell. "I want to reiterate that we do not intend to lift the asset cap imposed on Wells Fargo until remedies to address the risk management breakdowns that the Order was meant to address have been adopted and implemented to our satisfaction."

"We share your concerns regarding the progress of Wells Fargo toward meeting our regulatory expectations as set forth in the outstanding enforcement actions against bank," wrote Comptroller of the Currency Joseph Otting. "OCC supervision staff members continue to monitor the bank's work to remediate deficiencies identified in our April 2018 order as well as orders issued in September 2016 directly related to unsafe and unsound practices and November 2015 related to Bank Secrecy Act Compliance. The OCC is fully engaged and prepared to ensure Wells Fargo corrects the identified deficiencies, remediates identified harm to its customers, and operates in a safe and sound manner going forward."

"I can tell you that while the Bureau is working with Wells Fargo to ensure its compliance with the consent order, I am not satisfied with the Bank's progress to date and have instructed staff to take all appropriate actions to ensure the Bank complies with the consent order and Federal consumer financial law," wrote CFPB Director Kathy Kraninger. "Broadly speaking, I consider all options on the table for enforcing Bureau consent orders."

In response to the agencies' statements that Wells Fargo has failed to remediate its misconduct, Senator Warren made the following statement: "Scandal after scandal has shown that Wells Fargo has to be rebuilt from the ground up before regulators, Congress, and the American people can trust it again. The OCC, the Fed, and the CFPB need to do their jobs and hold Wells Fargo accountable until the bank rights all wrongs, including making every single person they harmed whole."

Senator Brown released the following statement: "Of course Wells Fargo hasn't done enough to clean up its act. Trump's regulators need to stop acting like lapdogs for the banking industry and start being the watchdogs consumers are counting on."

Senator Warren has led the charge to hold Wells Fargo accountable:

  • On June 19, 2017, Senator Warren sent a letter to then-Fed Chair Janet Yellen urging her to remove 12 Wells Fargo board members following the fake accounts scandal and again called on Chair Yellen to remove implicated Wells Fargo board members at a Senate Banking Committee hearing on July 13, 2017.
    • Later in July 2017, Senator Warren renewed her call for the Fed to remove Wells Fargo board members after it was reported that more than 800,000 Wells Fargo customers were charged for auto insurance they did not need.
    • On August 16, 2017, Senator Warren again called for the removal of Wells Fargo board members amid new evidence that the bank failed to refund money owed to car loan customers, that it overcharged small businesses for credit card transactions, and that it billed certain mortgage customers for unexpected, optional services.
    • On February 2, 2018, Chair Yellen announced in response to Senator Warren that the Fed would freeze the growth of Wells Fargo and push out four of the board members responsible.
  • In March and April 2018, Senator Warren urged Fed Chair Jerome Powell to hold a public vote by the Fed Board on lifting growth restrictions for Wells Fargo instead of delegating it to staff. She also asked for the public release of the third-party review of how Wells Fargo is implementing reforms. In a response to Senator Warren on May 10, 2018, Chair Powell reconsidered and announced he would require a Fed Board vote on whether to lift Wells Fargo's growth restrictions and said he would consider releasing as much of the third-party review as possible.
  • On February 22, 2019, Senator Warren once again urged Chair Powell not to lift growth cap restrictions on Wells Fargo until Tim Sloan is removed from his role as CEO, citing a report revealing that, beginning in 2016, Wells Fargo employees "routinely falsified clients' signatures and otherwise doctored paperwork" in order to comply with a legal settlement with the Office of the Comptroller of the Currency related to violations of anti-money laundering laws.
  • On January 17, 2019, Senator Warren questioned Tim Sloan about excessively high fees Wells Fargo charged college students. On April 4, 2019, Wells Fargo announced it had eliminated some of these fees associated with campus debit cards.