Regulator eases restrictions on Wells Fargo, saying bank has fixed itself after sales scandal
NEW YORK (AP) — The Biden Administration is easing its restrictions on banking giant Wells Fargo, saying the bank has sufficiently fixed its toxic culture after years of scandals.
The news sent Wells Fargo’s stock up sharply in afternoon trading as investors speculated that the bank, which has been kept under a tight leash by regulators for years, may be able to start growing again.
The Office of the Comptroller of the Currency, the regulator of big national banks like Wells, terminated its consent order on Thursday that had been in place since September 2016. When issued, the order required Wells to completely overhaul how it sold financial products to customers and provide additional consumer protections as well as employee protections for whistleblowers.
After a series of newspaper and regulatory investigations, Wells was found to have a completely poisonous sales culture that would force employees to sell multiple products to customers, even when the customer wouldn’t need them. The pressure of the sales culture led to millions of unauthorized accounts being opened and severely tarnished Wells Fargo’s reputation, once the most sterling of the banking industry.
In a brief statement Thursday, the OCC said that Wells Fargo’s “safety and soundness” and “compliance with laws and regulations does not require the continue existence of the Order.”
What still remains in place is the Federal Reserve’s own consent order against Wells as well as the Fed’s requirement that Wells grow no bigger than its current size, known as an asset cap, until it fixed its sales culture. The Fed did not immediately respond to comment, but the OCC’s decision is likely to pressure the Fed to make its own decision regarding its restrictions on Wells.