Beleaguered bank Wells Fargo is struggling to understand a suite of new management regulations put in place by the Office of the Comptroller of the Currency late last week, which will now require it to get federal approval to institute a myriad of business decisions.
“This could be OCC’s shot across the bow that firms shouldn’t be assuming that they will be allowed to continue to enjoy the benefits of those waivers,” a person familiar how the OCC makes decisions told the Wall Street Journal.
The OCC did not return a request for comment from the Business Times on Monday.
“The OCC informed the Bank today that it has revoked… relief from specific requirements and limitations regarding rules, policies, and procedures for corporate activities,” the agency said in a statement.
The OCC had initially made a September agreement with the bank that gave it a relatively free hand in implementing new business plans, including how it compensated departing executives. That has now changed, after the OCC issued a curt revocation of much of that waiver on Friday.
“The OCC had first issued a waiver to the San Francisco bank that provided relief from tight restrictions on the bank’s operations, such as needing to seek extensive approval for any change in its business plan, like opening a branch, as well as the hiring or firing of management and the board,” the paper reports.
Wells Fargo agreed to pay $185 million to settle charges that as many as 2 million unauthorized bank and credit card accounts were opened for customers by employees aiming to make sales goals. The bank fired about 5,300 employees over five years for engaging in the fraudulent activity and the debacle led to the ouster of CEO John Stumpf.
The OCC’s new decision reverses some of the waivers it had initially given the bank this fall as part of an effort to allow it to continue operating as usual. Wells Fargo now faces a newer, more stringent process of operation that must be overseen by regulators.
“Now, though, Wells Fargo has to go through a much longer and cumbersome process to get OCC approval on any change in leadership or business plan. It is also restricted from executive severance payouts, sometimes called ‘golden parachutes,’ the Journal said.
Wells Fargo CEO Tim Sloan said in a memo sent to employees Friday that the new OCC management actions are “not a result of any new event or issue,” but noted that the bank will still face headwinds as it attempts to rebuild trust among customers and investors, the paper reports.
Article and image provided by: Sacramento Business Journal