US eases restrictions on Wells Fargo after years of strict oversight following scandal
NEW YORK — The Biden administration is easing restrictions on banking giant Wells Fargo, saying the bank has sufficiently repaired its toxic culture after years of scandals.
The news sent Wells Fargo shares rising sharply Thursday as investors speculated that the bank, which has been strung along by regulators for years, might be able to rebuild its reputation and return to growth.
The Office of the Comptroller of the Monetary Fund, the regulator of major national banks like Wells, on Thursday ended its consent order that had been in place since September 2016. The order required Wells to overhaul the way it sold financial products to customers and offer additional consumer products. protective measures, as well as employee protection for whistleblowers.
After a series of newspaper and regulatory investigations in 2016, Wells was found to have a toxic sales culture that would pressure employees to sell multiple products to customers even though such products were not necessary. Millions of unauthorized accounts were opened, severely damaging the reputation of Wells Fargo, once one of the most solid in the banking industry.
Since the scandal broke, Wells has overhauled his board and management, paid more than a billion dollars in fines and fines, and spent eight years trying to show the public that his bad practices were behind it. At some facilities, workers have begun organizing unions without any quid pro quo from management.
In a brief statement Thursday, the Comptroller of the Monet said Wells Fargo’s “safety and soundness” and “compliance with laws and regulations do not require the continued existence of the Order.”
The decision is a major victory for Wells’ management and Charles Scharf, who took over as CEO in 2019.
“The OCC’s confirmation that we have effectively implemented what was needed is the result of the hard work of so many of our employees, and I would like to thank everyone involved at Wells Fargo for their commitment to transforming the way we do business do,” Scharf said in a prepared statement.
A Federal Reserve consent order against Wells remains in effect, as does a Fed requirement that Wells not grow beyond its current size until the sales culture is restored. The Fed did not immediately respond for comment, but the OCC’s decision will likely put pressure on the Fed to make its own decision on restrictions on Wells.