Wells Fargo has another federal consent order ended by regulator

Wells Fargo & Co. has had another consent order terminated by its federal regulator related to its fraudulent customer account scandal that erupted in September 2016.

The bank and the Office of the Comptroller of the Currency confirmed the ending of the consent order in separate statements on Thursday.

Wells Fargo said it is the sixth consent order terminated by a federal regulatory agency since 2019.

The Office of the Comptroller of the Currency said the consent order that went into effect on Sept. 6, 2016, addressed "deficiencies and unsafe or unsound practices in the bank's risk management and oversight of the bank's sales practices, and unsafe or unsound sales practices by the bank."

Wells Fargo confirmed on Aug. 31, 2017, that there could be at least 3.5 million accounts affected by its fraudulent customer scandal that erupted in September 2016 - up from the 2.1 million initially announced. Retail-bank employees opened accounts for customers who did not request them, or added non-requested insurance and residential mortgage services. Those moves garnered Wells Fargo tens of millions of dollars in fees.

Depending on which issue is discussed, the scandal period could go back as far as May 2002, with some customers potentially affected into mid-2017.

Most of the customer account fraud victims were in Arizona and California. Wells Fargo has said it cannot rule out that at least 38,722 unauthorized customer accounts were established in North Carolina and 23,327 in South Carolina.

On Thursday, the Office of the Comptroller of the Currency said it "believes that the safety and soundness of the bank and its compliance with laws and regulations does not require the continued existence of the order."

Wells Fargo said in its statement that the consent order required them "to revamp how it offers and sells products and services to consumers and take additional actions to protect its customers and employees."

Charlie Scharf took over as Wells Fargo's chief executive in October 2019 - the bank's fourth leader since September 2016 - in part to help resolve the consent orders.

"I have repeatedly said that implementing a risk-and-control framework appropriate for a bank of our size and complexity is our top priority, and closing consent orders is an important sign of our progress," Scharf said. "Our risk-and-control work remains our top priority."

In September 2021, a federal Consumer Financial Protection Bureau consent order expired that was issued in 2016 regarding the bank's retail sales practices.

In January 2022, the Office of the Comptroller of the Currency terminated a June 3, 2015, consent order regarding add-on products that the bank sold to retail banking customers before 2015.

In January 2021, the Office of the Comptroller of the Currency ended a 2015 consent order affecting Wells Fargo's policy addressing money laundering related to the Bank Secrecy Act/Anti-Money Laundering compliance program.

The Bank Secrecy Act requires financial institutions to assist the federal government with detecting and preventing money laundering, as well as tax evasion and other potential criminal actions.

That consent order required Wells Fargo to implement customer due diligence standards that include collection of current beneficial ownership information for certain business customers.

Wells Fargo still remains under the Federal Reserve's asset cap of $1.9 trillion that has been in place since Feb. 3, 2018. The Fed's order prohibits the bank from increasing its total assets beyond what it had on Dec. 31, 2017. For banks, loans are considered assets.

Several media outlets have reported that Fed chairman Jerome Powell said the asset cap will remain until the Fed is confident that Wells Fargo has resolved a series of internal governance and risk-control issues.

Wells Fargo has been subject to a series of federal fines and consent orders linked to the scandal that have added up to at least $11.5 billion.

Scharf has told analysts on several occasions it could be several more years before the bank resolves enough legal and regulatory issues to be allowed by the Fed to grow its total assets.

[email protected]@rcraverWSJ