Late last month, Wells Fargo’s Tim Sloan abruptly stepped down from his role as CEO, and the rumor mill churned with word that the board sent him packing because of his failure to convince lawmakers on Capitol Hill that the beleaguered bank had turned a new leaf.
It appears the rumors were true.
Kathy Kraninger, director of the Consumer Financial Protection Bureau, announced she is unhappy with Wells Fargo’s lackluster attempt to correct its risk management issues and that she is considering her options when it comes to the consequences.
In a letter to Senators Elizabeth Warren, D-Mass., and Sherrod Brown, D-Ohio, that was published Tuesday, Kraninger said the bank has not done enough to right its wrongs, according to Reuters.
“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,” Kraninger wrote. “Broadly speaking, I consider all options on the table for enforcing Bureau consent orders.”
The bank’s troubles began in 2016 when it was revealed that 5,000 Wells employees opened two million fake accounts in order to receive sales bonuses. That led to a $150 million fine by the CFPB, the Office of the Comptroller of the Currency and the city and county of Los Angeles, and to an additional $480 million payout to settle a class-action lawsuit.
Since then, it has dished out millions to settle allegations and pay remediation related to charges that it overcharged military veterans and denied mortgage modifications to borrowers facing foreclosure.
And then last April, the CFPB and the Office of the Comptroller of the Currency slapped Wells with a $1 billion fine for charging borrowers interest rate lock extensions and forcing customers into buying insurance for auto loans.
The bank has pledged its commitment to cleaning up its act, and at a hearing before the House Financial Services Committee in early March, Sloan was tasked with detailing how it has done just that.
But it appears its actions have fallen short of satisfying federal regulators, and there may be consequences to pay.
Kraninger and OCC Director Joseph Otting have the power to issue further sanctions against the bank – including fines, business restrictions or the removal of personnel – if they find Wells has not done enough to clean up its act.
Time will tell what’s in store.
In the meantime, the bank continues its search for a new CEO, one who might have a better grasp on the powers of persuasion.
