(Reuters) -Wells Fargo said on Tuesday its 2022 consent order with the Consumer Financial Protection Bureau related to automobile lending, consumer deposit accounts and mortgage lending has been terminated.
The termination, which is the seventh consent order closed by Wells Fargo’s regulators since 2019, is a win for CEO Charles Scharf, who has worked to address the U.S. banking giant’s longstanding regulatory issues.
A consent order is a formal, public enforcement action between a regulator and a bank, which often comes with a fine and directives to address an issue in a timely fashion.
Wells Fargo’s compliance issues took center stage after a fake-accounts scandal and its fraudulent sales practices came to light in 2016. Regulators mandated additional oversight of the lender in the wake of the turmoil.
The U.S. Federal Reserve imposed a $1.95 trillion asset cap on Wells Fargo in 2018 and ordered the bank to fix failings in its governance and risk management after years of consumer abuse.
The asset cap is seen as one of the toughest punishments U.S. regulators can put in place, and its removal requires a vote by the Fed’s board of governors.
Last year, Reuters, citing sources, reported the bank was in the last stages of a process to pass regulatory tests to lift the asset cap in 2025, after fixing the problems from its fake-accounts scandal.
The punishment could be removed as early as the first half of 2025, a source said at the time.
The bank’s cleanup efforts would take a major step forward once the restrictions are lifted. Since the scandal, Wells Fargo has been fined billions of dollars and slapped with a raft of regulatory punishments, some of which are still in place.
Early last year, the U.S. Office of the Comptroller of the Currency also terminated a 2016 punishment for the bank’s sales practices.
(Reporting by Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri)
Comments