Wells Fargo sheds fourth consent order in a month

Angus Mordant/Bloomberg

Wells Fargo has been released from another consent order, marking the fourth regulatory action the bank has shaken off in the last month.

The Office of the Comptroller of the Currency terminated a six-year-old consent order related to Wells' compliance risk management program, the company said on Thursday. While the bank has picked up its pace of shedding consent orders, it still remains shackled under the most titanic penalty — a February 2018 order from the Federal Reserve that caps Wells' assets at $1.9 trillion.

The latest order to be terminated, which came down on the bank in April 2018, was accompanied by a $500 million fine. It dealt with Wells' auto lending and mortgage practices, in addition to its compliance risk management program. In coordination with the OCC, the Consumer Financial Protection Bureau imposed its own consent order related to similar practices, fining the bank $1 billion, $500 million of which was credited to the OCC to cover the agency's penalty.

The related consent order from the CFPB remains outstanding.

In 2018, the OCC mandated that Wells develop a plan to overhaul its compliance risk management systems, its insurance policies for car loans and fee practices for mortgages. Three years later, the agency fined Wells $250 million for making insufficient progress on remediation, and it put limits on the bank's future activities until its mortgage servicing policies were addressed.

The bank has been under the regulatory microscope for nearly a decade as it has reckoned with myriad scandals related to its retail sales practices and risk control infrastructure.

CEO Charlie Scharf, who was brought on in 2019 to whip the bank's compliance into shape, said in a prepared statement on Thursday that "many thousands of people" have worked "tirelessly to transform the company." He also said that the recent spate of consent order terminations represents a "huge accomplishment."

"We are a different company today than when the new management team arrived," Scharf said. "We remain focused and confident in our ability to complete the work required in our remaining consent orders, while building one of the most respected financial institutions in the country."

The OCC's 2018 order hit the bank at a turbulent time in its relationship with regulators. The then-unprecedented asset cap had been slapped on the bank only two months prior. According to a 2020 report by the Democratic staff of the House Financial Services Committee, Wells had attempted to influence the wording of the OCC's press release to soften the language regarding the removal of bank directors and management.

Tim Sloan, then the CEO of Wells Fargo, was eventually ousted, apparently due at least in part to congressional testimony he gave in 2019 claiming the bank was in compliance with the OCC's April 2018 order. The House Democrats' report called Sloan's statements misleading and inaccurate.

Regulators have now closed 10 consent orders with Wells since 2019, while four more remain outstanding. But progress hasn't been entirely linear. The bank entered an agreement with the OCC in September 2024 that flagged "deficiencies" in Wells' anti-money-laundering program.

Keith Horowitz, an analyst at Citigroup, said in a research note on Thursday that the recent removal of numerous consent orders validates Scharf's regulatory and risk management priorities and the bank's progress.

Earlier this month, Wells Fargo cleared a pair of orders from the Fed that dated back to 2011 and related to deficiencies in its mortgage lending practices. In January, the bank was freed from a 2022 consent order with the CFPB.

Wells Fargo

Wells Fargo exits consent order. Is more regulatory progress coming?

Analysts say the termination of a 2022 consent order with the CFPB is a sign that the bank's days under an asset cap may be numbered. But the consumer bureau, still led by Director Rohit Chopra, says Wells is still being scrutinized as a repeat offender.

By Catherine Leffert

January 28

The CFPB said last month that although its 2022 action was terminated, Wells remained "a repeat offender that continues to have serious issues." At the time, Rohit Chopra, a Biden administration appointee, was still the CFPB's director.

Now Chopra has been fired, and in the last two weeks, the Trump administration has taken steps to effectively defang the bureau, firing dozens of employees and ordering staff to stop all work.

Scott Siefers, an analyst at Piper Sandler, wrote in a Thursday note that the termination of the 2018 consent order is significant, but the most significant takeaway involves the pace at which various regulatory orders have been resolved.

"Each of these terminations represents another important step forward in [Wells'] broader regulatory remediation efforts," Siefers said.

Horowitz was less optimistic, writing that the acceleration of terminations was good news, but arguing that "it's difficult to read into the pace too much given each agency controls the review and termination timeline."