Two more Wells Fargo federal consent orders terminated. But growth cap remains for now
Two more federal agency consent orders tied to Wells Fargo’s prior problems have ended, the bank said Tuesday. But the bank’s asset cap remains in place, a significant penalty that’s thwarting potential growth.
The Federal Reserve Board of Governors’ orders that were terminated Tuesday were issued in 2011. One was related to residential mortgage loan servicing and foreclosure processing, and the other was over mortgage lending practices at a former subsidiary, according to the board.
It’s a sign that Wells Fargo is making progress to resolve past problems, Charlie Scharf, Wells Fargo’s CEO since 2019, said in a statement.
“Wells Fargo is a different company today,” Scharf said, “and the resolution of these two longstanding Federal Reserve consent orders is another indication that our team is establishing the right processes and controls to meet our regulators’ and our own expectations.”
Just last week, a 2022 Consumer Financial Protection Bureau consent order was terminated. In that case, Wells Fargo was ordered to pay nearly $4 billion for “widespread mismanagement” of its automobile lending, consumer deposit accounts and mortgage lending.
Wells Fargo’s regulators have now closed nine consent orders since 2019, the bank said Tuesday.
But Wells Fargo’s biggest punishment remains in effect among its five remaining consent orders. The 2018 $1.95 trillion asset cap prevents the bank from growing until regulators believe it has fixed problems dating back to its 2016 fake accounts scandal.
From 2002 to 2016, thousands of Wells Fargo’s Community Bank employees opened millions of unauthorized or fraudulent accounts and other financial products to meet excessive sales goals.
The asset cap is a penalty associated with a specific, different consent order. Tuesday’s termination of enforcement actions does not affect the Fed board’s 2018 enforcement action, which remains effective, the board said.
But relief may be on the way. The asset cap may be lifted in the first half of this year with Wells Fargo “in the last stages of a process to pass regulatory tests,” Reuters said in November, citing unnamed sources.
The San Francisco-based bank’s largest employment center is in Charlotte and has about 27,000 employees here.
More about the 2011 consent orders
The 2011 Fed consent orders addressed independent reviews and practices, and oversight for performance management policies, The Charlotte Observer previously reported:
▪ April 2011: This consent order required Wells Fargo to make “significant revisions” to residential mortgage servicing and foreclosure processing practices.
▪ July 2011: Wells Fargo was fined $85 million for steering prime borrowers into costly subprime loans and falsifying income data on mortgage applications. Wells Fargo was also required to compensate borrowers. Wells Fargo didn’t admit to wrongdoing, but the Fed required the bank to improve oversight of its compensation and performance management policies for mortgage loan officers and underwriters.
Wells Fargo’s scandal and regulatory problems
Wells Fargo’s regulatory sanctions began after the fake accounts scandal was discovered in 2016. Since then, regulators identified additional problems with how the bank handled mortgages, auto loans and consumer deposit accounts.
▪ In 2018, Wells Fargo was charged a combined $1 billion from the add Consumer Finance Protection Bureau and the Office of the Comptroller of the Currency for improper mortgage and auto-lending practices that harmed consumers.
▪ In 2020, the bank agreed to pay a $3 billion fine to federal prosecutors and the SEC over its practices.
Also that year, 11 former Wells Fargo senior executives were charged by the comptroller’s office. Eight settled paying over $43 million in civil penalties, including former CEO John Stumpf who was ordered to pay $17.5 million.
▪ In 2022, CFPB ordered Wells Fargo Bank to pay a $1.7 billion fine and more than $2 billion for repeated auto lending, mortgage and account deposit practices that harmed over 16 millions customers. Bank customers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank, the 2022 CFPB order said.
▪ In May 2023, Wells Fargo was settling a class-action lawsuit from shareholders for $1 billion over claims the bank misled them about how it was complying with regulators in the aftermath of its fake sales scandal.
▪ In September 2023, Carrie Tolstedt, the only Wells Fargo leader criminally charged in the scandal, was sentenced to three years’ probation, including six months of home confinement, for her role in misleading investors.
▪ In December, the CFPB sued Wells Fargo for failing to stop “widespread” Zelle fraud. Bank of America and JPMorgan Chase are also named in the lawsuit. Customers have lost more than $870 million during the Zelle network’s seven-year existence because of the actions, according to the consumer agency.
▪ Also in December, three former executives were ordered to pay over $18 million. Claudia Russ Anderson, the former community bank group risk officer, was ordered Tuesday to pay $10 million; David Julian, former chief auditor, was ordered to pay $7 million; and Paul McLinko, former executive audit director, was ordered to pay $1.5 million.
This story was originally published February 4, 2025 at 1:04 PM with the headline "Two more Wells Fargo federal consent orders terminated. But growth cap remains for now."