The Fed said the order responds to the bank’s recent consumer abuses and other compliance breakdowns. The growth restriction will apply until Wells Fargo sufficiently improves its governance and controls.
The Fed’s order also requires Wells Fargo to improve its governance and risk-management processes, including strengthening the effectiveness of oversight by its board. Each current director of the bank was required to sign the cease-and-desist order.
"We cannot tolerate pervasive and persistent misconduct at any bank, and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again," Fed Chair Janet Yellen said. "The enforcement action we are taking today will ensure that Wells Fargo will not expand until it is able to do so safely and with the protections needed to manage all of its risks and protect its customers."
Concurrent with the announcement of the order, Wells Fargo disclosed a planned refreshment of four directors in 2018. Three of those directors will retire by the time of the company’s 2018 annual meeting.
“We take this order seriously and are focused on addressing all of the Federal Reserve’s concerns,” Wells Fargo President and CEO Timothy Sloan said. “It is important to note that the consent order is not related to any new matters, but to prior issues where we have already made significant progress. We appreciate the Federal Reserve’s acknowledgment of our actions to date. In addition, the order is not related to Wells Fargo’s financial condition – we remain in a strong financial position and stand ready to serve the varied financial needs of our customers.”
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Wells Fargo will be restricted from growing more than its total asset size as of the end of 2017 under a consent cease-and-desist order issued by the Federal Reserve Board.