Wells Fargo & Company’s WFC 2018 consent order related to its compliance risk management program was terminated by the Office of the Comptroller of the Currency (OCC). This is the 10th consent order of Wells Fargo, which has been closed by regulators since 2019.

The latest order to be terminated was imposed on the bank in April 2018 and was accompanied by a $500 million fine. It dealt with Wells Fargo's auto lending and mortgage practices, in addition to its compliance risk management program. A compliance order pertaining to similar activities was enforced by the Consumer Financial Protection Bureau in collaboration with the OCC. The bank was fined $1 billion, of which $500 million was credited to the OCC to cover the agency's penalty.

In 2018, the OCC ordered Wells Fargo to create a plan to restructure its mortgage fee practices, insurance policies for auto loans and compliance risk management systems. Three years later, the regulator placed restrictions on Wells' future operations unless its mortgage servicing rules were fixed and fined the bank $250 million for failing to make adequate rehabilitation progress.

Wells Fargo’s Management Remarks

Charlie Scharf, Wells Fargo’s CEO, stated, “We are pleased that the OCC has validated the work required in the 2018 compliance consent order and has terminated the enforcement action. This development, along with the termination of three other consent orders in the last three weeks and the termination by the OCC of the 2016 sales practices consent order last year, is a huge accomplishment for the many thousands of people at Wells Fargo who have worked tirelessly to transform the company.” “We are a different company today than when the new management team arrived. 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,” he added.

Wells Fargo’s Progress to Fix Compliance Problems 

On Dec 11, at the Goldman Sachs 2024 U.S. Financial Services Conference, Scharf expressed confidence in the bank's progress to fix compliance problems following its year-long fake account scandal, detailing its efforts to implement risk controls.

"For every one of our consent orders that we have, for every one of our regulatory deliverables, we have extremely detailed plans in place that the regulators have reviewed,” Scharf stated.

Earlier this month, Wells Fargo cleared a couple of orders from the Federal Reserve that dated back to 2011 and related to deficiencies in its mortgage lending practices. 

In November 2024, Reuters reported that WFC was in the final stages of meeting its regulatory requirements to remove the $1.95-trillion asset cap. This asset cap was imposed in 2018 following the revelation of its fake account scandal. 

In February 2024, the 2016 consent order issued by the Office of the Comptroller of Currency related to unsafe sales practices was terminated. This development was an important step toward the potential lifting of the asset cap.  In January 2024, the bank was freed from a 2022 consent order with the CFPB.

Wells Fargo’s Price Performance & Zacks Rank

WFC shares have gained 43.2% over the past six months compared with the industry’s growth of 33.2%.

Six-Month Price Performance

Image Source: Zacks Investment Research

WFC flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Banks’ Progress to Fix Regulatory Issues

In October 2024, Citigroup’s C 2013 anti-money laundering enforcement action was terminated by the Federal Reserve. In March 2023, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency raised concerns over insufficient controls and risk management practices pertaining to the Bank Secrecy Act (BSA) and anti-money laundering (AML) requirements.

The enforcement action did not include any fine and was filed against Citigroup and its subsidiaries, Banamex and Citibank N.A., in response to concerns about its compliance with AML regulations.

In December 2024, Bank of America BAC received a cease-and-desist order from the OCC, addressing the deficiencies under BSA and sanction compliance programs.

The order against Bank of America is based on violations, and inappropriate and unsafe practices concerning these programs, alongside a failure to report suspicious activity timely and rectify shortcomings related to its Customer Due Diligence processes identified earlier. The order mandates the bank to apply thorough remedial measures to improve its BSA/AML and sanction compliance programs.

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