Bank regulators are tightening restrictions on Wells Fargo in the wake of its sham-accounts scandal, requiring that it seek approval before hiring senior executives and submit to increased scrutiny of other business decisions.
The Office of the Comptroller of the Currency said it had revoked some terms of the $185 million settlement that Wells Fargo reached in September with regulators bank over the creation of unauthorized customer accounts.
As a result of the revocation, the OCC said in a brief statement, the bank will no longer be eligible for expedited regulatory review of applications for basic practices, including opening or relocating bank branches, must provide written notice of a change in directors and senior executives, and is restricted from making “golden parachute” payments to executives.
According to OCC rules, regulators can disapprove of those hiring decisions based on the individual’s “competence, experience, character or integrity.”
The OCC did not explain the move but a former OCC bank examiner said it amounts to a regulatory vote of no-confidence in Wells Fargo’s leadership.
“This is the OCC saying, ‘We don’t trust you to run your business,’” Wade Francis, president of bank consultancy Unicon Financial Services, told the Los Angeles Times. “They’re questioning the judgment of management.”
“It looks like the regulators are tightening the straitjacket around Wells Fargo,” bank analyst Mike Mayo of CSLA told CNNMoney.
Wells Fargo said it will “comply” with the new restrictions. “This will not inhibit our ability to execute our strategy, rebuild trust, serve customers and continue to operate the company,” the bank said in a statement.
Citing people familiar with the OCC, The Wall Street Journal reported that the changes with the Wells Fargo settlement “could have been provoked by public criticism that the OCC’s initial action was too soft, given the multiyear period that the alleged misconduct occurred and the fact that executives who have since left the bank still received tens of millions of dollars of compensation.”
The bank is also under investigation by the Securities and Exchange Commission, the U.S. Department of Justice, Department of Labor, congressional committees, and state attorneys general.