Wells Fargo, weeks after it was hit with a rare enforcement action from the Federal Reserve, is overhauling its risk management processes and announced internally that four top risk management executives would be retiring.
According to a report in The Wall Street Journal citing employees and an internal memo that was described to the paper, Wells Fargo also let employees know about the reorganization to better manage risk. The latest changes come as probes into the company's actions continue, with people familiar with the matter telling The Wall Street Journal that the Office of the Comptroller of the Currency is close to finalizing its own action against the bank. Its expected to include a civil penalty stemming from the risk controls at the company, noted the report. The WSJ reported earlier this year that the Office of the Comptroller of the Currency could slap a fine on Wells Fargo that is in the tens of millions of dollars range.
Those that are retiring include Jim Richards, head of financial crimes risk management, Kevin Oden, head of operational risk and compliance, Keb Byers, enterprise risk head and Vic Albrecht, community banking risk group head. All are retiring in April, May or June. In addition to announcing the retirements in the internal memo, Wells Fargo said it was making structural changes to the first and second lines of defenses, which are supposed to catch and prevent any problems such as the fake account scandal and subsequent wrongdoings. Some roles and responsibilities of executives and groups within the organization were also changed. The corporate risk group now has more power to stop or modify business activities, noted the report.
In what was seen as an unprecedented move in February, the Federal Reserve said it would not allow the bank to grow in size or scope beyond the slightly less than $2 trillion on the books, in effect curbing asset growth beyond 2017 — a limit that will remain in place until “sufficient improvements” are made that address “widespread consumer abuses.” As has been widely reported, the company has been under fire for opening accounts without customer permission and signing consumers up for auto insurance they neither asked for nor needed. The Fed has never before placed limits on how large a company can grow. However, the FI can still lend and take deposits. In reference to corporate governance, Wells Fargo has two months to boost board oversight and compliance efforts. Three board members are on track to be replaced by April and a fourth by the end of 2018.