Wells Fargo Slapped With Increased Restrictions

The government had decided that, in the wake of account creation scandal that has already seen the bank at the business end of $185 million in fines, Wells Fargo could probably also use some additional oversight.

Going forward, the firm’s banking unit will need to seek approval before making a wide range of business decisions, according to a statement released Friday (Nov. 18) by the Office of the Comptroller of Currency (OCC).

Wells was not expecting the leash to tighten so fast or so dramatically.

From now on, the bank can not offer departing executives “golden parachute” payments, and it must seek OCC permission before changing its business plans, hiring or firing senior executives or revamping its board of directors. The move comes as a wholesale unilateral alteration of the the terms of the September agreement negotiated with Wells Fargo. That settlement included the $185 million settlement over the opening of as many as 2.1 million accounts using fictitious or unauthorized customer information.

Th OCC has offered no official explanation as to why.

“I’ve never seen anything like this,” said a former OCC official who asked not to be identified. “It’s surprising to see the agency reverse themselves on a negotiated agreement without some new information coming to light.”

The scandal has been costly for Wells.

CEO John Stumpf retired, and the bank’s new leader, Timothy Sloan, has been on the road nearly constantly trying to persuade government officials, employees and customers that the bank is on the road to repair after a horrible aberration from its own norms.  And it seems, as of now, Wells is not fighting the news rules.

“We continue to cooperate with the OCC, as well as all our regulators, and will comply with these requirements,” Wells Fargo spokeswoman Jennifer Dunn said in a statement Friday. “This will not inhibit our ability to execute our strategy.”

The new regulations are now one of many issues Wells must work through. On top of this, there is also the slew of state and federal investigations from favored players like the Justice Department and the Securities and Exchange Commission.

And though the bull market in bank shares has kept Wells Fargo’s stock price healthy of late, there has been numerically calculable fallout as well. The company reported Thursday that consumer checking account openings dropped into the 300,000 neighborhood, a 27 percent falloff between September and October and a 44 percent drop year over year.