A federal regulator has told Wells Fargo’s board it is considering taking action against the bank over practices in its mortgage and auto lending businesses, the Wall Street Journal reported Wednesday.
In a letter this month, the Office of the Comptroller of the Currency said Wells had willingly hurt customers in the two businesses and had until Nov. 24 to respond, people familiar with the matter told the Journal. The action being considered against Wells is a cease and desist order, the people said.
The letter follows disclosures Wells made this year of missteps in the two business lines. In July, the bank said as many as 570,000 customers may have been charged premiums for auto insurance they did not need. In October, Wells disclosed improperly charging some customers fees for mortgage rate lock extensions.
The OCC letter said Wells repeatedly failed to fix problems in a broad span of areas, not just auto insurance and mortgage-lending, according to The Wall Street Journal.
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Wells Fargo spokeswoman Catherine Pulley told the Observer she could not comment on the comptroller’s letter or its contents because it was confidential supervisory information.
“While there is still work to be done, Wells Fargo is dedicated to making things right, fixing the problems and building a better bank,” Pulley said. “We are making critical changes across our risk management functions and line of business operations to rebuild the trust of our customers and team members.”
Comptroller’s office spokesman Bryan Hubbard said he could not comment on supervisory matters pertaining to specific banks.
The OCC, an independent bureau of the Treasury Department, regulates and supervises national banks. In September 2016, it was among the regulators that fined Wells Fargo a combined $185 million over claims employees had opened millions of accounts that may not have been authorized by consumers.
In fining Wells Fargo, the OCC also issued a cease and desist order against the bank, noting the regulator had found deficiencies in Wells’ oversight of its sales practices. Such orders typically require banks to take steps to fix practices and report back to the OCC.
The regulator has taken other action against the bank since the fake-accounts scandal.
Last year, the OCC announced a cease and desist order after the regulator said it found violations of the Servicemembers Civil Relief Act, including Wells had failed to obtain court orders before repossessing servicemembers’ vehicles. Wells did not admit or deny any wrongdoing.
In March, Wells Fargo disclosed the OCC had downgraded the bank’s latest Community Reinvestment Act rating to “needs to improve,” the second-lowest of four ratings.
Created by Congress in 1977, the CRA requires banks to make loans in the communities where they do business, including low- and moderate-income neighborhoods. The OCC cited the bank’s sales scandal as a factor in the downgrade.
Wells Fargo, the nation’s third-largest bank by assets, continues to make changes in its leadership as it seeks to fix its reputation.
On Wednesday, the bank announced the addition of three new directors to its board to replace long-time directors who announced their departures in August. Among those stepping down at the end of this year is Chairman Stephen Sanger, whose tenure included the years in which the fake-accounts scandal was taking place.
Also this month, Wells announced the firing of the head of its consumer lending unit. The bank said the executive, Iowa-based Franklin Codel, was dismissed following a discussion with a former employee about that employee’s termination. In his role, Codel was in charge of Wells’ home lending business, as well as auto lending, personal lending and student lending.
Codel joins other top executives who have been terminated or left Wells Fargo over the past year or so, including former CEO John Stumpf, who announced his retirement after revelations of the sales scandal.