Wells Fargo faces tighter controls as US regulator reverses course

A Wells Fargo branch is seen in the Chicago suburb of Evanston, Illinois, US. (Reuters)
Updated 19 November 2016

Wells Fargo faces tighter controls as US regulator reverses course

WASHINGTON: A leading US bank regulator has reversed course and positioned the agency to claw back pay of former executives at Wells Fargo & Co. after a phony-accounts scandal.
The lender must also now seek prior approval before naming new bank leadership, said the Office of the Comptroller of the Currency, the main regulator for federal banks.
Friday’s move may target executive pay at Wells Fargo at a time when some lawmakers complain bank bosses have not paid a fair price for their part in financial scandals.
Wells Fargo in September agreed to pay $190 million to settle charges that bank employees opened as many as 2 million accounts without customers’ knowledge.
The fraud went on for at least five years, said the San Francisco-based bank that fired 5,300 employees involved.
Congressional hearings followed news of the scandal and John Stumpf, the firm’s chief executive officer, resigned.
Meanwhile, the September settlement with Wells Fargo remained relatively lax.
The OCC exempted Wells Fargo from some controls on “golden parachutes” in that agreement. The move Friday evening voids those earlier allowances and puts Wells Fargo under toughened standards for oversight, the OCC said.
“The OCC informed the Bank today that it has revoked... relief from specific requirements and limitations regarding rules, policies, and procedures for corporate activities,” the agency said in a Friday evening statement.
A Wells Fargo official said on Friday that the bank is on track to restore its reputation and business.
“This will not inhibit our ability to execute our strategy, rebuild trust and serve our customers,” said spokeswoman Jennifer Dunn.
Stumpf and Carrie Tolstedt, former head of retail banking, did relinquish about $60 million in stock, in the wake of the scandal, according to a Reuters review of securities filings.
But the pair also stood to take home more than $350 million in compensation, according to filings.


Friday’s move is an about-face for the OCC which had settled the Wells Fargo matter without imposing the toughest controls on executive payouts.
Wells Fargo “is not subject to the limitation on golden parachute and indemnification payment,” according to the September settlement.
That allowance on executive pay appears in an eight-page stipulation that also exempts the bank from “requiring OCC approval of a change in directors and senior executive officers.”
If the OCC has asserted its right to screen Wells Fargo executives it could have asked that incoming executives satisfy tests of “experience, character or integrity,” according to banking rules.
Regulators gained the right to freeze executive payouts at troubled banks after the savings and loan crisis of the 1980s and 1990s but exemptions are common.
The OCC has granted an exemption on “golden parachute” standards roughly half the times it issued cease-and-desist orders this year, according to a Reuters tally.


In Congress, lawmakers urged Wells Fargo to come clean about the scope of the phony-accounts scandal.
Democrats on the Senate Banking Committee had asked Wells Fargo to share e-mails, memos and meeting minutes from the bank’s inner workings but the firm largely declined.
On Friday, those lawmakers published Wells Fargo’s response to dozens of questions about the scandal which the bank said it was still investigating.
Sherrod Brown of Ohio said he was not satisfied by the reply from Wells Fargo.
Wells Fargo did tell lawmakers that in 2012 there was an internal probe over problematic sales practices included examining whether accounts were “a poor fit for the customer.”
The settlement covered only accounts that may have been opened without customer authorization.
It did not address accounts that were authorized but might have been a poor fit.
“It seems unlikely that Wells Fargo can restore the trust of its customers if it continues to ignore or dodge basic questions about the causes and consequences of the fraud that it permitted for years,” Brown said in the statement.

France ready to take Trump’s tariff threat to WTO

Updated 08 December 2019

France ready to take Trump’s tariff threat to WTO

  • Macron government will discuss a global digital tax with Washington at the OECD, says finance minister

PARIS: France is ready to go to the World Trade Organization to challenge US President Donald Trump’s threat to put tariffs on French goods in a row over a French tax on internet companies, its finance minister said on Sunday.

“We are ready to take this to an international court, notably the WTO, because the national tax on digital companies touches US companies in the same way as EU or French companies or Chinese. It is not discriminatory,” Finance Minister Bruno Le Maire told France 3 television. Paris has long complained about US digital companies not paying enough tax on revenues earned in France.

In July, the French government decided to apply a 3 percent levy on revenue from digital services earned in France by firms with more than €25 million in French revenue and €750 million ($845 million) worldwide. It is due to kick in retroactively from the start of 2019.

Washington is threatening to retaliate with heavy duties on imports of French cheeses and luxury handbags, but France and the EU say they are ready to retaliate in turn if Trump carries out the threat. Le Maire said France was willing to discuss a global digital tax with the US at the Organization for Economic Cooperation and Development (OECD), but that such a tax could not be optional for internet companies.

“If there is agreement at the OECD, all the better, then we will finally have a global digital tax. If there is no agreement at OECD level, we will restart talks at EU level,” Le Maire said.

He added that new EU Commissioner for Economy Paolo Gentiloni had already proposed to restart such talks.

France pushed ahead with its digital tax after EU member states, under the previous executive European Commission, failed to agree on a levy valid across the bloc after opposition from Ireland, Denmark, Sweden and Finland.

The new European Commission assumed office on Dec. 1.