U.S. Regulators Sanction Wells Fargo, Declaring 'Living Will' Deficiencies
14 December 2016 - 9:02AM
Dow Jones News
By Ryan Tracy and Emily Glazer
WASHINGTON -- U.S. regulators slapped Wells Fargo & Co. with
new regulatory sanctions Tuesday, saying the firm failed to address
alleged "deficiencies" in a plan to manage its own bankruptcy
without a taxpayer bailout.
Four other huge banks avoided the sanctions: J.P. Morgan Chase
& Co., Bank of America Corp., Bank of New York Mellon Corp.,
and State Street Corp. The Federal Reserve and Federal Deposit
Insurance Corp. announced the verdicts Tuesday after saying in
April that the five banks didn't have adequate "living will"
plans.
This the first time that regulators have imposed penalties since
the country's biggest banks were required to submit "living wills"
starting in 2012. Officials have been granted far-reaching powers
to restrict bank activities under the program. In this case, Wells
Fargo will be barred from establishing international bank entities
or acquiring any non-bank subsidiary. The regulators could have but
did not impose higher capital requirements on the firm, a
potentially stricter sanction.
The regulatory shortcoming, akin to failing a makeup test, is
yet another blow to Wells Fargo, which is still struggling with the
fallout from its sales-practices scandal. The firm, once a golden
child among big banks, paid a $185 million fine in September to a
separate set of federal regulators, along with a city official,
over opening as many as 2.1 million accounts with unauthorized or
fictitious customer information.
Since then, Wells Fargo has faced public and political
criticism. Former Chief Executive John Stumpf retired abruptly
after being grilled in two congressional hearings. The bank faces
many state and federal investigations, including from the Justice
Department and the Securities and Exchange Commission. Wells
Fargo's board is also conducting its own internal investigation.
The Office of the Comptroller of the Currency last month imposed
further restrictions on the bank's operations over that
controversy, and is looking at still further restrictions on the
bank's ability to expand.
--Christina Rexrode contributed to this article.
(END) Dow Jones Newswires
December 13, 2016 16:47 ET (21:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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