WASHINGTON – The Office of the Comptroller of the Currency has rolled back some of the relief from regulatory restrictions on corporate activities afforded Wells Fargo under federal law before its recent troubles.
The move appears to give the agency more control over executive changes and pay practices at the third-largest U.S. bank by assets.
Wells in September agreed to a $190 million settlement after regulators determined that certain employees had created roughly 2 million phony accounts over several years in order to meet sales quotas and earn bonuses. Wells fired roughly 5,300 employees between 2011 and 2014 for creating the unlawful accounts.
The settlement agreement had preserved Wells Fargo's eligibility for expedited treatment of certain regulatory applications, and leeway in naming officers and directors and setting executive pay, that are granted to healthy, well-managed banks that meet all the U.S. requirements for such treatment.
However, the OCC said in a news release late Friday that it had revoked those privileges, including Wells' ability to name new directors and senior executive officers or change the duties of existing officers without first notifying the agency. The bank is now required to give 90 days' notice, and the agency has the power to reject the moves.
In addition, Wells will face significant limitations on its ability to make so-called golden-parachute payments to top executives.
The OCC did not specify what prompted the changes now. A spokesman for the agency declined to comment about them when contacted by American Banker.
However, a Reuters report quoted a government official as saying the move positions the OCC to claw back compensation that Wells Fargo paid to John Stumpf, who resigned as chief executive in October, and former retail banking chief Carrie Tolstedt.
The Wells board stripped Stumpf of $41 million in compensation in late September, and Tolstedt left in July and was denied $19 million in compensation. But that is said to have been only a small portion of their overall pay packages.