Wells Fargo creates unit to satisfy regulatory demands
Wells Fargo has created an operations unit designed to focus exclusively on meeting demands of regulators who have expressed dissatisfaction with the bank's progress after a series of scandals.
Derek Flowers, the bank's chief credit and market risk officer, will lead the newly formed strategic execution and operations group, acting CEO C. Allen Parker said in an internal memo issued Wednesday. Flowers, a 21-year veteran of Wells Fargo, currently oversees all credit risk throughout the bank's lending activities and provides oversight of all company and line-of-business credit policies.
“I am pleased to announce the formation of the strategic execution and operations group that will be focused on executing against our regulatory priorities and, in that connection, strengthening and driving the implementation of certain business and risk-management processes,” Parker wrote in the memo.
The $1.88 trillion-asset bank has been in the regulatory penalty box since February 2018 when the Federal Reserve imposed a cap on its asset growth. The bank has been struggling to persuade regulators to lift the cap, but the central bank and Office of the Comptroller of the Currency have both expressed public dissatisfaction with Wells' progress in making changes required under a series of consent orders.
The creation of the unit is seen by observers as a tacit acknowledgment that the regulators’ criticism has merit. Parker did not provide further details on how Wells’ efforts over the past 15 months have fallen short or what it needs to accomplish to satisfy regulators.
Wells has revamped its organization, beefed up compliance and embarked on a long list of reforms that were included in a 103-page business standards report released in January. The bank has given no timetable for the selection of a permanent CEO following the abrupt retirement of Tim Sloan in March.
The flurry of scandals started in September 2016 when it was revealed that thousands of Wells employees had created potentially millions of fake accounts in order to meet ambitious sales goals. Other missteps have followed related to the bank's force-placed auto insurance and mortgage policies.
Flowers, who was named chief credit officer in 2013, chairs the bank's Credit Risk Management Committee and assists management and the bank’s board in identifying and monitoring credit, counterparty and market risk. Previously, Flowers was chief credit and market risk officer for Wells Fargo's securities and corporate banking groups, which include the company’s corporate, energy, power and utilities, gaming, restaurant, and sponsor finance businesses.