The Fed Terminates Two Enforcement Actions Against Wells Fargo

On February 4, 2025, the Federal Reserve Board announced the termination of two enforcement actions against Wells Fargo, both dating back to 2011. The first action addressed deficiencies in the bank's residential mortgage loan servicing and foreclosure processes, while the second pertained to inadequate mortgage lending practices at a former subsidiary. Despite these terminations, the Federal Reserve's 2018 enforcement action, which restricts Wells Fargo's growth due to widespread compliance issues, remains in effect.

Wells Fargo's CEO, Charles Scharf, commented on the development, stating that the Federal Reserve's actions reflect "clear, meaningful progress." He emphasized that Wells Fargo has become a different company today, with improved processes and controls to meet both regulatory and internal expectations.

Details of the Terminated Enforcement Actions

• 2011 Enforcement Action on Mortgage Servicing and Foreclosure Processing:  This action was implemented to address deficient practices in Wells Fargo's handling of residential mortgage loans and foreclosure procedures. The termination indicates that the bank has remediated the identified issues to the Federal Reserve's satisfaction.
• 2011 Enforcement Action on Mortgage Lending Practices: This action targeted inadequate mortgage lending practices at a former Wells Fargo subsidiary. The conclusion of this enforcement action suggests that the bank has rectified the concerns raised by regulators.

Why This Matters to Every Bank

• Demonstrates the Necessity of Robust Compliance Programs: The extended duration of these enforcement actions underscores the critical importance of establishing and maintaining comprehensive compliance frameworks. Banks must proactively identify and address deficiencies to avoid extended regulatory scrutiny.
• Highlights the Consequences of Compliance Failures:  The fact that Wells Fargo remains under an asset cap imposed in 2018 due to widespread compliance issues serves as a cautionary tale. It illustrates that regulators are prepared to enforce strict measures that can significantly impact a bank's operations and potential growth.

Does Your Compliance Program Measure Up?

The Federal Reserve's termination of these longstanding enforcement actions against Wells Fargo signifies the bank's progress in rectifying past deficiencies. However, the continuation of certain restrictions highlights the ongoing challenges and underscores the importance of robust compliance efforts for every bank not matter the size.

Our experts have extensive experience working with financial institutions and regulators.  We have seen firsthand the costs and consequences of failing to maintain proper compliance programs.  We help financial institutions conduct a gap analysis and create an appropriate remediation plan to correct deficiencies. 

We offer our services in two models – a self-service model utilizing our compliance assets such as regulatory checklists, process guides, and exam readiness tools; and, a full-service model where our team of experts do the work for you.  

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