Wells Fargo's 2021 Compliance Consent Order Terminated by OCC

Wells Fargo & Company’s WFC 2021 consent order related to related to loss mitigation practices in its Home Lending business was terminated by the Office of the Comptroller of the Currency (“OCC”). This marks the 11th consent order of Wells Fargo, which has been closed by regulators since 2019.

Details of WFC’s 2021 Consent Order by OCC

In 2021, OCC levied a $250-million fine on Wells Fargo related to the bank's home lending loss mitigation program and for failing to meet the requirements of a 2018 consent order. The Office of OCC litigated that WFC had not met the requirements of a 2018 consent order when the regulator ordered the bank to pay back customers who were charged excessive or improper fees.

Specifically, the OCC mentioned that Wells Fargo's efforts to identify and pay back customers who had been previously harmed by the bank were insufficient, citing "significant deficiencies" in its earlier attempt.

WFC’s Management Remarks

Charlie Scharf, Wells Fargo’s CEO, stated, “We are pleased that the OCC has again validated our work and terminated this consent order in just three and a half years. This timeframe is much improved from other historical orders, including two 2011 Federal Reserve orders which were terminated earlier this year. This is our fifth closed consent order since the beginning of 2025. We remain confident that we will complete the work required in our remaining consent orders.”

Wells Fargo’s Progress to Fix Compliance Problems 

On Dec. 11, at the Goldman Sachs 2024 U.S. Financial Services Conference, Scharf expressed confidence in the bank's progress to fix compliance problems following the year-long fake account scandal, detailing its efforts to implement risk controls.

"For every one of our consent orders that we have, for every one of our regulatory deliverables, we have extremely detailed plans in place that the regulators have reviewed,” Scharf added.

Last month, WFC’s 2018 consent order related to its compliance risk management program was terminated by OCC. This dealt with Wells Fargo's auto lending and mortgage practices, in addition to its compliance risk management program.

In the same month, Wells Fargo cleared a couple of orders from the Federal Reserve: a 2011 consent order regarding its legacy mortgage servicing activities and a 2011 consent order regarding legacy Wells Fargo Financial business. 

In January 2025, WFC’s 2022 consent order with the Consumer Financial Protection Bureau related to automobile lending, consumer deposit accounts and mortgage lending was terminated. 

In February 2024, the 2016 consent order issued by the Office of the Comptroller of Currency related to unsafe sales practices was terminated. This development was an important step toward the potential lifting of the asset cap. In January 2024, the bank was freed from a 2022 consent order with the CFPB.

Our Take on WFC’s Efforts to Fix Compliance Issues

Fixing compliance problems has been the top priority for Wells Fargo under Scharf’s leadership, who became the bank’s CEO in 2019.

In November 2024, Reuters reported that WFC was in the final stages of meeting its regulatory requirements to remove the $1.95 trillion asset cap. This asset cap was imposed in 2018 following the revelation of its fake account scandal. 

Wells Fargo has seen several regulators move to terminate enforcement actions in recent months and it will likely reinforce investors’ belief that the asset cap could be lifted sooner rather than later. 

Given that loans are among the largest assets a bank can hold, lifting the asset cap will mark a positive turning point for Wells Fargo. This will allow the bank to offer loans without restrictions, supporting the top-line expansion and positioning it for long-term growth.

Wells Fargo’s Price Performance & Zacks Rank

WFC’s shares have gained 28.3% in the past six months compared with the industry’s growth of 13.7%.

Image Source: Zacks Investment Research

WFC carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Banks’ Progress to Fix Regulatory Issues

In October 2024, Citigroup’s C 2013 anti-money laundering enforcement action was terminated by the Federal Reserve. In March 2023, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency raised concerns over insufficient controls and risk management practices pertaining to the Bank Secrecy Act (“BSA”) and anti-money laundering (“AML”) requirements.

The enforcement action did not include any fine and was filed against Citigroup and its subsidiaries, Banamex and Citibank N.A., in response to concerns about compliance with AML regulations.

In December 2024, Bank of America BAC received a cease-and-desist order from the OCC, addressing the deficiencies under BSA and sanction compliance programs.

The order against Bank of America is based on violations, and inappropriate and unsafe practices concerning these programs, alongside a failure to report suspicious activity timely and rectify shortcomings related to its Customer Due Diligence processes identified earlier. The order mandates the bank to apply thorough remedial measures to improve its BSA/AML and sanction compliance programs.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research