Lately it seems that Wells Fargo can’t even go a few days without another round of bad news. And Tuesday was another one of those bad-news days.
In September, Wells Fargo’s reputation was shattered after the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau and the city and county of Los Angeles fined the bank $185 million because more than 5,000 of the bank’s former employees opened approximately 2 million fake accounts in order to get sales bonuses.
The bank also lost business from several states, and then the OCC slapped additional sanctions on Wells Fargo, including forcing the bank to ask the OCC for approval if it wants to make a change to its board of directors or its senior executive officers.
The bank also reportedly failed to meet its fair lending requirements under the Community Reinvestment Act, which could land it in more hot water with the OCC.
And earlier this week, the states of California and New Jersey began investigating whether Wells Fargo’s fake account scandal also includes life insurance policies from Prudential Insurance.
Now, Wells Fargo is in more trouble with a regulator, as the Federal Deposit Insurance Corp. and the Federal Reserve Board announced Tuesday that the bank failed some of its “living will” tests and will be subject to business restrictions until the failures are remedied.
Under the Dodd-Frank Wall Street Reform Act, the nation’s largest banks are required to create a “living will,” which is a plan for the bank’s “rapid and orderly resolution under bankruptcy in the event of material financial distress or failure of the company.”
The banks are required to submit those plans to the FDIC and the Federal Reserve, and according to those two entities, Wells Fargo’s plan is not sufficient.
According to the FDIC and the Federal Reserve, Wells Fargo, Bank of America, Bank of New York Mellon, JP Morgan Chase, and State Street each had “deficiencies” in the living will plans they submitted in 2015.
The FDIC and the Federal Reserve said Tuesday that the other four banks remedied their issues, but Wells Fargo still had two outstanding issues, and will therefore be sanctioned.
From the FDIC and the Federal Reserve:
The agencies jointly determined that Wells Fargo did not adequately remedy two of the firm’s three deficiencies, specifically in the categories of “legal entity rationalization” and “shared services.” The agencies also jointly determined that the firm did adequately remedy its deficiency in the “governance” category.