Wells Fargo Revamps Its Risk Management Department
Wells Fargo is restructuring its risk management department in response to a sanction from the Federal Reserve. The Wall Street Journal reports four of the top executives in that department will be retiring over the next three months, and new “lines of defense” will be put in place to prevent problems in the future.
In February, the Federal Reserve restricted Wells Fargo’s growth until the company could improve its risk management practices. This ruling came after repeated misconduct from the bank, including 3.5 million fake checking and credit card accounts, 863 illegal vehicle repossessions, and potentially thousands of overcharged mortgage fees. When the bank recently tried to refund customers for unnecessary auto insurance charges, they sent some refunds to the wrong people—those not affected by the charge.
In response to these errors and others from the last few years, the Fed capped Wells Fargo’s total asset size to its value at the end of 2017. Each current director at the bank was required to sign a cease and desist order. The Fed’s official statement said, “In recent years, Wells Fargo pursued a business strategy that prioritized its overall growth without ensuring appropriate management of all key risks.”
The Federal Reserve required three board members to be replaced by the end of April and one more by the end of the year. Wells Fargo employees say an internal memo at the bank scheduled Jim Richards, head of financial crimes risk management, to retire in early April; and Kevin Oden, head of operational risk and compliance, as well as Vic Albrecht, head of the community banking risk group, to retire in May. Keb Byers, head of enterprise risk, is set to retire in June and will only be on “special assignment” until then.