The recent Wells Fargo scandal caused quite a bit of controversy, and it was only a matter of time until repercussions would become apparent. The US regulator has changed its course and deemed former executives at the bank will face financial punishment. Additionally, the lender will now need to seek approval before new leadership can be appointed. This is a more than just course of action, as creating phony bank accounts is not something to sneeze at.
Major Regulatory Concerns For Leaderless Wells Fargo
When the news broke about Wells Fargo’s phony account scandal, the entire world was taken by surprise. Then again, banks do not have the best of reputations when it comes to following guidelines and rules. It was only a matter of time until the bank would face repercussions, and the US regulator has come down with a fair but troubling verdict.
Rather than leaving things as they are, former Wells Fargo executives will be held responsible for the phone account scandal. They will need to pay the price for their actions, and the US regulator will ensure that amount is settled shortly. Additionally, it is now impossible for the bank to appoint a new leader without regulatory approval. This latter decision could have big consequences for the bank moving forward.
This decision is a significant step forward to hold upper management brass responsible for scandals involving their financial institutions. So far, that has hardly ever been the case. After all, they are supposed to keep their employees in check. It is not unlikely that some former WF executives were aware of this phony account scheme and greenlit it regardless.
At the same time, Wells Fargo agreed to pay US$190m to settle charges due to this scandal. Keeping in mind how the scheme was run for the period of five years, that only seems to be a drop of water on a boiling plate. Many customers remained outraged and demanded justice. It appears that the US regulator has every intention to honor those requests moving forward.
More oversight for major banks is a positive development, even though financial institutions may disagree on that point. There is a severe lack of transparency in the banking sector, and far too many shenanigans take place behind the scenes. In the end, the only victims are the customers, as their information or finances are abused by the very people they trust.
This is not the end of the Wells Fargo investigation by any means, though. US Congress members have requested that the bank publishes internal memos and communication related to this scandal, yet Wells Fargo has declined to do so. It is clear that there are quite a few more skeletons in the bank’s closet, and it is only a matter of time until the truth comes out.
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