Four years have gone by since Charlie became CEO. We are still under the Federal Asset Cap with no word on an ETA, and violations continue to occur under Charlie’s watch. Regulators have accused Charlie of putting too much focus on profit- producing activities, resulting in slow progress on repairing the bank. What are Wells Fargo’s choices at this point, and what will they be willing to do?
- Let Charlie continue with business as usual, saying year-after-year ‘we’re making progress’ while continuing to not make enough progress. This is not a viable option for much longer, as the CFPB Director said in January, “Finding a permanent resolution to this bank’s pattern of unlawful behavior is a top priority.” ❌
- Charlie is removed or steps down, and the BOD brings up an internal “same-sh-t, different day” planned successor. This accomplishes nothing. ❌
- Replace Charlie with (hopefully) the right CEO who can achieve positive change for the bank and all its stakeholders. This would be the right long-term solution, but will never happen because: ❌
- It would mean starting over from square one, and further delays on regulatory work.
- It would mean smaller profits since our business model has been built on customer exploitation for the past 25 years.
- It could tank the stock and cause blowback on the the Board.
- Charlie is ON the Board which complicates their ability and independence to oversee him.
- Based on our Board’s passive performance through the years - they do not seem progressive, engaged or independent enough to pull the trigger, unless forced. This will NEVER happen.
This puts the responsibility on the Regulators. What are their choices?
- Give Wells Fargo unlimited time. This is probably not going to happen. Regulators’ credibility is at stake after nearly 6 years of an unprecedented asset cap and multiple ongoing failures resulting in serious, repeated violations of law and abuse of customers by Wells Fargo. ❌
- Impose more financial penalties, which Wells Fargo has just weaved in to the cost of doing business. The fines, though large, have not been a deterrent. And ultimately- the shareholders and employees pay the price, not the executives. It has been argued that Wells Fargo is Too Big To Regulate. Penalties and the Federal Asset Cap have failed. ❌
- This leaves one remaining option: Fed could break up the bank into several smaller, more manageable companies. (This plan has several downsides as well: It allows the remaining Too Big To Fail banks to grow bigger. And this could put the US economy at risk during a time inflation, smaller banks failing, and growing problems with Commercial Real Estate Loans) I don’t think regulators want to go this route, but I believe they will. ✅