Wells Fargo (WFC) investors are awaiting a potential change to regulations that would allow the company to continue with their fraudulent practices. A U.S. regulator wants to loosen restrictions on paying employees when they leave a company. The practice would allow the company to pay employees that have left the company again. Wells Fargo has been restricted of making such payments following the phony account scandal.
President Donald Trump is also championing lighter rules and regulations on Wall Street and bank regulators. The rules and regulations were put in place following the recession to help protect consumers and avoid further risks of a recession.
Keith Noreika, Comptroller of the Currency (OCC), has been in his position since May and has suggested in the past that he is an advocate of easing sanctions on Wells Fargo.
The company admitted to creating 2.1 million accounts without customer approval. This figure has since been revised up to 3.5 million. Wells Fargo settled the issue for $190 million. The settlement deal requires the OCC to vet incoming executives. Severance pay packages, provided to employees after they leave the company, must be cleared by the Federal Deposit Insurance Corporation and the OCC.
Wells Fargo’s potential regulation loosening comes at a time when reports indicate the company’s auto insurance division engaged in deceptive practices. The OCC’s confidential report, reviewed by the New York Times, suggests that Wells Fargo forced unneeded insurance on hundreds of thousands of borrowers.
The report also found problems with the way that the company handled issues when they were detected.
Wells Fargo is accused of forcing unneeded insurance on borrowers that took out a car loan with the company.
The report, still in the preliminary stage, was sent to the bank this week. The report suggests an additional blow to Wells Fargo’s reputation. The report suggests that the bank may underestimate how much the practices will cost the bank if they need to reimburse impacted customers.
Action against the company will require the company to implement closer monitoring and will force the company to curb some of their practices.
The improper insurance scandal came to light in July. Reports initially showed 800,000 customers that were charged for insurance that they didn’t need or want. The consumers impacted already had the coverage.
The report shows that 274,000 people fell behind on car loans due to the higher charges. Some 25,000 customers also had their cars repossessed due to the company’s actions.