#FHC – Federal Financial Analytics

FedFin on: CFPB Crafts New-Style, High-Impact Enforcement Construct

Arezou Rafikian2022-12-20T17:22:32-05:00December 20th, 2022|The Vault|

In this report, we provide an in-depth assessment of the CFPB’s unprecedented $3.7 billion settlement earlier today with Wells Fargo (WFC). In its release, the Bureau notes that it worked with the FRB and OCC to craft this consent agreement; in his remarks, Director Chopra makes it clear that, settled or not, he wants to penalize a “corporate recidivist” by retaining or even tightening the Fed’s 2018 asset-cap (see Client Report CORPGOV26) and doing the same with the OCC’s 2021 mortgage-servicing settlement….

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

Karen Petrou: Choosing Between Evisceration, Amputation, or Decapitation to Punish Big Banks

Arezou Rafikian2023-08-03T14:36:09-04:00September 20th, 2021|The Vault|

One can pretty much count on senior Democrats to demand summary execution when Wells Fargo stumbles on its troubled path to exoneration from the Fed’s scorching 2018 enforcement order. So, when the OCC last week embarrassed the bank with renewed sanctions, Sen. Warren didn’t miss a beat; as we noted, she promptly sent Jay Powell a letter demanding that the bank be disemboweled. However, if Sen. Warren really wants to ensure that accident-prone banks mend their ways, she would do better by pressing remedies that might really work for the consumers she wants to protect.

Disembowelment via Sen. Warren would come via regulatory resurrection of the Glass-Steagall Act along her preferred lines. As she explains this in her letter, the Fed would use the authority she believes it has to revoke Wells Fargo’s charter as a financial holding company (FHC), thereby ending the holding company’s ability to engage in both consumer banking and securities activities.

Sen. Warren considers the mix of consumer and capital-markets activities fraught with contagion for vulnerable consumers, but none of the violations that sparked enforcement orders has anything to do with wholesale finance and could well have occurred in the most consumer-pristine of retail banks. For example, the OCC’s latest order punishes what are said to be severe lapses in mortgage servicing. IPO offerings, brokerage services, and even junk-bond sales have diddly to do with mortgage servicing or the cross-selling scandal that brought all this down on the bank in the first place. Thus, divesting capital-markets …