Wells Fargo faces tighter controls

WASHINGTON: A leading U.S. bank regulator on Friday reversed course and positioned the agency to claw back pay of former executives at Wells Fargo & Co after a phony-accounts scandal.

The lender must also now seek prior approval before naming new bank leadership, said the Office of the Comptroller of the Currency, the main regulator for federal banks.

Friday´s move may target executive pay at Wells Fargo at a time when some lawmakers complain bank bosses have not paid a fair price for their part in financial scandals.

Wells Fargo in September agreed to pay $190 million to settle charges that bank employees opened as many as 2 million accounts without customers´ knowledge.

The fraud went on for at least five years, said the San Francisco-based bank that fired 5,300 employees involved.

Congressional hearings followed news of the scandal and John Stumpf, the firm´s chief executive officer, resigned.

Meanwhile, the September settlement with Wells Fargo remained relatively lax.

The OCC exempted Wells Fargo from some controls on "golden parachutes" in that agreement. The move Friday evening voids those earlier allowances and puts Wells Fargo under toughened standards for oversight, the OCC said.

"The OCC informed the Bank today that it has revoked relief from specific requirements and limitations regarding rules, policies, and procedures for corporate activities," the agency said in a Friday evening statement. A Wells Fargo official said on Friday that the bank is on track to restore its reputation and business.

"This will not inhibit our ability to execute our strategy, rebuild trust and serve our customers," said spokeswoman Jennifer Dunn.

Stumpf and Carrie Tolstedt, former head of retail banking, did relinquish about $60 million in stock, in the wake of the scandal, according to a Reuters review of securities filings.

But the pair also stood to take home more than $350 million in compensation, according to filings. Friday´s move is an about-face for the OCC which had settled the Wells Fargo matter without imposing the toughest controls on executive payouts.  Wells Fargo "is not subject to the limitation on golden parachute and indemnification payment," according to the September settlement.