What the Wells Fargo Crackdown Signals to Corporate America<br />The Federal Reserve imposed penalties on Wells Fargo the other week after a cascade of problems surfaced over the last two years,<br />ranging from opening dummy accounts in the names of customers to forcing borrowers to take out unnecessary automobile insurance.<br />It requires Wells Fargo to enhance the board’s oversight of operations, improve its risk management with an outside review of its progress<br />and — most important — temporarily limit asset growth until its compliance issues are addressed.<br />The central bank sent letters to the former chief executive John G. Stumpf and to the former chairman Stephen W. Sanger, criticizing their performance as “an example of ineffective oversight<br />that is not consistent with the Federal Reserve’s expectations” for a bank of its size and scope.<br />Although the order falls short of a takeover of the bank, it shows just how much the board had failed, in the<br />view of its primary regulator, to meet its basic obligation to ensure that Wells Fargo is managed properly.
