wells fargo

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The  Federal Reserve  Board  is  issuing  this  letter  to  you  with  respect  to  your  tenure as Chair  of  the  board of  directors  of  Wells  Fargo  &  Company  (WFC)  from  2010 to 2016.  As  Chair, it  was  your  responsibility  to lead the  WFC  board in its  oversight  of  the  firm’s  business  and operations.  With respect  to that  responsibility, it  was  incumbent  upon  you  as  leader  of  the  WFC board to ensure  that  the  business  strategies  approved by  the  board  were  consistent  with the  risk management  capabilities  of  the  firm.   It  was  also incumbent  on  you to  ensure  that  the  WFC  board had sufficient information  to  carry  out its  responsibilities. In  the past  year  and  a half,  it  has  emerged  that  there were many  pervasive and  serious compliance  and  conduct  failures  ongoing  during  your  tenure  as  Chair.  These  include  the  sales practices  that  led  to  the  issuance  of  the  Consent  Orders  from  the  Office  of  the  Comptroller  of  the Currency  and Consumer  Financial  Protection Bureau in 2016.  Due  to the  scope  and severity  of these compliance  and  conduct  failures,  the  Federal  Reserve  Board  has  also  issued  a cease-anddesist  order  (“Order”)  against  WFC  requiring,  among  other  things, that  WFC  strengthen board oversight  of  the  firm  and  senior  management.  The  Order  also imposes  limits  on WFC’s  growth until substantial progress  on  implementing  the  requirements  of  the  Order  has  been  achieved. The  Order  is  addressed to the  current  WFC  board.  However, the  Board is  issuing  this letter  to  you because  of  your  role  as  Chair  during  the  time  period many  of  these  problems occurred.  WFC  pursued  business  strategies  and  goals  that  motivated compliance  violations  and improper  practices  without  ensuring  its  risk management  programs  were  sufficiently  robust  to prevent  such behavior.   In short, appropriate  and timely  action was  not  taken and the  compliance and conduct  failures  continued.   In  addition, according  to  the  April  10, 2017, Sales  Practices  Investigation Report (Report),  you  were  aware  of  specific sales  practice  problems  over  the  years  in  your  management capacity  at  the  firm.  However,  as  Chair,  you did  not  ensure  that  the  full  board  received  detailed and timely  reporting  from  senior  management.   Moreover,  you did not  appear  to initiate  any serious  investigation or  inquiry  into the  sales  practices  issues  (or  any  other  compliance  issues that  you  may  have been  aware of  at  the time)  or  put  a  proposal  to do so to the  WFC  board.    You also continued to support  the  sales  goals  that  were  a  major  cause  of  the  problem, and the  senior  executives  who were  most  responsible  for  the  failures, and, as  detailed in the  Report, you  resisted  attempts  by  other  directors  to hold executives  accountable  even when the  other directors  had  become  aware of  the seriousness  of  the compliance  and  conduct  issues. The Federal  Reserve  Board  has  been  troubled by  the  sales  practice abuses  at WFC, and the ongoing  disclosures  of  misconduct  in other  areas.    In particular,  your  performance  in addressing these  problems  is  an example  of  ineffective  oversight  that  is  not  consistent  with the  Federal Reserve’s  expectations  for  a firm  of  WFC’s  size  and scope  of  operations.    Sincerely,   /s/  M