Wells Fargo Risk Chief to Retire as Scrutiny of the Bank Continues -- Update
January 17 2018 - 3:40PM
Dow Jones News
By Emily Glazer
Wells Fargo & Co.'s Chief Risk Officer Mike Loughlin is
retiring as the bank continues to face heightened regulatory
scrutiny, especially over its risk- management practices.
The San Francisco-based bank said Wednesday it will name a
successor to Mr. Loughlin in "the next few months," and he will
remain in his role through the transition.
The Wall Street Journal reported earlier in January that banking
regulators downgraded one part of a secret assessment of banks'
health and strength that focuses on Wells Fargo's management and
its ability to manage risk.
The downgrade of the assessment, known as a CAMELS score,
occurred over the summer of 2017, as Wells Fargo continued to
grapple with issues related to how it treats customers. In
September 2016, the bank settled allegations that it had years of
improper sales practices that resulted in potentially 3.5 million
accounts being opened without customers' knowledge.
Elsewhere in the bank, more than 550,000 auto-loan and mortgage
customers were potentially overcharged for products for years as
well. Regulators' most recent concerns focus on the bank's overall
approach to catching and preventing problems that can harm
customers, a major part of risk management.
The Office of the Comptroller of the Currency has been weighing
a new enforcement action against the bank related to such risk
controls, The Wall Street Journal reported earlier in January.
A Wells Fargo spokeswoman at the time declined to comment on the
bank's CAMELS rating or any potential OCC actions. The spokeswoman
then said the bank is "very focused on prudent and effective risk
management" and continues to enhance those matters.
Mr. Loughlin, 62 years old, has been with the bank or its
predecessors for 36 years and has served as chief risk officer
since 2008, a period in which the biggest risk that bank officials
worried about was a repeat of the lax lending practices that led to
the housing crisis.
Mr. Loughlin reports directly to Wells Fargo Chief Executive
Timothy Sloan and has served on the bank's operating committee of
its top executives. Mr. Sloan said in a statement that Mr. Loughlin
has served during "some of the most critical times in our company's
history," including the financial crisis and the bank's acquisition
of Wachovia Corp.
Since then, Mr. Loughlin has overseen risk matters related to
credit, markets, operations, compliance and cybersecurity,
according to the bank.
Over the last two years, Mr. Loughlin also led a plan to
centralize many of the company's risk functions. Specifically, the
bank shifted about 5,200 risk employees to different roles in an
effort to give them more independent oversight outside the business
lines, according to an April report done for the bank's board.
But Wells Fargo didn't always specify the employees' new roles
and responsibilities, current and former executives said.
Regulators noticed the problems, and Mr. Loughlin had to submit a
new risk framework to them in the first half of 2017, these
executives said.
Around the spring of 2017, Wells Fargo tapped consultancy
Promontory Financial Group to help with the issues, bringing in
former top OCC official and Promontory managing director Julie
Williams, people familiar with the hiring said. Promontory's
changes, which have been rolling out in recent weeks, in many cases
reversed work Wells Fargo had done in the past 12 to 18 months,
they added.
Write to Emily Glazer at emily.glazer@wsj.com
(END) Dow Jones Newswires
January 17, 2018 15:25 ET (20:25 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Sep 2023 to Sep 2024