Wells Fargo & Co. is “open for business” and remains committed to its consumer’s financial needs — including through its powersports floorplan finance business Wells Fargo Commercial Distribution Finance — following the Federal Reserve’s action to restrict the bank’s asset growth.
The Federal Reserve issued a consent order in early February, which limits the growth of Wells Fargo’s total consolidated assets beyond levels reported at the end of 2017, unless it receives prior approval from the regulator, according to a press release. Effective in the second quarter, Wells Fargo’s total consolidated assets will be held to the 2017 period-end level of $2 trillion.
“This limitation will be measured on a two-quarter daily average, which provides some flexibility to manage temporary asset fluctuations,” Chief Executive Tim Sloan said during an investor presentation on Feb. 2.
However, the Fed will not require Wells to cease current activities. The bank was unable to provide additional comment regarding how the order would specifically affect Wells Fargo CDF, but Sloan reiterated the bank’s commitment to the parent bank’s consumers and shareholders during the investor presentation.
“We take this order seriously and are focused on addressing all of the Federal Reserve’s concerns,” Sloan said in the release. “It is important to note that the consent order is not related to any new matters, but to prior issues where we have already made significant progress. We appreciate the Federal Reserve’s acknowledgment of our actions to date. In addition, the order is not related to Wells Fargo’s financial condition — we remain in a strong financial position and stand ready to serve the varied financial needs of our customers.”
The bank was also ordered to replace three current board members by April and a fourth by the end of 2018.
Under the consent order, Wells Fargo will submit plans to the Fed within 60 days that detail the bank’s existing plans and efforts underway to enhance the board’s compliance and operational risk management program, Sloan said on the call.
“After the Federal Reserve approves our plans, we will engage independent third parties to conduct a review to confirm the adoption and implementation of the plans, to be completed no later than Sept. 30, 2018,” he said. “Until this third-party review is completed to the satisfaction of the Federal Reserve, we are required to hold our total consolidated assets at Dec. 31, 2017, levels. While operating under this constraint, we are open for business and we will continue to serve our customers’ financial needs including saving, borrowing, and investing.”
Separately, the bank’s auto finance arm Wells Fargo Dealer Services announced in late January that it is changing its name to Wells Fargo Auto. The name change will take several months to implement, and does not apply to Wells Fargo CDF or Wells Fargo Preferred Capital, a spokeswoman told Powersports Finance.