What goes around

14 December 2016 By Antony Currie Follow @AntonyMCurrie

New CEO Tim Sloan has been the most vocal bank boss in calling for a rollback of oversight since the U.S. election. He may have a point. But the $274 bln lender’s fake-accounts scandal seems to be spreading. And the business Sloan ran flunked the Fed’s latest living-wills test.

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Wells Fargo's resubmitted plan to wind itself down in the event of a crisis was rejected by regulators for the second time this year, the Federal Reserve and the Federal Deposit Insurance Corp said on Dec. 13.

Bank of America, Bank of New York Mellon, JPMorgan Chase and State Street all "adequately remediated deficiencies in their 2015 resolution plan," the watchdogs said. All five had been required to resubmit their so-called living wills after they were rejected in April.

The regulators determined that Wells Fargo failed to sort out issues in the "legal entity rationalization" and "shared services" categories, but had properly addressed concerns about governance.

- Wells Fargo has until March 31, 2017 to resubmit its proposal. The regulators have imposed restrictions on its international and non-bank – such as broker-dealer – activities until then. Failure to address regulators' concerns by means the two agencies will cap the size of Wells Fargo's international and non-bank activities to the levels on Sept. 30, 2016. If the issues remain unresolved by March 2019, regulators can force the bank to sell assets or operations.

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The regulators determined that Wells Fargo failed to sort out issues in the "legal entity rationalization" and "shared services" categories, but had properly addressed concerns about governance.

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