FDIC Change in De Novo Policy / Live Oak Bank Tops List as Best Bank to Work For / Wells Fargo Employees Fired for Creating Over 2 Million Phony Accounts

By: Sharon J. Lorman
Richard B. Trauger, Jr.
Jill A. Pursell

Guest: Wayne A. Abernathy, Executive Vice President, American Bankers Association

Podcast Show Notes:

Our This Month In Banking (TMIB) podcast highlights significant news and events in banking and our hosts’ take on them, along with interviews with industry thought leaders. New episodes will be available on the last Wednesday of every month here, on Stitcher, Soundcloud, and iTunes for your listening enjoyment. Join us on your commute or at your desk.

Topic 1: FDIC Change in De Novo Policy
Start time 2:07
Wayne A. Abernathy was TMIB’s guest for this segment. Mr. Abernathy joined the American Bankers Association in February of 2005, and serves as Executive Vice President for Financial Institutions Policy and Regulatory Affairs. Mr. Abernathy oversees ABA groups that deal with policy development, regulatory and compliance issues, bank supervision and resolution, securities and investment, wealth management, derivatives policy, and risk management.
Before joining ABA, Mr. Abernathy served as Treasury Assistant Secretary for Financial Institutions under President George W. Bush, receiving the Alexander Hamilton Award in recognition of his service. In that office he was also a member of the Board of Directors of the Securities Investor Protection Corporation. Prior to his work in the Treasury, Mr. Abernathy served as Staff Director of the Senate Banking Committee, under Chairman Phil Gramm.
Since 2010, only three new banks have been chartered, and one is not yet open. The FDIC has received an average of three applications per year between 2011 and 2015; in comparison, between 2004 and 2005 it received 219 applications annually on average. The FDIC wants this to change. In the Summer 2016 edition of the FDIC’s online publication, Supervisory Insights, the FDIC indicated that it continues to support the formation of new financial institutions and welcomes applications for deposit insurance. The article provides an overview of trends in de novo formation; the process by which the FDIC reviews applications for deposit insurance; the supervisory process for de novo institutions; and steps the FDIC is taking to support de novo formations. The article said the next step will be a roadshow for FDIC officials to explain to potential new bank organizers how to get started.
With the FDIC’s support of new banks, what could get in the way?

Topic 2: Live Oak Bank Tops List as Best Bank to Work For
Start time 17:00
American Banker released the results of its fourth annual ranking of the Best Banks to Work For. The analysis is performed with the Best Companies Group, which conducts extensive employee surveys and reviews employer reports on benefits and policies. Live Oak Bank has taken the top spot 3 years in a row. What is it about Live Oak Bank that makes it such a great place to work?

Topic 3: Wells Fargo Employees Fired for Creating Over 2 Million Phony Accounts
Start time 25:40
Wells Fargo has agreed to pay approximately $187.5 million, the largest penalty the CFPB as ever imposed, to settle claims by federal regulators that the bank wrongfully opened unauthorized bank and credit card accounts for more than 2 million customers. The phony accounts allowed employees to hit sales targets and receive bonuses. Wells Fargo said it has fired 5,300 employees over a five-year period in relation to the fraud. The Department of Justice has opened an investigation and has issued subpoenas to the bank. In July, Wells announced the departure of Carrie Tolstedt, former head of community banking, saying she made the decision to retire at the end of the year. She will walk away with millions in accumulated stock and options over her career. Will Wells Fargo executives be held responsible given the “clawback” provisions instituted by the bank shortly after the financial crisis? What impact will the fraud have on CFPB reform?

Watch for episode 10 of This Month in Banking to be released on Wednesday, October 26, 2016 and a new episode on the last Wednesday of every month.

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