On Thursday, the Chief Compliance Officer, holds a call and tells his staff he is leaving the firm to pursue other opportunities and an outside candidate is taking over his job in October 2020. He is staying on for the transition. He opens the call by playing the song “welcome to the jungle”, and talks about having discussions with the head of Risk regarding how he has been undermined and marginalized by the CEO’s decision to move from a centralized model to a CRO model. He ends the call by playing the song: Oh wont you stay a little bit longer”. All of this hits the press right before his call. Right after the call, the Chief Risk Officer sends out an announcement that Roemer is not staying until October and an internal candidate is going to act as Interim Chief Compliance Officer. Who would want to invest in this companies stock when internally there is absolute chaos? No one knows what is going on in Risk. All of the compliance work has been put on hold even if it is linked to a MRA. Compliance is severely understaffed (they approved a handful of positions recently to cya, but not nearly enough to fill the requests in the queue) and we are being told there will be no backfills and even managers who do individual contributor work and are SMEs are going to be eliminated. There is a lot of us in this bucket. (Most managers spend no more than 15% managing. They are doing individual contributor work the remaining time.) Meanwhile our CEO is misrepresenting all of this on the quarterly analyst call - He is running around saying they won’t disrupt valuable compliance work and the regulatory work will remain untouched. What a pack of lies people!!! Roemer probably is getting the heck out of dodge because he doesn’t want to be blamed for the regulatory violation fallout that is going to occur because of a lack of staff and that there is total leadership chaos. M.N. Needs to go because she is the CEOs puppet and can’t push back. Our CEO is all about getting the stock up and he does not care at all about putting the correct Risk and Compliance structure in place. He is telling Roemer that the Compliance efficiency ratio is 77% and needs to be cut by 20%. They are cutting the compliance organization through attrition, spans and layers and by not approving enough backfills. This method will not catch the eyes of the Regulators, Congress and investors. I would be investing money in JPM, BOA if I want to buy the banks. Heck, even Warren Buffet knows WFC is a hopeless mess and he just dumped his WFC stock. That says a lot right there! Run Forest, Run!
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This article is 2 years old. I’m posting it because the discussion turned to Wells Fargo taking taxpayer money and then laying off American workers. This is regarding Wells Fargo’s estimated $3.7 billion annual Trump-GOP tax cut windfall.
https://americansfortaxfairness.org/issue/wells-fargo-tax-cuts-windfall/
If course @2owx+16ty80vE neglects didn’t mention WF used 25 billion of taxpayer money as leverage to buy Wachovia, further reducing competition and creating even more “to big to fail”
The feds shouldn’t have stepped in, should have let the free market break up the big banks when it had a chance
The welcome to the jungle selection came from a question that came up during one of his first town halls when someone asked what song reflected his first couple of months at Wells Fargo. It still all boils down to legacy leadership from MN never caring about automating and centralizing operations. Pockets of this organization are worse than being in a Government job and the cuts coming are long overdue.
Let me get this straight, we can't use the words Super Bowl or March Madness in an e-mail.. but non-licensed music is allowed on an all team call?
Ok. Two things.
First, we're just going back to the old structure where we had Group Risk Officers vs Chief Risk Officers. It's the same thing. We've spent millions of dollars just swinging back and forth.
Second, @1yec+16ty80vE Wells Fargo was required to take the bailout money so that the public wouldn't flee the other banks that were failing and needed the bailout money. The government threatened to take away our charter if we didn't take the bailout money. The government thought this was the best way to preserve the financial system overall. However, the media portrayed it as Wells Fargo taking a bailout, which decreased the value of our stock and was almost a self-fulfilling prophecy. I'm tired of people misstating our history on this.
A recent meeting I attended started with “ The Future's So Bright, I Gotta Wear Shades”. I wondered if it was a joke.
How unamerica n of wells. Yet they can take taxpayers bailouts. I can't image stockholders would want so many unemployed American people.
I am well aware of the history. The bottom line is M.N. Is a weak leader and not independent. She is our fearless leader’s puppet! She does not stand up to our “anything goes” to make a buck Fearless leader and his JPM buddies that he is hiring to run the LOBs. History will repeat itself where WFC will take on excessive risk in order to grow and catch up to its competitors once the asset cap is lifted. Our fearless leader and cohorts will line their pockets, and then jump ship. Rinse, repeat. Roemer stood up to our fearless leader and look what happen to him. He steamrolled right over him, marginalized him and threw him out the door. It’s our CEO’s way, or the highway. Risk is for window dressing only, and will be pared down to the bare minimum required to keep the Regulators away. CROs need to be truly independent in their role to actually be effective, but banks are not set up that way.
The asset cap is about 2 years old. It predates Mandy Norton. There are a couple of new MRAs, these don’t rise to the level of the cease and desist or consent orders. Loughlin is the one that owns this, he’s gone and never should have been CRO in the first place.
I don’t think a lot of people posting here know even high level details about the asset cap, the consent orders or the relationships of the new leadership. You’re just posting uninformed speculation without even a basic grasp of facts.
Risk has been working on consent orders for 4 years, what significant progress have we made? Still under the asset cap. Yeah, time to fix risk in addition to everything else.
My God.
sounds like a loser meeting
Over 10k risk employees is not severely understaff. It’s probably doubled in last few years. It’s more than twice as big as any other cost center.
Noski is the chair of the board and goes way back as friends with our fearless leader. Both serving as board members with various forms. Not a lot of objectivity there.
From @kde: Well.....I’m sure the Board will question this move (lol).
@kde. You are spot on and aren’t missing anything. We are going back to the same model that got us in trouble with the exception that the CRO will report to chief risk officer. Only problem is M.N. Is weak and will not stand her ground with the business and the CEO won’t back her, because he all about what the business wants, the business gets. He is about making money and getting the stock price up. As soon as the asset cap is lifted, it is going to be all about growth at any cost. Just you wait and see. Groundhog Day!
@kde; you are spot on.
From @kde: okay thank you! I get it.
I’m with you OP. Good post that provides insight for many of us who were not in Compliance and were not on the call. I’m on the board for this kind of insight. So thank you. I am an adult and don’t need the supposed “assistance” from the fact checkers and the correctors.
So I'm sure Roemer would properly license such copyrighted music right?
Or is it time to drop a dime to BMI/ASCAP for copyright violations?
I am assuming there is probably a bloated budget for such nonsense(music licensing for corp events), but that's even worse...
A lot of us were thinking Roemer was trying to be cryptic with his song selection. Welcome to the jungle everyone!
Each LOB has its own CRO reporting to the head CRO. It is centralized and independent (from the LOB's CEO).
https://corpgov.law.harvard.edu/2017/04/26/wells-fargo-lessons-will-leaders-ever-learn/
@kde
The big centralization of everything effort a few years ago wasn't for any actual operational improvement, it was to avoid having the regulators say "Oh you operate as individual LOB's? You're not too big to break up, you're already broken up".
It's only natural that we go back to more independent LOB management now that the fears of being broken up have subsided.
Forgive my lack of a full understanding of Wells Fargo’s Compliance structure, but doesn’t it sound like Charlie is taking us backwards with this move? I thought the big problems in 2016 and earlier were partially due to compliance not being centralized. LOB leaders were controlling and manipulating their compliance officers. Now it looks like we are back to same model that got us in trouble in the first place. What am I missing?
your = you're
Warren didnt sell his stake just a portion. His biggest stake sale was jp morgan. He wants the cap lifted more yhan anything else. So your purely speculating because your losing your job. I dont blame you but thats the truth. Chief is leaving because he's butt hurt for losing power. Dont blame him either, but lets stick to facts please.
@gos The music on these calls is not from the vendor or while you are waiting for the call to begin. Roemer picks them and plays them himself at the beginning & end of each call. He's been doing it since he got here in 2018.
Not for nothing, but I think the vendor that does these large conference calls that selects the music, people on the speaker line don’t even hear it. I noticed on a huge town hall meeting the other day that there was some groovy R&B playing instead of the corporate musaq you would usually hear.
Extract from FT:
Mr Roemer will leave the bank after a transition period. He will be replaced by Paula Dominick, who has been chief compliance officer for Credit Suisse Americas for more than four years and previously worked for Bank of America.
Mandy Norton, Wells’ chief risk officer, said the bank was implementing a new organisational structure that would “further strengthen risk management”.
Each of the bank’s divisions will now have its own chief risk officer. The divisional CROs will look at all risk types — credit, operational, and compliance — and report directly to Ms Norton, so that risk management “is still centralised and independent”.
The new chief compliance officer “will have the same scope and responsibility for driving compliance risk management” across Wells, she said, noting that the new organisational structure matched that of most other large banks.
The change seems to mirror with JPM's risk control structure:
https://institute.jpmorganchase.com/about/governance/board-committees/risk-committee
Some comments I found elsewhere:
It does make sense to have people who understand a business at a certain level of risk management... but then they need to report to someone independent.
However, risk management is essentially operationally oriented - who can do what? - while compliance is essentially legal - what is lawful or without the rules?
The skills and cultural values are quite different.
To mange risks related to,trading, for example, you need to understand what they are and how they give rise to loss, how people try and break the rules.
To ensure compliance with limits internally and legally mandated, you are handling not only the rules and laws but also The way people can be persuaded to obey them.
Compliance can certainly fall under a CRO, but if you have business based risk management, why would you need a fragmented compliance system?
Retail does it all the time.
Yes, really!
The song thing sounds really unprofessional. Welcome to the jungle? Really?