As disclosures about fresh improprieties at Wells Fargo stream in, now seems an odd time to reduce communications between regulators and bank boards. In recent weeks, Wells has been forced to disclose that it pushed auto insurance on customers who did not need it, that it failed to refund insurance money owed to people who paid off their car loans early and that the number of fraudulent accounts created by its staff was likely to “significantly increase” from the 2.1 million that the bank had previously estimated.
The Fed is not the only government entity that thinks bank directors are under duress. A recent report from the Treasury Department said that regulators’ expectations of bank boards should be reformed “to restore balance in the relationship between regulators, boards and bank management.”
The Fed’s recommendations are the result of work that predated the Trump administration, but they certainly dovetail with its broad deregulatory agenda. In 2014, Daniel K. Tarullo, a former Fed governor, outlined the need for change in this area. He