Bank regulator hasn’t followed up on its own Wells Fargo recommendations, Democrats allege
Democratic members of the Senate Banking Committee say a key bank regulator has failed to make necessary changes in the wake of the unauthorized accounts scandal at Wells Fargo & Co.
In a letter sent Wednesday to Joseph Otting, who was sworn in as the nation’s comptroller of the currency in November, six banking committee Democrats said the agency does not appear to have made any progress on recommendations made in an internal report in April. The failure to act leaves consumers vulnerable to abuses by other big banks, they said.
The report, which identified the ways the office of the comptroller of the currency’s bank examiners for years failed to spot or correct bad practices at Wells Fargo, made nine recommendations for changes at the agency, including developing a process to more thoroughly analyze customer and employee complaints.
It was released just weeks before previous Comptroller Thomas Curry, an Obama appointee, was replaced by an interim comptroller named by President Trump. Now the agency is led by Otting, a Trump appointee and former Los Angeles bank executive.
“The review was issued nearly nine months ago, and the OCC’s continued failure to implement its recommendations leaves vulnerable customers of the nation’s largest banks,” the senators wrote.
OCC spokesman Bryan Hubbard said the agency does not comment on congressional correspondence.
The letter is signed by Sens. Robert Menendez (D-N.J.), Sherrod Brown (D-Ohio), Catherine Cortez Masto (D-Nev.), Elizabeth Warren (D-Mass.), Brian Schatz (D-Hawaii), Jack Reed (D-R.I.) and Chris Van Hollen (D-Md.).
They asked Otting to implement the report’s recommendations “without additional delay” and to give the committee, by the end of this month, a detailed schedule for putting the recommendations into action.
The OCC’s report last year was hailed by some consumer advocates as a remarkably frank take on the agency’s failures, one that painted an unflattering picture of bank examiners who failed to follow up on numerous red flags.
Regulators began taking a more thorough look at the bank’s practices following a 2013 Times investigation, which led to a lawsuit by Los Angeles City Atty. Mike Feuer. Feuer’s office, the OCC and the Consumer Financial Protection Bureau reached a $185-million settlement with Wells Fargo in 2016.
The report noted that OCC examiners met in 2010 with now-former Wells Fargo executive Carrie Tolstedt and asked about 700 whistleblower complaints regarding workers “gaming” the bank’s sales goal system to boost their pay — one of the issues at the heart of the bank’s creation of as many as 3.5 million unauthorized accounts.
Tolstedt told the examiners the bank encouraged valid complaints. After that meeting, examiners apparently did not investigate further, the report found.
The report also noted that examiners thought Wells Fargo’s goal of getting customers to open an average of eight accounts each sounded risky but did not look into how or whether the bank was monitoring account openings.
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