Wells Fargo not the only bank to have created unauthorized accounts — but regulator won’t identify others


A federal bank regulator that has fined Wells Fargo more than $500 million over its creation of unauthorized accounts and other consumer abuses has found evidence of sales practice problems at other large and midsize banks — but is refusing to name those institutions.

The Office of the Comptroller of the Currency, the nation’s main bank regulator, found “bank-specific instances of accounts being opened without proof of customer consent” as part of a review of more than 40 banks spurred by the Wells Fargo scandal, agency spokesman Bryan Hubbard told The Times in an email Friday.

However, the agency will not be naming the banks where it found potentially unauthorized accounts or providing details on banks’ specific conduct, he said.


“We do not comment on specific supervisory matters pertaining to particular banks, and exam findings are not released,” Hubbard said.

American Banker, which first reported the story this week, reported that the agency warned banks about five industry-wide issues and more than 250 institution-specific problems turned up by the review.

Hubbard wouldn’t comment on the number of specific or industry-wide issues banks were warned about, but said the review wrapped up at the end of last year and banks received letters regarding their specific issues early this year.

The review started under previous Comptroller Thomas Curry, an Obama appointee. The OCC is now run by Joseph Otting, a former Los Angeles banker who was appointed last year by President Trump.

Otting, who so far has taken a more industry-friendly tack than his predecessor, could face questions from Congress next week about the OCC’s decision to withhold information related to the review. He is scheduled to testify Wednesday and Thursday before the House and Senate banking committees, respectively.

The OCC’s decision to not publicly release its findings drew the ire of consumer groups. They have said that the aggressive employee sales goals and other problems that led to the creation of millions of unauthorized accounts at Wells Fargo — first documented in a 2013 Los Angeles Times investigation — were not unique to the San Francisco finance giant.


Ed Mierzwinski of the U.S. Public Interest Research Group said that the OCC appears to be sweeping its findings under the rug and that the agency should release the results of the review and publicize its warnings to banks.

“It’s apparent that the toxic culture at Wells Fargo that led to millions of fake accounts was no outlier,” he said. “We know now that Wells Fargo wasn’t the only wrongdoer; only full disclosure by OCC can let us know if Wells was Patient Zero of a growing epidemic of banks behaving badly.”

Still, the OCC’s finding is not surprising. In 2016, executives at a few large banks who spoke to The Times on the condition of anonymity said they were nearly certain that some workers had created unauthorized accounts at their institutions, though they did not believe the practice was widespread.

Banking consultant Margaret Kane agreed, saying at the time that because nearly all banks use incentives to encourage workers to open accounts, it was likely that other banks would have similar issues.

Sales practices, specifically incentives that pushed workers to open a set number of new accounts each day, were at the root of Wells Fargo’s problems.

The bank had an aggressive program to “cross-sell” different services to its customers, with former Chief Executive John Stumpf encouraging employees to open as many as eight accounts for each customer.


Though Hubbard said the agency would not release details of specific issues at specific banks, he did say that there were “isolated instances of employee misconduct with no clear connection to sales goals, incentives or quota programs.”

Hubbard said some banks showed they did not have proper controls in place while running short-term promotions, leading to cases where banks could not prove customers had authorized new accounts. In some cases, banks could not prove customers had given consent because of poor documentation, incomplete records or “technology issues,” he said.

Generally, Hubbard said the review did not find “systemic issues with bank employees opening accounts without the customer’s consent,” though most institutions did not take a “holistic” approach to managing risks associated with sales practices.

He said most banks “took timely actions during the review to address weaknesses” in their risk-management practices and should be better prepared to “identify inappropriate sales activities in a timely manner.”

At Wells Fargo, more than 5,000 workers were fired over the creation of as many as 3.5 million potentially unauthorized accounts created over many years.

The OCC, Consumer Financial Protection Bureau and Los Angeles city attorney’s office fined Wells Fargo $185 million in 2016. As more bad practices have come to light, regulators have piled on.


The Federal Reserve in February ordered Wells Fargo to stop growing until it could improve its risk management operations, an unprecedented punishment that is expected to cut into the bank’s profits.

In April, the OCC and CFPB each fined the bank $500 million over more recently discovered problems, including the practice of charging improper fees on some mortgage borrowers and forcing auto loan borrowers to pay for unnecessary insurance policies.

Wells Fargo spokesman Ancel Martinez declined to comment on the OCC’s review of other banks.

Since taking over the OCC in November, Otting, a longtime commercial banker, has pushed to scale back rules and reporting requirements for banks, recently lifting restrictions — put in place by his predecessor — on banks offering small consumer loans. He’s also made it a priority for the OCC to rewrite federal rules that require banks to lend in low-income and minority communities.

He’s one of a few Trump appointees, along with Treasury Secretary Steven T. Mnuchin and interim Consumer Financial Protection Bureau Director Mick Mulvaney, who are key players in the administration’s push for broad financial deregulation — from limiting the power of the CFPB to rolling back parts of the Dodd-Frank Wall Street Reform Act.

Before they reunited in Washington, Otting and Mnuchin were the chief executive and chairman, respectively, of Pasadena’s OneWest Bank, an institution built from the shell of failed mortgage lender IndyMac. Both Mnuchin and Otting faced questions about OneWest’s foreclosure practices during their confirmation hearings.


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1:20 p.m.: This article was updated with more background on Joseph Otting and his tenure at the OCC.

This article was originally published at 12:45 p.m.