WASHINGTON–The Office of the Comptroller of the Currency (OCC) has acknowledged it failed to act on numerous “red flags” related to problems at Wells Fargo, and knew as far back as 2010 that there were at least “700 cases of whistleblower complaints” about the bank’s sales practices.
Those sales practices, finally revealed through media reports in 2016, would eventually involve more than two-million fake customer accounts created by employees trying to meet hyper-aggressive sales targets, a practice that has cost the bank more than $185 million in fines to date and led it to seek to “claw back” bonuses paid to two top executives. More than 5,300 other employees have also been fired.
According to an internal review published by the OCC, oversight of Wells Fargo was “untimely and ineffective" and federal examiners overseeing the bank "missed" several opportunities to uncover the problems that led to the creation of millions of fake accounts.”
“The review painted a damning picture of the OCC's ability to spot what in retrospect should have been obvious problems at one of the nation's biggest banks,” CNN reported.
The internal review found that the OCC did confront Carrie Tolstedt, who was then head of Wells Fargo's community bank operations, about the huge number of whistleblower claims, but there are no records that show that federal inspectors "investigated the root cause," or forced Wells Fargo to probe it, CNN said.
The OCC report further suggests that Wells Fargo's board of directors received "regular" reports going back to 2005 indicating that most ethics line complaints and firings were related to sales violations. If true, as CUToday.info reported here, that conflicts with Wells Fargo’s own internal report that its board was not made aware of any issues related to sales practices until 2014.
The OCC examiners in charge of Wells Fargo received those same reports "since at least early 2010," the review found, CNN reported. CNN added that within the past few weeks the OCC has removed its top Wells Fargo inspector, Bradley Linskens, from duties monitoring the bank.
The OCC report said that regulators were apparently aware of hundreds of instances where employees spoke up about problems as well, but it had "failed to document resolution of whistleblower cases," and that these early warnings were not properly researched, analyzed or resolved.