At Senator Warren's Urging, OCC Confirms it Will Conduct Oversight of Wells Fargo CEO Hiring Process
At Today's Senate Banking Hearing, OCC Comptroller Otting Refused Senator Warren's Call to Make That Oversight Public
Warren: "The OCC blew it once by letting Tim Sloan take over. This time, you need to show your work and make your supervision public. That way consumers - and Congress - can hold you accountable too."
Washington, DC - United States Senator Elizabeth Warren (D-Mass.) today released a letter she received from the Office of the Comptroller of the Currency (OCC) in which Comptroller Joseph Otting confirmed that the OCC would exercise its statutory authority to review the selection of a new chief executive officer (CEO) of Wells Fargo. The letter from OCC came in response to a letter sent by Senator Warren last month in which she urged Comptroller Otting to use that authority and criticized the agency for waiving its right to do so in the past.
During testimony before the Senate Banking Committee, Comptroller Otting confirmed to Senator Warren that the agency would review Wells Fargo's selection of its next top executive for competency, experience, character or integrity. However, when pressed by Senator Warren, Otting refused to agree to make the review public despite clear authority do so.
"People all across this country were scammed and squeezed by Wells Fargo," Senator Warren said to Comptroller Otting during today's Senate Banking Committee hearing. "Their houses were taken away. Their cars were stolen because the bank's executives were more concerned about making mountains of money than about following the law, and the OCC never uttered a peep about their executives who were leading this. The OCC blew it once by letting Tim Sloan take over. This time, you need to show your work and make your supervision public. That way consumers - and Congress - can hold you accountable too."
In each of the OCC's recent enforcement cases against Wells Fargo, the OCC waived its authority to object to new executives, despite the obvious failure of Wells Fargo's leadership, the bank's inability to manage risk, and its failure to meet the requirements of three separate consent orders issued. The exemption from these requirements in the 2015 and 2016 consent orders allowed Wells Fargo to appoint Tim Sloan as CEO in October 2016, without OCC review or approval. Had the OCC used its authority in 2016 to review Mr. Sloan's appointment, it may have found that his tenure as a high-ranking Wells Fargo executive prior to being named CEO -- including serving as the head of the bank's Wholesale Banking business from 2014 to November 2015 while the bank failed to comply with anti-money laundering laws -- disqualified him from becoming CEO at a time when Wells Fargo was in need of drastic reform. After Mr. Sloan was appointed, the OCC reversed course and subjected Wells Fargo to its prior notification requirements, only to exempt the bank again in April 2018.
In his letter to Senator Warren and again at today's Senate Banking Committee hearing, Comptroller Otting confirmed that despite waiving the authority in their recent consent orders, the OCC would indeed conduct a review of Wells Fargo's selection of a new CEO and President. The full text of Comptroller Otting's letter can be read here.
In today's Senate Banking Committee hearing, Senator Warren also called on the OCC to make public a review of any proposed Wells Fargo CEO. A transcript of Senator Warren's exchange with Comptroller Otting is below:
Senator Warren: I just want to know if you're going to conduct the review according to the authority that's been given to you?
Comptroller Otting: Yes, we will.
Senator Warren: You will. Okay, I'm glad. Because when you, the OCC, waived the examination in your 2015 order settling claims that Wells Fargo broke anti-money laundering laws and when you waived the examination in your 2016 fake accounts settlement, the result was that Tim Sloan - a bank insider complicit in the fake accounts scam - became CEO without a peep from the OCC. Now, you also told me in your letter that you have decided that you will treat the results of the review as confidential supervisory information, which means that this review will be done in secret, behind closed doors, and never discussed publicly. Comptroller Otting, under the OCC regulations, you have the discretion to disclose this confidential supervisory information when it's "necessary and appropriate." Will you commit to publicly disclosing the OCC's evaluation of the "competence, experience, character or integrity" of the next Wells CEO?
Comptroller Otting: I will not.
Senator Warren: Why not?
Comptroller Otting: Because it will be confidential supervisory information.
Senator Warren: Well it's confidential if you make it confidential. The point is, you have the legal authority -
Comptroller Otting: At this time I do not have plans to release that information publicly.
Senator Warren: And what is the reason that you don't have plans? Why are you keeping this secret?
Comptroller Otting: As you indicated, it's my prerogative.
Senator Warren: Okay, and our job is oversight here. So I'd like to know why you want to exercise your prerogative to keep secret the oversight that the OCC has ducked repeatedly.
Comptroller Otting: I haven't exercised it, but I plan to. Senator Warren, no one has been more tougher on Wells Fargo than myself. No one has been more outspoken -
Senator Warren: You mean at the OCC? That's a low bar.
Comptroller Otting: I disagree. I find it insulting that you would make that comment.
Senator Warren: Good. You know, people all across this country were scammed and squeezed by Wells Fargo. Their houses were taken away. Their cars were stolen because the bank's executives were more concerned about making mountains of money than about following the law, and the OCC never uttered a peep about their executives who were leading this. The OCC blew it once by letting Tim Sloan take over. This time, you need to show your work and make your supervision public. That way consumers - and Congress - can hold you accountable too.
Comptroller Otting: I appreciate the request.
The full exchange can be watched here.
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