April 17, 2019

Senator Warren Questions OCC's Refusal to Use Existing Authority to Oversee Wells Fargo CEO Hiring Process

Text of the letter (PDF)

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) sent a letter to Joseph Otting, Comptroller of the Currency, requesting information about the role that the Office of the Comptroller of the Currency (OCC) will play in the selection of a new Chief Executive Officer (CEO) and President of Wells Fargo. She noted that under federal law, the OCC has the authority to object to candidates for senior executive positions at Wells Fargo, including a new CEO. She questioned why the OCC has not used this authority in the past, and whether it will exert its power as Wells Fargo moves to replace former CEO Tim Sloan.

Federal law allows the OCC to disapprove of a candidate for a senior position of a "troubled bank" after an evaluation of that individual's "competence, experience, character, or integrity." According to OCC regulations, banks are troubled if they're operating under consent orders. Wells Fargo is still operating under at least three OCC consent orders from 2015, 2016, and 2018, in addition to orders from other regulators.

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 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.

Following news that Wells Fargo is actively searching for a new CEO, Senator Warren said: "Federal regulators must hold Wells Fargo accountable for its misdeeds and ensure that the bank ends its streak of unlawful behavior. The OCC's repeated willingness to waive its authority over Wells Fargo's hiring process calls into question the agency's commitment to using all of the tools in its toolbox to ensure that Wells Fargo corrects its deficiencies."

She requested answers to her questions no later than May 1, 2019.