Eight former executives at the scandal-ridden lender Wells Fargo have been slapped fines totaling more than $58 million by a bank regulator of the United States. Analysts view this move by the regulator to be one that is a diversion from the otherwise soft attitude that they take towards banks.
There were many consumer groups who were of the opinion that the Office of the Comptroller of the Currency (OCC) would typically be lenient to banks after US president Donald trump appointed Joseph Otting to head the regulator. This is not without reason. As a comptroller Otting, who is a former chief executive of California’s OneWest Bank, had viewed banks to be his “customers’ and has pushed to implement changes in regulations that were proposed by bank lobbyists.
However he has consistently been a harsh critic of Wells Fargo’s sales practices and has pushed for imposing of penalties against the bank. Otting had been angered by the failure of the bank to swiftly fix systemic misconduct, because be had been a banker himself for decades and he felt that he represented high standards, said reports quoting sources with knowledge of the matter.
“You would get far more significant penalties from someone who has been in the business and is disappointed in what Wells Fargo has done,” said Thomas Vartanian, a law professor at George Mason University and former OCC official.
Former Wells Fargo CEO John Stumpf was banned from the banking industry by the OCC earlier in the week. He was also slapped with a fine of $17.5 million against settlement of charges against him that alleged that he has not been able to prevent sales misconduct. That fine is the highest ever imposed by the OCC on one individual person. Former retail banking head Carrie Tolstedt was among the others who were fined by the regulator. Tolstedt has not yet gone for a settlement of the charges and is slated to face a possible fine of about $25 million.
Lawmakers in the US have pressurized the OCC to hold more individuals responsible for corporate wrongdoing after the OCC and other regulator did not manage to charge any senior Wall Street executives for their role in the 2007-2009 financial crisis. However, analysts also say that it is quite difficult to prove personal culpability and this makes the latest decision of the OCC to pull up former executives of Wells Fargo has surprised many.
“The OCC actions are eye-popping in terms of the number and seniority of the individuals charged,” said Erik Gerding, a law professor at the University of Colorado. In recent memory, there had not been such a high profile executive crackdown, Gerding added.
He was “surprised” the OCC had pursued such drastic charges, said Arthur Wilmarth, a law professor at George Washington University. “It’s fair to say they’ve always been viewed as probably the most bank-friendly regulator,” he added.
The charges “reinforce the agency’s expectations that management and employees ... provide fair access to financial services, treat customers fairly and comply with applicable laws,” Otting said in a statement.
(Source:www.reuters.com)
There were many consumer groups who were of the opinion that the Office of the Comptroller of the Currency (OCC) would typically be lenient to banks after US president Donald trump appointed Joseph Otting to head the regulator. This is not without reason. As a comptroller Otting, who is a former chief executive of California’s OneWest Bank, had viewed banks to be his “customers’ and has pushed to implement changes in regulations that were proposed by bank lobbyists.
However he has consistently been a harsh critic of Wells Fargo’s sales practices and has pushed for imposing of penalties against the bank. Otting had been angered by the failure of the bank to swiftly fix systemic misconduct, because be had been a banker himself for decades and he felt that he represented high standards, said reports quoting sources with knowledge of the matter.
“You would get far more significant penalties from someone who has been in the business and is disappointed in what Wells Fargo has done,” said Thomas Vartanian, a law professor at George Mason University and former OCC official.
Former Wells Fargo CEO John Stumpf was banned from the banking industry by the OCC earlier in the week. He was also slapped with a fine of $17.5 million against settlement of charges against him that alleged that he has not been able to prevent sales misconduct. That fine is the highest ever imposed by the OCC on one individual person. Former retail banking head Carrie Tolstedt was among the others who were fined by the regulator. Tolstedt has not yet gone for a settlement of the charges and is slated to face a possible fine of about $25 million.
Lawmakers in the US have pressurized the OCC to hold more individuals responsible for corporate wrongdoing after the OCC and other regulator did not manage to charge any senior Wall Street executives for their role in the 2007-2009 financial crisis. However, analysts also say that it is quite difficult to prove personal culpability and this makes the latest decision of the OCC to pull up former executives of Wells Fargo has surprised many.
“The OCC actions are eye-popping in terms of the number and seniority of the individuals charged,” said Erik Gerding, a law professor at the University of Colorado. In recent memory, there had not been such a high profile executive crackdown, Gerding added.
He was “surprised” the OCC had pursued such drastic charges, said Arthur Wilmarth, a law professor at George Washington University. “It’s fair to say they’ve always been viewed as probably the most bank-friendly regulator,” he added.
The charges “reinforce the agency’s expectations that management and employees ... provide fair access to financial services, treat customers fairly and comply with applicable laws,” Otting said in a statement.
(Source:www.reuters.com)