Last year in a stunning and revolting revelation, it was discovered that Wells Fargo, one of the world’s biggest banks, had instructed (and gave incentives) to employees to use aggressive sales techniques to set up 2 million fake accounts on behalf of thousands of unsuspecting Wells Fargo customers. As a result of the scandal, 5,300 Wells Fargo employees were fired, and the banking giant was ordered to pay a $185 million settlement. The issue was investigated by the Office of the Comptroller of the Currency (The O.C.C. is a division of the US Treasury Department) which is the country’s top federal banking regulator and the agency that was supposed to identify when fraud was occurring. However in a report filed last week, an internal review published by the Office of the Comptroller of the Currency found that the OCC failed to act on numerous “red flags” at Wells Fargo, that could have stopped the fake account scandal years earlier.
According to the report, one warning that went ignored was in January 2010, when the regulator was aware of “700 cases of whistleblower complaints” about Wells Fargo’s sales tactics. The report found that”
• The regulator didn’t live up to its responsibilities.
• Oversight of Wells Fargo was “untimely and ineffective”
• Federal examiners overseeing the bank “missed” several opportunities to uncover the problems that led to the creation of millions of fake accounts
The review showed that the Office of the Comptroller of the Currency made big mistakes and failed to notice what should have been obvious problems at Wells Fargo, prior to the scandal breaking in 2016. In a recent interview with CNN, Wells Fargo CEO-Tim Sloan said that in order for the bank to gain back people’s trust, they have to address everything they did wrong. See the interview with Wells Fargo CEO Tim Sloan with CNN here.