December 4, 2019 – In an exclusive, the Wall Street Journal reported that the Office of the Comptroller of the Currency (OCC) rebuked Wells Fargo for a “massive backlog of employee complaints and compensation structures”.
The public rebuke is a set back for Wells Fargo, whose new CEO – Charles Scharf – only started in October.
Under the 2018 settlement reached between the bank and the OCC, federal regulators have the ability to remove Wells Fargo’s management.
In an earlier report by the Wall Street Journal, Wells Fargo allegedly fired thousands of low-level branch employees, many of whom had derogatory remarks left on their FINRA records and thus are unable to secure employment. The process of handling these complaints and others are believed to be among the HR issues being investigated by the OCC.
Wells Fargo has been in the cross hairs of regulators since 2016, when the company announced it had opened 3.5 million fake accounts, forced over 1 million automobile borrowers to purchase insurance they could not afford and fired over 5,000 employees the bank says were negligent or fraudulent.
Municipal Issuers Remain Wary
In the municipal finance industry, Wells Fargo continues to be viewed warily by issuers. BuyMuni spoke with two governmental issuers in New York and California, both sources indicated the bank’s “social impact” rating was adversely affected by the events of the past few years.
Wells Fargo remained black-listed by New York City – the largest municipal bond issuer in the country on a combined basis, including its sales tax credit and Water Sewer debt entity.
In May 2017, New York City Mayor Bill DeBlasio and Comptroller Stringer banned Wells Fargo in 2017 from municipal underwriting.
Referring to Wells Fargo’s “Unsatisfactory” Federal Community Reinvestment Act rating or CRA Rating, Mayor de Blasio said:
“The rules are very clear: if you fall below ‘satisfactory,’ we will no longer do banking business with you. I encourage Wells Fargo to quickly clean up its act and do right by the millions of customers who trust the bank with their savings. Until then, we will not be entering new contracts with the bank.”
Comptroller Stringer said:
“What happened at Wells Fargo was a fraud – and there should be consequences. We need to send a message to this bank and the broader industry that ethics matter. Public trust is a must – and accountability is non-negotiable. That’s why we plan to take action. We have an opportunity to stand up and do the right thing today, and that’s a moment we plan on seizing.”
Contact Jumanne Johnson at JJohnson@BuyMuni.com.
