The Trump administration used a highly unusual personnel move to skirt Senate confirmation and standard ethics requirements when it installed a financial services lawyer atop a powerful banking regulator.
Keith Noreika’s transition from representing banks to overseeing them came courtesy of a quick two-step. He was made “first deputy” at the Office of the Comptroller of the Currency, a designation that ensured he would ascend to the top job once it opened. Then the administration ousted Thomas Curry, an OCC head picked by Barack Obama who had imposed tough rules and record fines on lenders. Just like that, Noreika became acting comptroller.
While the OCC says Noreika has mitigated potential conflicts, there’s been no public disclosure of an ethics agreement or his former clients. He represented Wall Street firms and an online brokerage that needs the OCC’s sign-off to complete a merger, according to legal filings and a biography that was posted on the website of his previous employer, law firm Simpson Thacher & Bartlett.
A federal regulator on Wednesday criticized its oversight of Wells Fargo’s sales practices, saying it failed to act quickly enough once it learned of problems at the San Francisco bank.
In a report, the Office of the Comptroller of the Currency said it knew of issues with sales practices at Wells since at least 2010 – six years before the scandal would erupt in September with $185 million in fines from OCC and other authorities. Despite information OCC possessed, including complaints from the bank’s own ethics line, the regulator failed to investigate “root causes,” the report said.
The OCC “missed opportunities to address concerns with unsafe or unsound sales practices in the (Wells Fargo) community banking division earlier,” says the internal report, “Lessons Learned Review of Supervision of Sales Practices at Wells Fargo.”
The Office of the Comptroller of the Currency, the lead regulator for national banks, stripped the examiner, Bradley Linskens, of his supervisory powers within the last two weeks, said three sources, who were not authorized to discuss the matter publicly.
Linskens did not immediately respond to requests for comment. OCC spokesman Bryan Hubbard declined to comment.
Wells Fargo’s board is expected to release a report on Monday detailing what went wrong at the fourth-largest U.S. bank, according to sources familiar with the matter. The bank and its board both declined to comment.
The Office of the Comptroller of the Currency terminated its mortgage servicing-related order against HSBC Bank USA, lifting restrictions placed on the bank over its failure to comply with requirements of the Independent Foreclosure Review. This termination marks the last OCC-regulated mortgage service to have its order terminated.
The OCC originally issued the order in April 2011 and amended it in February 2013, with the most recent amendment in June 2015 forcing business restrictions on HSBC.
The OCC portion of that fine was $50 million. But for currently unknown reasons, the OCC announced late Friday that it is placing several new sanctions on Wells Fargo that were previously excluded from its settlement with the bank.
Chief among those sanctions is that the bank is now required to ask the OCC for approval if it wants to make a change to its board of directors or its senior executive officers.
Wells Fargo is also now prohibited from providing “golden parachute” payments to any departing executives or board members.
According to Bloomberg, banks are typically grated relief from these types of sanctions as part of settlements with regulators, as they were in Wells Fargo’s initial settlement with the OCC, but now the OCC is dropping the hammer on Wells Fargo.
The restriction on golden parachutes, which are payments made to executives or board members as they leave the company, is interesting, considering the amount of heat that Wells Fargo took over the “retirement” of Carrie Tolstedt, the former head of Wells Fargo unit responsible for the fake account scandal.
Oh oh for Wells Fargo…
The resolution directs the city to:
·Create an inventory of all financial dealings with Wells and the feasibility of ending them;
·Directs the City Attorney to investigate if other banks are engaged in similar account practices;
·Consider establishing a Responsible Banking Ordinance to better connect the city’s banking relationships to banks engaged in ethical corporate behavior;
·Calls for a criminal investigation of former CEO John Stumpf; and
·Calls on the OCC (Wells Fargo’s primary bank regulator) to explore whether conditions exist such that the OCC should revoke Wells Fargo’s national banking charter.
Here is Sanders’ letter to the heads of CFPB and OCC. To read the letter, click here.