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.
Credit risks have risen in U.S. commercial real estate as lenders compete more fiercely in a low rate environment, a federal banking regulator said on Monday, adding that it was stepping up its scrutiny of the sector.
The Office of the Comptroller of the Currency (OCC) said in its semiannual risk report that while the financial performance of lenders improved in 2015 compared to a year earlier, credit risks were higher across the industry.
The U.S. Federal Reserve has kept interest rates low for more than seven years to help the U.S. economy recover from the 2008 financial crisis. But that policy is also weighing on bank profits and pushing lenders to compete more fiercely for worthy borrowers. That competitive pressure is increasing risk, the OCC said.
“It’s at this stage of the cycle that we also see strong loan growth combined with easing underwriting to result in increased credit risk,” Comptroller of the Currency Thomas Curry said in prepared remarks.
The agency has escalated its oversight of commercial real estate risk from ordinary monitoring to “additional emphasis.” It also flagged risks in commercial and industrial loans, and said concerns remain about indirect auto lending and leveraged lending, which are both issues the OCC has flagged in the past.
A U.S. congressional watchdog said on Tuesday it has formally added three agencies to its investigation into whether government regulators are too soft on the banks they are meant to police.
In March, Reuters exclusively reported that the Government Accountability Office (GAO) was preparing a probe of the U.S. Federal Reserve and other to-be-determined regulators, in response to a request by Democratic U.S. Representatives Maxine Waters and Al Green for it to look into “regulatory capture.”
The review, requested last October, is the first by an outside agency into the perception that financial regulators are “captured” by and too deferential toward the bankers they supervise, so that Wall Street benefits at the public’s expense.
Lawrance Evans, director of the GAO’s financial markets and community investment division, said in an email on Tuesday that the probe would include the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) and the National Credit Union Administration (NCUA). The GAO will also look back at work by the Office of Thrift Supervision, which merged with the OCC in 2011, and regulates savings and loan institutions.
And $70 million is a drop in the bucket for Wells Fargo..
The Office of the Comptroller of the Currency on Wednesday finally lifted its mortgage servicing restrictions on Wells Fargo now that the bank is in compliance with the requirements of the Independent Foreclosure Review.
But Wells Fargo didn’t come out of this unscathed and must pay a $70 million civil money penalty for previous violations of the order, according to the OCC.
“We are pleased that the OCC has validated the effectiveness of the significant changes we have made to our mortgage servicing operations and confirmed our release from the Consent Order. Our team worked very hard to complete the requirements of the original Consent Order and the amendments, and continues to provide the best possible service to our customers,” Tom Goyda, a spokesperson for Wells Fargo said.
While the OCC said it originally issued orders in April 2011 and amended the orders in February 2013, it amended the orders again in June 2015.
The OCC revised Wells Fargo’s restrictions, along with JPMorgan Chase’s and four other banks that also had restrictions placed on them due to their failure to comply with requirements of the Independent Foreclosure Review.
At the time, Wells Fargo and HSBC were dealt the hardest blow by the OCC and were prohibited from:
- Acquiring of mortgage servicing rights until the consent order is terminated
- New contracts to perform mortgage servicing prohibited until the consent order is terminated
- New offshoring of mortgage servicing activity until the consent order is terminated
Click this chart for a more in-depth outline of the restrictions placed on each bank.