Wells Fargo, the nation’s third-biggest bank in terms of assets, has suffered immensely both tangibly and intangibly when the fake accounts scandal was unearthed last year. Till date, the bank has paid hundreds of millions of dollars in various fines and settlements and is struggling to restore its reputation.
Yesterday, a report was released by OCC’s Office of Enterprise Governance, which states that the Office of the Comptroller of the Currency actually failed to spot, monitor and investigate the prevalent practices in the bank that eventually led to the scandal of opening 2.1 million fake accounts. The report says that the faulty practices have started cropping in since 2010, but the regulators failed in spotting them and nipping them in the bud.
The watchdog has now recommended some nine steps that the OCC’s large bank supervision division should adopt so that no other such scandal can take place in future.
The report clarifies that since 2005, the board was getting notifications that indicated the highest level of ethics line complaints and also the employee firings that were related to sales integrity violations. The regulating agency started getting these reports since early 2010, but it failed to follow up on any such concern as there is no evidence that proves otherwise.
The chief executive Timothy J. Sloan of Wells Fargo admitted that they need to fundamentally change the way they are organised. He also added that he was not aware of few findings in the report and said, “It was incredibly difficult to read the report because of the very direct criticism of a company that I care a lot about.”
The report has put the entire blame of the mishappenings on the then CEO John G. Stumpf and Carrie L. Tolstedt who appeared in the Fortune’s most powerful person list in 2015. She was their superstar female leader running the branch who was initially allowed to retire after the scandal was unearthed, but was fired later. The regulatory agency has informed Ms Tolstedt about the whistle-blower cases way back in 2010 itself, but she played down the issue.
Sloan said the report offers a fair description of his predecessor pointing out both his strengths and weaknesses. Sloan further adds that the report talks about the management style of Tolstedt, but pointed had she agreed to be interviewed by the board’s investigators the report could have been a bit different.