WASHINGTON - The Office of the Comptroller of the Currency came under more pressure Wednesday for its handling of money-laundering compliance problems at Wells Fargo & Co.
First, a key House Democrat wrote a letter to the agency demanding to know whether Wells received preferential treatment. Also, the Treasury Department Inspector General's Office said it would investigate the OCC's actions. Finally, an anonymous OCC employee sent a letter to several lawmakers claiming the new Wells lead examiner's laptop computer was "apparently stolen" from his office at the San Francisco company.
The news coincided with harsh criticism at a hearing Wednesday by Senate Republicans, who said financial regulators acted too harshly against innocent banks while letting other bad actors skirt compliance. (See
Rep. Luis V. Gutierrez of Illinois, the lead Democrat on the House Financial Services subcommittee on oversight and investigations, sent the letter that raised concerns about possible favorable treatment to acting Comptroller Julie Williams this week.
He is the first lawmaker to publicly take an interest in the Wells matter, in which the OCC overturned the recommendations by field examiners that the company receive a formal cease-and-desist order for lapses in its anti-laundering program. A Feb. 4 memo recommended a public enforcement action, but after a meeting between Ms. Williams and Wells' chief executive officer, Richard Kovacevich, the memo was redrafted to recommend a less strict nonpublic action.
Rep. Gutierrez wrote that recent stories in American Banker detailing the memos' contents "raise potentially disturbing issues regarding the agency's decision-making processes and indicate that a chief executive officer may have improperly influenced an enforcement decision.
"I am therefore writing to request a formal explanation about how your agency deals with these matters on a regular basis," he wrote.
Among the questions Rep. Gutierrez asked were how a recommendation to take an enforcement action affects subsequent communications between agency and bank officials, and whether a senior bank official can cause the OCC to reverse such a recommendation. He also questioned whether bank officials ever threaten a charter switch, which would reduce the agency's fee income,
"Do bank officials ever threaten to take their charter (and examination fees) to a competing regulator if a decision is not favorable to the bank?" Rep. Gutierrez asked. "To the extent they occur, how does the OCC respond to communications of this sort?"
He also asked pointed questions about how often the OCC rotates examiners-in-charge.
The anonymous OCC employee told lawmakers in a letter last month that the examiner-in-charge of Wells, Stephanie Peters, was removed after pressure from the company. The OCC responded that she had completed her five-year rotation.
Rep. Gutierrez asked whether there was strict adherence to the five-year rotation rule, and whether bankers have any influence in determining who their examiners are and how long they stay.
Rich Delmar, a counsel for the Treasury's inspector general, said Wednesday that the office is planning to audit the OCC's oversight of Wells' Bank Secrecy Act compliance. He said that the audit would begin in several weeks and that investigators had collected preliminary information from House Financial Services Committee members.
The audit will look at the efficiency and standards the OCC used in monitoring BSA compliance, Mr. Delmar said. It is not clear yet how broad the investigation will be or how long it will take, he said.
The announcement was made the same day the report of the computer theft came to light.
The OCC informant sent a fax July 12 to several lawmakers saying the laptop of Kenneth Peyer, the current examiner-in-charge at Wells, was taken Monday evening "from inside his desk, inside the secured offices of Wells Fargo."
A spokeswoman for Wells referred inquiries into the matter to the OCC, which called the theft "a deplorable criminal act."
In a statement provided to American Banker, Ms. Williams said, "The OCC immediately notified local police and the Treasury Department's inspector general, and we will do everything possible to assist in the investigation and prosecution of the individual or individuals involved in this crime."
An OCC spokesman would not discuss the letter from Rep. Gutierrez or provide more details on the laptop's theft.
The incident could raise more questions about the case, including whether sensitive data about the company was compromised. Sources said that typically agency personnel on site at a bank have their own office that is not readily accessible to bank officials.
