WASHINGTON — As Keith Noreika takes over as acting head of the Office of the Comptroller of the Currency on Friday, he faces a daunting challenge: a precipitous drop in morale at the agency.

Worker satisfaction at the OCC has fallen markedly in recent years, particularly in the aftermath of the Wells Fargo fake-accounts scandal, based on analysis of surveys and conversations with several former top OCC officials and managers.

The internal tensions came to a head after the agency last month made public a scathing internal report that detailed failings by OCC staff to address numerous complaints about Wells’ cross-selling practices.

“There's a bit of a black eye on the OCC right now,” said David Gibbons, a former deputy comptroller of the currency for special supervision, who now serves as a senior adviser at Alvarez & Marsal. “If the agency is perceived to have dropped the ball in some way, that really affects people.”

But the problems existed before then. Results from two employee satisfaction surveys from last year (taken before the Wells Fargo case came to light) depict an agency that is still considered a good place to work, but where employees feel increasingly frustrated by decisions made at the very top.

In 2016, the OCC ranked No. 95 among the 305 best places to work in the government, according to a survey conducted by the Office of Personnel Management in the spring of 2016. This represented a stunning 83-place drop from a year earlier, the nonprofit Partnership for Public Service found, based on OPM survey data.

In addition, an internal survey commissioned by the OCC last year shows that while agency employees found their workplace had improved on a number of important measures, they felt that communication from leadership had significantly deteriorated.

Though 90% of employees said they were “proud” to work for the agency, the three measures that saw the most drastic decline had to do with communication from agency leadership.

Recommendations drawn from the survey, which was conducted by the private consulting firm Sirota and garnered an 79% response rate, included “providing more clarity when changes take place” and “reassessing processes for handling employee complaints.” Last month, OCC Chief of Staff Paul Nash announced to staff that the agency would stop implementing the internal survey and rely instead on the OPM one.

The results underline a sentiment of that has been growing over several years at the OCC. Employees felt they were not trusted by their leadership, they said, citing initiatives like a 2013 “peer review” of the agency conducted by foreign regulators.

“[Comptroller Thomas] Curry in a lot of ways was trying to change the culture at the OCC,” said one former senior official, who, like many others for this article, spoke on condition of anonymity. “He perceived the agency being too close to the banks and not willing to take a hard line with them.”

The perception that the OCC is too close to the banks it supervises is widespread among Democrats on Capitol Hill and among consumer groups. Many argued that the agency was partly responsible for the financial crisis because it turned a blind eye to the explosive growth of bad mortgages. Early on in his tenure, Curry took responsibility for the agency’s mistakes leading up to the crisis, something that angered many inside the agency who did not believe they were at fault.

“The OCC's main impetus coming into the crisis was protecting banks from pesky consumer protection laws,” said Lauren Saunders, the associate director of the National Consumer Law Center. “They did too little, too late."

Saunders added, "Comptroller Curry has brought more of a focus on consumer protection to the agency than it has in the past, but it's not a perfect record.”

Some OCC employees were also irritated by the creation last year of a parallel supervision office led by Grovetta Gardineer, the agency’s first senior deputy comptroller for compliance and community affairs.

These moves were read by those staff as a vote of no-confidence for people working on the ground to enforce safety and soundness and consumer protection standards. “What you're doing is bifurcating the decision-making process,” a former OCC manager said. “It makes it more complex to get things done.”

In this context, the agency’s decision to publish the internal report on Wells was viewed as rubbing salt in the wound. Some employees felt that the report was unbalanced, focusing on the failures of agency staff without mentioning the responsibility of those at the top.

“It's a significantly biased report to make the examiners look bad,” a former senior OCC official said. “It's kind of like sticking a knife in your back and twisting it.”

Compounding this was the news, first reported by Reuters last month, that Wells Fargo’s top examiner Bradley Linskens had been removed from his position.

“The staff feels that he was thrown under the bus, and he didn't do anything wrong,” said the former senior OCC official. “You have to personally take responsibility and [not] blame the little guy.”

The former manager also argued the report had failed to identify the OCC’s own research into the Wells scandal, which built upon investigations led by the Los Angeles city attorney and an article in The Los Angeles Times.

"The work that the OCC did was critical to revealing this was a national problem, not just a Los Angeles problem,” said the former manager. “It was OCC findings and work product that became the basis of the regulatory enforcement actions that were taken by the three government agencies."

Curry has highlighted the agency’s work on Wells’ sales practices, leading up to the $35 million enforcement action it imposed on the bank in September in coordination with the other regulators. (The bank paid a total of $190 million in fines and restitution.)

“The OCC’s actions focused on safety and soundness issues, and we worked in close coordination with the [CFPB] and the Los Angeles City Attorney,” the comptroller said later that month in his prepared remarks to the Senate Committee on Banking, Housing and Urban Affairs.

But the report focused on repeated failings by agency examiners, including a bombshell revelation that they had knowledge of 700 whistleblower complaints as early as 2010.

The OCC, which declined to comment for this story, is implementing a new whistleblower tracking program to ensure that complaints are better monitored.

The former manager said the report also failed to recognize that the agency was expending substantial resources on another effort at the time some of those Wells complaints came to light: a multiyear review of mortgage foreclosure practices among dozens of financial institutions, including Wells.

“I don’t think the report captures the fact that our examiners were busting their tails on significant compliance and safety and soundness issues during the entire period,” the former manager said.

With the bogus accounts, “there was very minimal financial impact to clients. It was clearly an inconvenience. By contrast [in the mortgage foreclosure review,] millions of customers were affected and [it] was dramatically more impactful on both the U.S. economy and Wells customers.”

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Lalita Clozel

Lalita Clozel covers fintech regulation, anti-money-laundering, cybersecurity and the Federal Deposit Insurance Corp. in American Banker's Washington bureau.