- Key insight: The OCC's effort to hold former Wells Fargo executives accountable for the bank's fake-accounts scandal — which relied on charges brought in the administrative law system — has ended with barely a whimper.
- What's at stake: The $0 settlement wraps up the U.S. government's decade-long response to the momentous scandal.
- Forward look: It comes as court decisions and the policies of the Trump administration cast doubt on the future of the administrative law system.
UPDATE: This story now includes comments from an OCC spokesperson.
U.S. regulators' nearly decade-long quest to hold former
Earlier this year, the Office of the Comptroller of the Currency settled two enforcement cases
Now the OCC has agreed to settle its final case — against former Wells risk executive Claudia Russ Anderson — for $0. That's down from a $10 million penalty that Michael Hsu, the acting comptroller of the currency during the Biden administration,
The OCC's decision to settle came as oral arguments were approaching in Russ Anderson's federal court appeal of Hsu's decision. The acting comptroller's penalty followed a trial before an administrative law judge whose rulings drew harsh criticism from defense lawyers.
"The fact that they wanted $5 million from me, and then $10 million, and we're settling for zero — I think tells you everything you need to know," Russ Anderson told American Banker.
Not only did the eight-digit monetary penalty evaporate, so also did a ban from the banking industry that the OCC had previously ordered. Under the terms of the settlement agreement, Russ Anderson can go to work at a bank again, as long as she provides a copy of her consent order with the OCC to its president or CEO.
That provision will likely have no practical significance, since Russ Anderson, who's 67, says she has retired.
"I have a husband who's almost 77 years old, and we want to spend time with our families, with our friends," she said. "We want to do some traveling, and we just really want to enjoy each other and the life that we built."
An OCC spokesperson called the settlement with Russ Anderson "the culmination of the OCC's enforcement actions to hold eleven former
"Each of the OCC's enforcement actions was warranted and fully supported as described in court filings and the bank's own independent review. The OCC has restricted Ms. Russ Anderson from working in the banking industry and millions of dollars of her compensation were clawed back," the OCC spokesperson said. "In total, the OCC's significant actions have resulted in the collection of more than $43 million in civil money penalties and included orders of prohibition against
'I don't think Wells Fargo was different'
In an interview with American Banker, Russ Anderson reflected on her 35-plus-year career in banking and how it came to an abrupt end after the
Two weeks after graduating from college in 1980, Russ Anderson began in the trainee program at a
Russ Anderson did stints in commercial lending and commercial loan workouts before going to work for John Stumpf in the bank's retail unit. Stumpf would later become
Upon joining the retail banking unit as credit officer, Russ Anderson was tasked with improving the bank's relationship with its primary regulator, the OCC, she recalled.
"They were having difficulties with their relationship," Russ Anderson said, "and they wanted someone who could build a relationship with the OCC. And I did that, and we worked really hard on that. We got to a place where the regulators were very happy with us."
In the early 2000s, Russ Anderson told Stumpf about an emerging area in risk management — operational risk, or risks to core operations that could be disrupted by natural disasters, cyberattacks or any manner of outside contingencies. Russ Anderson recalls telling Stumpf that he should hire someone to oversee operational risk management.
"Two days later, he called me and told me I had a new job," she said. "Since I had flagged this for him, I could now take over operational risk."
Russ Anderson eventually got a new boss, Carrie Tolstedt, who succeeded Stumpf as the head of the bank's retail unit. Tolstedt eventually became the only former Wells executive to face criminal charges in connection with the phony-accounts fiasco.
Starting in the early 2000s — but especially after 2010 —
Russ Anderson maintains that the sales misconduct at Wells was par for the course in the U.S. banking industry.
"Nobody should dispute the fact that
The scope of wrongdoing by low-level workers at Wells will likely never be known. Regulators have described millions of potentially unauthorized accounts, but those numbers are estimates, and the methodology used to derive them has drawn criticism from lawyers for embattled former Wells executives.
One data point that has been verified: Wells fired 5,300 employees for sales misconduct over a five-year period. That number might have been higher if not for the fact that Wells executives
But Russ Anderson argues that 5,300 firings was not a particularly large number in the context of the bank's coast-to-coast network of 6,000 branches.
"That's less than one team member per branch per year," she said. "I would challenge any banking organization or financial services organization or sales organization to do that well."
'Most unfair forum I've ever experienced'
On Sept. 20, 2016, Russ Anderson tuned in to watch a congressional hearing where Stumpf was testifying about the fake-accounts scandal. Less than two weeks earlier, the bank had been hit with $190 million in penalties, and the story had snowballed from there.
When Sen. Elizabeth Warren, D-Mass., asked Stumpf if he had fired members of senior management, Russ Anderson said to her husband, "Oh my God, that's me. I need a lawyer."
She would be fired early the next year. And in 2020, the OCC would bring administrative charges against her, initially seeking a $5 million penalty, which the agency later increased to $10 million.
As the group risk officer for
According to the OCC, Russ Anderson made false and misleading statements to the agency on two different occasions in 2015, obstructing its exams of the bank.
For example, in response to a question about whether pressure to meet sales goals was significant and contributed to employee turnover, Russ Anderson allegedly said that "no one loses their job because they did not meet sales goals."
The OCC also alleged that Russ Anderson assisted in preparing a false and misleading memo regarding sales misconduct in May 2015 — and that she successfully advocated for the deletion of information about employee terminations. The memo was prepared for a committee of
Russ Anderson says that the OCC's entire posture toward Wells' sales misconduct changed after the Los Angeles City Attorney's office filed suit against the bank in May 2015. That suit followed coverage in the Los Angeles Times of sales abuses at the bank.
Before that time, Russ Anderson said, "The OCC never really paid much attention to it, didn't talk to me about it. We were still having what I thought was a very good relationship."
Around the time that the LA city attorney's office sued Wells, the OCC was in the midst of a large examination of Russ Anderson's group, she said. The regulatory agency wanted her group to take one specific action, which the bank had agreed to, she added. Then the Los Angeles lawsuit was filed.
"That put the screech on everything," she said. "And that's when things started going sideways, in my opinion, because Washington was now asking questions and wanting information."
"And that's when I think people started asking the OCC, 'Where were you?'"
The OCC went after a number of former Wells executives, most of whom agreed to settle with the agency. Stumpf
"We never got offers of settling," said Doug Kelley, one of Russ Anderson's attorneys. "I said to Claudia, 'You have a target on your back here.' And I always thought that target number one was Carrie Tolstedt, and target number two was Claudia."
The OCC's case against Russ Anderson was heard by an administrative law judge named Chris McNeil. He held a hearing that stretched on for months. After it was over,
That recommendation was eventually ratified by Hsu, but only after the case had dragged on for five years. Russ Anderson's lawyers have decried various decisions that McNeil made — and lamented the fact that the administrative law system does not provide the same rights and protections that federal courts do.
"I can say unequivocally that the process we went through was the most unfair forum I've ever experienced in a United States courtroom," Kelley said.
Russ Anderson has a similar view. "I would say from the first time we put our answers in and we got the responses back from Judge McNeil, I felt that we were going to struggle in an uphill battle," she said.
"We didn't have to wait for his final document," she added. "There were no surprises in there."
'Bankers have to be held accountable'
McNeil retired as an administrative law judge at the end of 2022, shortly after wrapping up his role in the
McNeil said his comments were not based on any records, and that he no longer has access to the relevant case files.
He wasn't shy about sharing his own opinions about the
"At some point, bankers have to be held accountable," McNeil said. "And I don't think the attorneys of the bankers were trying to let their clients be accountable. I think they were trying to avoid accountability."
In the cases against two onetime audit executives at Wells, McNeil recommended penalties totaling $8.5 million. But months after the then-acting comptroller ratified those numbers, the OCC settled one of the cases for $100,000 and the other for $50,000.
"If I had to pay 100,000 bucks for something, I'd feel like I was being punished," McNeil said. "But I don't have anywhere near the resources that these bankers" have.
McNeil said that he feels for the low-level Wells employees who were fired for failing to meet their sales goals. He wondered aloud what those people would think of the OCC's relatively modest settlements with the two former audit executives.
"I think they would probably say the fines … were laughable," McNeil said.
He imagined the branch-level employees saying: "If that's the best the OCC can do, then I got screwed."
McNeil also spoke at length about the administrative law system, which has come under attack not only by lawyers for former bankers, but also by the Trump administration and the U.S. Supreme Court.
The retired judge acknowledged that the processes in the administrative law system are "seriously different" from the processes in a U.S. courtroom.
In the administrative law system, the government agency that brings charges has the burden to establish its case only "by the preponderance of the evidence," McNeil said.
"It's a standard that isn't as intense or demanding as the standard that's applicable in criminal cases," he said. "I can understand why an attorney might say, 'That's not fair.'"
Another important difference: In administrative cases, the government agency that brings the charge has had the opportunity to gather evidence from inside the company over the course of years, which is generally not true in criminal cases.
Referring to Kelley, who decried the proceedings that McNeil oversaw as unfair, the retired judge said: "I'm sure it was certainly startling to him that there was so much evidence that was already available way before the OCC decided to bring charges."
"This was through an administrative process. It was not through the judicial process. So he has every right to his own opinion," McNeil said.
But McNeil also noted that the attorneys for Russ Anderson and other former
"What they got was more than two bites at the apple," McNeil said.
What's more, McNeil said, when an agency like the OCC brings a case in the administrative law system, it's taking criminal charges off the table. "And that's a pretty significant factor," he added.
McNeil spoke highly of the attorneys who advocated for Russ Anderson and the other former Wells executives. "They were very well represented by very good counsel," he said.
While McNeil offered a defense of the administrative law system, he also argued that Trump is currently trying to do away with it. And he referred to the fact that the courts have chipped away at the system in recent years.
"I don't really have skin in this race anymore. I do think that we are seeing the end of the administrative state," McNeil said.
He speculated that the OCC might have decided recently to settle cases against former Wells executives for relatively small sums because they didn't expect to get support from federal appeals courts.
"They're probably right," he added. "They probably know much more than I do about what they were facing in the court."
'Claudia's family can finally breathe'
The OCC recently got new leadership, as Trump's choice to lead the agency, Jonathan Gould, was
"We have always expected that Claudia would prevail once we got to a fair jurisdiction and exposed the unfairness of the proceedings before the administrative tribunal," her attorneys said in an email. "She has been steadfast in her story and denial of the OCC's allegations. The OCC's self-serving narrative only carried weight in front of its in-house administrative law judge."
Russ Anderson's lawyers also noted that they had added Ilan Wurman, an administrative law expert at the University of Minnesota law school, to their legal team, and said they believe that move was a factor in the OCC's decision to settle for $0.
"Now facing oral argument before the 8th Circuit, they finally understood their case never had merit. Claudia's family can finally breathe and move on with their lives," her lawyers said.
Russ Anderson spoke about the toll the OCC's case has taken, saying that it disrupted holidays for nine years, overshadowed key milestones in her life and stoked fears that she and her husband would have to file for bankruptcy.
"We didn't have $5,000,000. And clearly when they went to $10 million, I didn't have $10 million," she said.
Russ Anderson said the legal saga led her to sever ties to Tolstedt, who eventually pleaded guilty to one criminal charge of obstructing a bank examination and was later sentenced to three months of probation, including six months of home confinement.
After Tolstedt's legal issues finally ended, Russ Anderson sent her a short text message and got a brief text back. "But we have not had voice-to-voice communication in over nine years," she said.
"The ceasing of communication really had to do with all of the things that were going on with the regulators," Russ Anderson added. "I, to this day, have a great deal of respect for Carrie Tolstedt."
When Russ Anderson was asked about how she feels regarding the settlement, which came together quickly in recent weeks, she said that she's overwhelmed with relief.
"I can finally, at 67, look forward to a normal life," she said.
