Wall Street Banks to Face On-Site Reviews of Sales Practicesby
Regulators want to ensure Wells Fargo scandal isn’t repeated
Agencies said to start bank exams within the coming days
To ensure Wells Fargo & Co.’s scandal over unauthorized customer accounts isn’t being repeated at other lenders, regulators are poised to start reviewing data and talking to employees inside the biggest U.S. banks, according to a person familiar with the matter.
Wells Fargo’s largest competitors have received regulators’ formal requests for information and have been preparing for their practices to be scrutinized by examiners in the coming days, said the person, who requested anonymity because the process isn’t public. The reviews come on the heels of Wells Fargo agreeing to pay $185 million to authorities including the Consumer Financial Protection Bureau last month, lawmakers grilling the bank’s officials and Chief Executive Officer John Stumpf stepping down.
Banks including JPMorgan Chase & Co. and Bank of America Corp. have already been looking internally for any activities similar to those at Wells Fargo. The Office of the Comptroller of the Currency, a front-line regulator of banks, is working with other agencies -- including the Federal Reserve, Federal Deposit Insurance Corp. and CFPB -- to ensure no other lenders have maintained sales practices that encourage the opening of accounts without authorization by customers.
Comptroller of the Currency Thomas Curry told lawmakers at a Senate Banking Committee hearing last month that he had directed his examiners to review sales practices at all large and mid-sized banks, and that his agency could pursue further enforcement actions against “individual misconduct and culpability” of Wells Fargo officials. Fed Chair Janet Yellen said at a separate hearing before the House Financial Services Committee her agency had also started taking “a comprehensive look at the biggest banks.”
Bryan Hubbard, a spokesman for the OCC, confirmed that the review process Curry had referred to has begun.
CFPB Director Richard Cordray said his agency will “follow up aggressively” with the rest of the industry, but indicated at the Senate hearing that he doesn’t expect to find the same level of problems as at Wells Fargo, where employees were pushed to open multiple accounts for customers.
“Wells Fargo bank no doubt was the industry leader in aggressively cross-selling products, which led in part to the extreme circumstances we find here,” he said to lawmakers.
The other banks, for their part, are saying there’s not much to see. Bank of America Chief Executive Officer Brian Moynihan said he’s “comfortable” with his company’s practices and hasn’t found anything comparable to the situation at Wells Fargo.
“We run our company on responsible growth,” Moynihan said Oct. 20 in an interview on Bloomberg Television. “We emphasize the depth of the relationship.”
JPMorgan is conducting a “deep dive” review of its sales practices, Chief Financial Officer Marianne Lake said Oct. 14 in a conference call with journalists. While it’s found a few lapses, the review isn’t turning up any systemic problems, Lake said. Regional lenders including BB&T Corp. and U.S. Bancorp also said internal reviews found no issues with cross-selling at their firms.