Wells Fargo apparently got a pass from federal investigators when it came to the bank’s massive campaign of creating fake accounts. It’s a disturbing case of a regulatory group failing to do its job. Millions of people were affected by the inaction. The botched job earns the investigators The Whiner of the Week Award.
Last year it was discovered Wells Fargo had a ongoing practice of creating fake bank accounts in the names of customers. Sometimes, those customers were charged fees for the bogus accounts.
In total, the scam grew to 2 million accounts. Eventually, about 5,300 employees were fired for their actions. Federal regulators also hit Wells Fargo with a $185 million settlement.
Since then, the Office of the Comptroller of the Currency (OCC) investigated itself and its handling of the Wells Fargo scandal. The OCC is a federal agency that oversees many national banks.
In a new report, we learn in 2010, the bank regulators knew about Well Fargo’s sneaky sales tactics, discussed them with bank officials, but took no action.
According to the report, the people who are supposed to investigate suspicious activity, “…failed to follow-up on significant complaint management and sales practices issues.”
The report goes on to say there were 700 cases of whistleblower complaints from Wells Fargo employees at that time. For most investigators, that should justify a closer look.
Instead, when the former head of community banking was asked about the complaints, she said, “The primary reason for the high number of complaints is that the culture encourages valid complaints which are then investigated and appropriately addressed.”
You don’t have to be Columbo or Nancy Drew to realize some followup questions were warranted. Instead, a bad banking practice was allowed to continue. Customers suffered and Wells Fargo profits grew.
Earlier this year, the OCC fired its most senior Wells Fargo examiner.
The OCC review of the Wells Fargo situation recommends nine changes to internal processes that would better detect and address potential scandals. One would see whistleblowers have a more direct line to senior officials.
Some of you may remember that former CEO John G. Stumpf previously won The Whiner of the Week for his puzzling leadership during the crisis.