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As OCC Attacks Community Reinvestment Act To Collusion With Wells Fargo Detailed By Informant

By Matthew Russell Lee, Exclusive Patreon
BBC - Guardian UK - Honduras - CJR - PFT

SOUTH BRONX, March 8 –   The current US Comptroller of the Currency Joseph Otting cashed out of his position with OneWest Bank in California by overseeing fake comments in favor its acquisition by the CIT Group. His OCC has similar treated with kids gloves Wells Fargo.

   Then, emboldened, Otting devoted the Office of the Comptroller of the Currency to weakening or destroying the Community Reinvestment Act which provides for the public process that he subverted with fake comments.

   Inner City Press, which along with CRC opposed the merger and then pursued a Freedom of Information Act request for all documents about Otting's fraud, soon found its and Fair Finance Watch's comments to the OCC being rejected, or ignored, or returned. 

  On March 6 Fair Finance Watch and Inner City Press filed timely comments with Otting's OCC on the application by Northfield Bank to buy Victory State Bank, see below.

 On March 8, Inner City Press received the final part of the below from OCC Informant: "To: Matthew R. Lee, Inner City Press:   FYI   ----- Forwarded Message ----- From: Whistleblowing Informant To Gov't Subject: OCC Relationship With Wells Fargo: Cozy For A Decade (2006 - 2016)  Attached, please see portion of a recent American Banker story that I have highlighted.  Based on the DOJ settlement documents, the American Banker story notes the role of Richard Kovacevich ("King of the Cross-Sell") in the sales practices that further developed under John Stumpf when he succeeded Kovacevich as Wells Fargo CEO in 2007.    Since the sales practices fraud is rooted in the early years of this century, apparently 2002 onward, the upcoming TOIG report should review the long sweep of the OCC's "partner" relationship with Wells Fargo, including:  2005-2006 BSA-AML problem that led to a series of pliant examiners-in-charge along with a failure of oversight by OCC Headquarters, and Stumpf speech to OCC examiners in 2011, proclaiming his "wonderful" relationship with Ken Peyer and urging OCC examiners to regard banks as OCC's "partners". Again, the Stumpf speech is available at the following link, here.  I assume that TOIG may give some credit for recent displays of toughness by the OCC, under external pressure.  The credibility of your report depends on a hard look at more than a decade of OCC interactions with Wells Fargo preceding September 2016.  During that long period, in the aftermath of the BSA-AML problem that TOIG expertly and thoroughly reported on, the OCC egregiously failed to regulate Wells Fargo in the objective, arms-length manner that the public has a right to expect of our bank regulators.  The Stumpf speech in 2011, alongside other evidence, vividly shows the OCC was cozy with Wells Fargo's senior management.  The OCC was amenable to senior management's mendacity and blind to evidence of the bank's wrongdoing.  I believe the OCC will return to that sort of relationship with Wells Fargo, after the pressure is off.    ----- Forwarded Message ----- From: Whistleblowing Informant To Gov't Subject: OCC Relationship With Wells Fargo: 2005-2006 Supervision Problem  Please see two attachments: 2005 American Banker story and the TOIG audit report in 2006, with the following top finding:  "Despite Years of BSA Program Compliance Problems at Wells, OCC Did Not Take Formal Enforcement Action"  Please note the memo sent to Congress in April 2005, quoted in the American Banker story, accusing senior OCC officials of "keeping quiet and accepting the OCC's culture of forbearance for the large banks that fund the agency . . . . This [2005-2006 matter] is about one large bank's very successful and secret pressure on the OCC to override the findings and seasoned judgment of OCC field examiners."  The TOIG report (see especially pages 28-31) notes the OCC's aborting its WSRC process after Julie Williams and Doug Roeder secretly met with then-CEO Richard Kovacevich.  Julie Williams, as Acting Comptroller, overrode the recommendation of a public and formal cease and desist order.    By 2007, John Stumpf was Wells CEO, and Ken Peyer was the OCC examiner-in-charge.  Stumpf clearly was pleased with Ken Peyer and with Peyer's successors (Scott Wilson and later, Bradley Linskens).*  Stumpf told the mass OCC audience in 2011 that "trust"  was key to his relationship with the OCC examiners.  Ref: Stumpf speech, linked below, at 54:14 onward.  The upcoming TOIG report should review the OCC-Wells "partner" relationship that predates 2009 even if that year appears to be the beginning of the sales practices fraud and the OCC's gross failure to act promptly and effectively regarding that particular saga of malfeasance.  Congress and the public need to know about the historical backdrop, that is, how the OCC-Wells Fargo problem in 2005 was followed by the installation of pliant examiners, lauded by Stumpf.  Congress and the public need to be aware that the OCC culture continues to operate with excessive secrecy and far too little accountability.    Thanks, OCC Informant   *  Linskens was partially cleared by a TOIG investigation and restored to active duty at the OCC.  Last year, he was quietly promoted to an Associate Deputy Comptroller position. See American Banker stories, March 9, 2018 and April 24, 2019.  ----- Forwarded Message ----- From: Whistleblowing Informant To: gov't Subject: OCC Relationship With Wells Fargo: Here is Link to Stumpf's Speech to OCC in 2011  Dear Rich Delmar, Acting Inspector General and Counsel:  I understand from recent media coverage that your office, Treasury OIG (TOIG), is preparing a report on the OCC's supervision of Wells Fargo from 2009 onward.  According to a statement attributed to you, the TOIG report is expected to be issued in late spring.  You are probably aware that John Stumpf, the former Chief Executive Officer of Wells Fargo, spoke to a mass audience of OCC examiners in July 2011, at an OCC conference.  You should be aware that the media has covered some of the substance of Stumpf's speech, most notably in stories in The Wall Street Journal (November 17, 2016, "Before the Scandal: Wells Fargo CEO's Warm Welcome From Regulator") and American Banker (January 28, 2020, "Verdict coming on OCC's supervision of Wells Fargo").  Attached to this email are copies of those two news stories.  I am now providing the actual recording of Stumpf's speech (on July 21, 2011, in Chicago), here.  As far as I am aware, TOIG has not previously had access to Stumpf's speech beyond what was reported in the attached news stories.  When you now listen to the speech, its relevance to your upcoming report on OCC supervision of Wells Fargo should be obvious.  I decided therefore to provide it to you now, to help inform your upcoming report.   Stumpf was introduced to the OCC audience of approximately 1000 examiners by Michael Brosnan, former Senior Deputy Comptroller for Large Bank Supervision.  Stumpf addressed various topics over the course of nearly one hour, and much of what he said is relevant to the criminal culture of Wells Fargo that spawned the sales practices fraud and other wrongdoing that has become pervasively public since September 2016.  For example, Stumpf said (at 11:24 in the recording): "We think of ourselves as Main Street . . . we believe you should never sell the customer anything . . . ."    In fact, cross-selling to customers and an "eight is great" sales goal was becoming part of the Wells Fargo organizational culture more than a decade before the massive fraud became public, and while Richard Kovacevich was the Wells Fargo CEO; see the following story published in 2005, here.
   Beyond the various topics addressed by Stumpf, the final portion of his speech is extremely relevant to TOIG's upcoming report. Stumpf (at approximately 54:14 in the recording) said: "Let me end with 10 comments about the OCC."  Stumpf then said: "Continue to view your banks as partners, not as your problems.  And at the core of that is trust.  A couple of years ago when Ken Peyer was our EIC [Examiner-in-Charge], he [referred to a Stephen Covey book].  And I can't tell you how positive and wonderful that relationship was, because Ken [Peyer] brought to our relationship trust as a core element . . . . Scott Wilson continued that, and Mike [Brosnan] . . . . You feel it . . . . Raise issues early and escalate them to the highest levels of the bank, you are not bothering me when you bring an issue to me. Ken did that, Scott does that, I get calls from Mike from time to time . . . . We have very common interests . . . . The basics are still important . . . . We help customers succeed financially . . . . Finally, hire, promote and reward great people . . . and keep great people out in the field."   The Stumpf speech is relevant to possible federal crimes or monetary penalties that may be pursued by the Department of Justice against former Wells Fargo officers, including but not limited to Stumpf.   Furthermore, the speech is relevant to gross mismanagement by the OCC in its supervision of Wells Fargo, especially from 2009 to 2016.  So far, the OCC's mismanagement of its statutory mission to act promptly and effectively against the abuses of Wells Fargo has been described only in one official report, the April 2017 OCC report by Larry Hattix, commissioned by then-Comptroller of the Currency Thomas Curry.  The Hattix-Curry report entirely attributed OCC supervision failure to the "WF team" based in San Francisco, that is, to the field examiners praised by Stumpf in his speech; in that regard, please see again the speech excerpt that I have offered in the paragraph above. (As you know, the OCC examiners-in-charge were Ken Peyer, Scott Wilson, and Bradley Linskens.)  I strongly urge that TOIG review the above-linked speech in order to get a more complete understanding of the relationship that has existed between the OCC and Wells Fargo.   Please let me know if you have questions.    Sincerely, OCC Informant (Anonymous)"

  On Northfield: "Re: Timely Initial Comment Opposing Application of Northfield Bank to acquire Victory State Bank     Dear Deputy Comptroller Kiefer, Ms. Cummings and others in the OCC:      This is a timely first comment opposing and requesting an extension of the OCC's public comment period on the Application by Northfield Bank to acquire Victory State Bank.       This comment is timely.  While Comptroller Otting has said he never saw discrimination (except being told by family members about it), consider for the record on this application that even as reflected by the too-limited 2018 HMDA data available on the CFPB's website, in New York State in 2018 made 91 loans to whites - and only TWO to African Americans, out of proportion to the demographics of its service area and of other lenders' activities in it.       While making only TWO loans to African Americans in NYC in 2018, Northfield Bank denied seven applications from Africans, much more disparate that its ratio for whites: 91 loans made, 97 denial: more than three times more disparate to African Americans.       This application should be denied. And for the record, the CFPB's elimination of the HMDA informaiton that has been available on the FFIEC's and even its own website for 2017 data is part of the destruction of CRA and HMDA of which the OCC is a part.        On consumer (non) protection, consider for the record these:

 "This has got to be the WORST bank I've ever been in. I accompanied a friend to this Northfield branch because they had to take care of a problem. They had been trying to speak to the manager about it, but he was never in. My friend spoke to someone who said she was the assistant manager and she was VERY rude,condescending, and a know it all.  I've been a businessman for 30 years and have never come across a person this rude to a customer before. If she worked for me, she would have been fired. Another lady in the back was talking to a customer at the window very loudly and I was almost embarrassed for them. Totally unprofessional employees! I had been thinking of opening an account there, but after seeing how my friend was treated, no way! There are too many better banks in the area. No wonder it was empty! Why do they hire people who give such poor customer service??I hope their other branches aren't like this.  It's a disgrace, and I plan to tell all my friends and colleagues to stay away from this bank.  I hope my friend goes up the chain with their complaint.     This review is for the 1123 Kings Highway branch which is not even listed on Yelp. They are a terrible bank! They are unprofessional liars. I would never trust them with my money.

      Also for the record, any and all possible branch closing or consolidations which result from this proposal must be disclosed, during the comment period. Public hearings should be held.            In this context, the comment period should be extended so that public evidentiary hearings can be held, and the application should be denied."

  While Inner City Press' FOIA requests get fee waivers from the Federal Reserve and a range of agencies in the US and beyond, Otting's OCC suddenly started denying them, hindering access to the merger applications on which CRA is enforced.   

Otting is trying to push through this CRA-killing proposal on a short comment period, cognizant of the other CRA, the Congressioal Review Act. Now it's been extended a single both. It is not enough - Otting must recuse.  But it is obvious that even banks want more time.

On January 26, in advance of Otting's belated January 29 House of Representatives appearance, Inner City Press / Fair Finance Watch submitted a formal comment, here.


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