The Office of the Comptroller of the Currency (OCC) isn’t satisfied with the progress Wells Fargo has made in reimbursing customers who might have been affected by scandals in its auto lending and mortgage units.
“We are not comfortable where we are with them,” Joseph Otting, chief of the OCC, told senators at a hearing this week, according to Bloomberg.
In April, the OCC and the Consumer Financial Protection Bureau (CFPB) reached a settlement with the bank after finding that it had violated the Consumer Financial Protection Act (CFPA) through the way it ran an insurance program related to its auto loans, and how it charged certain borrowers for mortgage interest rate-lock extensions.
As a result, Wells Fargo was hit with a $1 billion penalty, but the CFPB credited the $500 million penalty collected by the OCC against the fine. In addition, the Bureau said the bank will need to take steps to remediate harmed consumers, and undertake activities related to risk management and compliance management.
Yet when Otting was asked at Tuesday’s (Oct. 2) hearing about the lender's progress in paying back consumers, he said the company is still “framing up” its analysis of how the scandals have financially impacted those affected consumers.
While he couldn't give an exact date for when Wells Fargo will start compensating those people, Otting noted that the OCC has “hundreds” of examiners working on it.
In addition to the fines imposed on Wells Fargo by the OCC and CFPB, the Federal Reserve implemented its own unprecedented punishment: a ban on the bank's ability to grow until it fixes its internal issues.
Senator Brian Schatz, a Democrat from Hawaii, questioned Otting on whether Wells Fargo’s behavior is proof that big banks “can’t supervise themselves.”
But Otting argued that size isn’t the problem, adding that other large institutions have proven they can be regulated and serve their customers at the same time.