Ex-OneWest Chief Surprises Wells Fargo With OCC Enforcement

Feb 3, 2020

On Thursday, the OCC banned former Wells Fargo CEO John Stumpf from the banking industry and fined him $17.5 million (13 million pounds) to settle charges he failed to put a stop to sales misconduct – the most it has ever secured from an individual. Among other former executives charged was retail banking head Carrie Tolstedt, who has not yet settled and is potentially facing a whopping $25 million penalty.

After watchdogs including the OCC failed to charge senior Wall Street executives for their role in the 2007-2009 financial crisis, lawmakers have pressed them to hold more individuals responsible for corporate wrongdoing. Proving personal culpability, though, is legally tough, which makes Thursday’s charges all the more striking.

90 years ago, after Congress finally passed the Securities and Exchange Acts President Roosevelt made a controversial appointment to head the new agency — rogue named Joseph Kennedy, father of JFK, RFK and Ted Kennedy amongst others. Roosevelt appointed him because Kennedy knew where the bodies were buried and was seeking legitimacy for his legacy. Kennedy turned on his fellow conspirators and enforced the new laws thus correcting intolerable abuses of law and good sense that had come to dominate a marketplace where only the rich dared to roam.

So too we find Joseph Otting, former CEO of the infamous OneWest which with a little seed money from some famously rich people who didn’t necessarily understand the true nature of the business plan had formed the enterprise literally over a weekend to take advantage of the bankruptcy of IndyMac. The business plan was simple: “take over” IndyMac and claim ownership of loans that had been originated by IndyMac but long since sold mostly into private label securitizations. And then foreclose on the portfolio which consisted of unviable nonperforming loans. In so doing they would make a “profit” consisting of all the net proceeds from property sales labeled as foreclosures PLUS payments from FDIC for 80% of losses claimed by but not incurred by OneWest.

It’s good work if you can get it. A lot of rich people got richer. And of course a lot of no-so-rich people got wiped out.

Having cleaned out most of the profit potential of OneWest, Mnuchin our current treasury Secretary dubbed “foreclosure king” and Otting went into government both to protect themselves and their compatriots from any claims for disgorgement of ill-gotten gains and to pursue Kennedy’s goal of seeking legitimacy after being party to the greatest economic crime in human history.

Mnuchin is another story. But Otting has seized upon the Wells Fargo culture to foster an image of himself as a reformer. And so he is shining a light upon Wells Fargo who was merely caught doing the same thing all the other big banks were doing — maximizing their strengths as marketing platforms to achieve not only the greatest profit but also the greatest control over the marketplace. To hell with free market forces.

So now Wells Fargo has turned into the poster boy for illicit banking patterns and practices.

Otting at OCC Surprises Wells Fargo With Enforcement