According to sources who spoke with the Wall Street Journal, that contact came in the form of letters seeking information about sales practices and incentive-compensation structures for large and regional banks.
As a follow-up to earlier, informal questions, the OCC reportedly sent letters to JPMorgan Chase & Co. (NYSE:JPMC), Bank of America Corp. (NYSE:BACF) and Citigroup Inc. (NYSE:CC) as well as Santander Consumer USA Holdings Inc. (NYSE:SCB), the 29th largest U.S. bank by assets, and others.
In some cases banks had about two weeks to respond with information about retail banking practices over a number of years.
Searching For Patterns
The letters and the queries they contained were designed to determine what (if any) questionable practices exist at banks other than Wells Fargo, which opened as many as 2 million accounts using unauthorized or fictitious customer information.
OCC comptroller Thomas Curry said during a Sept. 20 Senate Banking Committee hearing that the agency would “review the sales practices of all the large and midsize banks the OCC supervises and assess the sufficiency of controls with respect to these practices.”
At the same hearing, Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB) stated that his agency would aggressively follow up with banks it was investigating.
The Federal Reserve also weighed in with questions of its own ahead of Fed Chairwoman Janet Yellen’s testimony at a contentious House Financial Services committee hearing Sept. 28.
Avoiding Fallout Of Wells Fargo Proportions
Clearly other banks want to avoid the scandal that befell Wells Fargo, not to mention the potential loss of customers. One study by cg42 suggested the bank could lose up to 44% of existing retail customers.
According to the study so far 14% of Wells Fargo's existing customers plan to leave with as much as another 30% considering their alternatives, including closing their accounts.
By The Numbers
At first, analysts said they did not believe the Wells Fargo scandal would impact the bank’s earnings. As the news spread, the company’s reputation suffered and an exodus of customers began.
As a result Wells Fargo stands to lose as much as $212 billion in deposits and $8 billion in revenue over the next year and a half, based on the cg42 study. A drop of that magnitude would represent a 17% decrease in deposits and a 9% drop off in revenue compared to 2015.
More Regulation To Come
Perhaps the biggest fallout from the Wells Fargo scandal will come in the form of accelerated bank compensation rules and enforcement actions by regulators according to FBR Capital Markets senior financial policy analyst, Edward Mills.
"This is a different political reality in D.C., where best interest of the consumer has to be to be the driving force, and you have to really look at incentives,” Mills said. “Gone are the days of the trips to Hawaii. Gone are the days of being able to sell whatever you want in terms of financial products."