OCC Wraps Up 2024 with a Crackdown on Banking Missteps

As the year winds down, the Office of the Comptroller of the Currency (OCC) has delivered a reminder to the banking world that accountability is non-negotiable. December’s enforcement actions reveal a mix of systemic breakdowns and individual misdeeds, painting a picture of an industry still grappling with old challenges in governance and compliance. From small-town banks failing to shore up their operations to individuals exploiting the system for personal gain, the OCC’s latest round of penalties shows a firm resolve to ensure stability and integrity in the financial system.

Two smaller banks, The Fairfield National Bank and The First National Bank of Williamson, were flagged for operational shortcomings that read like cautionary tales for risk management.

Fairfield’s violations included staffing and training deficiencies, poor credit risk ratings, lax loan administration, and even errors in financial reporting. A Formal Agreement now requires the bank’s leadership to address these failings with urgency.

First National Bank of Williamson, meanwhile, is grappling with issues ranging from capital and strategic planning to interest rate risk and commercial credit administration. The OCC’s agreement with the bank leaves no room for missteps, demanding significant reforms to stabilize operations.

Then there’s USAA Federal Savings Bank, which remains a regulatory repeat offender. Its latest Cease and Desist Order highlights enduring problems with consumer compliance, internal audits, IT systems, and management oversight. This isn’t the bank’s first dance with the OCC; it’s replacing orders issued in 2019 and 2022. For a financial institution of USAA’s size and reputation, the persistence of these issues raises serious questions about its governance.

Holding Individuals Accountable

While banks face institutional reckoning, the OCC hasn’t let individuals off the hook. December’s enforcement actions brought to light cases of fraud and ethical lapses that highlight systemic weaknesses.

• Armando De Leon, formerly of TD Bank, allegedly exploited the Paycheck Protection Program (PPP) to the tune of $80,000. His fraudulent loan applications are now the subject of a Notice of Charges for a Prohibition Order.
• Emily Niedwiecky, a former senior representative at Wells Fargo, is accused of pulling off a brazen scheme, falsely disputing $22,000 in personal debit card purchases.
• Wendell Pialet, once a business relationship manager at JPMorgan Chase, reportedly took a bribe to open a bank account meant for PPP fraud. His actions resulted in an Order of Prohibition.

These cases don’t just call out bad actors; they underscore the need for stronger internal controls and oversight within financial institutions.

Amid the crackdown, one bank managed to turn things around. The OCC terminated its Cease and Desist Order against Lake Shore Savings Bank. After addressing issues tied to IT security, board oversight, and anti-money laundering compliance, the bank earned its clean slate. This rare note of progress shows that meaningful reform isn’t just possible—it’s essential.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.