Prepared remarks and testimony of Thomas J. Curry, the Comptroller of the Currency, to the Senate Committee on Banking, Housing and Urban Affairs make it imminently clear that cross-selling, sales practices and related incentive compensation will be a focal point for examinations of banks of all sizes and that the OCC continues to review the Wells Fargo matter for "individual misconduct and culpability." Curry stated that he has ordered examiners to "review the sales practices of all large and midsize banks we supervise and assess the sufficiency of controls with respect to sales practices." Oral Statement of Thomas J. Curry (Sept. 20, 2016). Logic dictates that the FDIC has issued a similar directive to its examiners, as well.

Moving forward, the regulatory agencies are also being scrutinized for their part in the Wells Fargo incident. Congressional leaders are questioning whether the agencies acted quickly enough. Curry stated in his Testimony that "the actions against Wells Fargo highlight that we must continue our efforts to improve and refine the agency's supervisory program, to sharpen our early warning processes, and to enhance our supervisory capabilities, particularly with respect to our largest, most complex banks." Testimony of Thomas J. Curry Comptroller of the Currency before the Committee on Banking, Housing, and Urban Affairs (Sept. 20, 2016).

Banks and credit unions of all sizes should carefully review their sales incentive packages and relevant risk management and audit practices. As we indicated last week, the Wells Fargo Orders provides guidance as to the expectations of examiners. Supervised entities should review their product lines, perform independent risk management and internal audits to identify any weaknesses in their compliance management and review their policies and procedures to insure they are consistent with the expectations of examiners..