By Ryan Tracy
WASHINGTON -- A top regulator of the nation's largest banks
purchased bank stocks while his nomination for the job was under
review, financial disclosures indicate.
Comptroller of the Currency Joseph Otting, a former banker who
has taken the agency in a deregulatory direction, was confirmed for
the post in November and sold the stock in January, according to
forms he has filed with U.S. agencies including the Office of
Government Ethics.
In a financial disclosure signed by Mr. Otting on Feb. 20, 2018,
he lists the sale of stock in Wells Fargo & Co., Goldman Sachs
Group Inc., Morgan Stanley, Citigroup, Inc. and KeyCorp., among
other financial firms. It isn't clear exactly when he purchased
shares in those companies. But financial disclosures dated March
2017 and released after the White House nominated him for the job
don't list stakes in those banks.
The most recent disclosure, dated February 2018, was filed with
the Treasury Department and is awaiting certification by the Office
of Government Ethics.
All of those banks have subsidiaries regulated by the
comptroller's office. Wells Fargo agreed to a major settlement with
the office last week related to misconduct at the huge bank.
A spokesman for Mr. Otting said Wednesday he "has met all of his
ethical obligations and remains committed to the highest ethical
standards."
Mr. Otting divested the stock after taking office in compliance
with ethics rules that are meant to guard against conflicts of
interest. Those rules didn't apply to him before he took
office.
The OCC spokesman also said Mr. Otting uses a professional money
manager and "has not made individual decisions regarding specific
stocks or securities for several years."
Mr. Otting valued the sale of the bank stock at between $15,000
and $50,000 for Goldman, Morgan Stanley, Citigroup and Wells Fargo,
and between $1,000 and $15,000 for KeyCorp.
He also sold shares of insurer Prudential Financial Inc., valued
at between $1,000 and $15,000, according to the Feb. 20 document.
That position also wasn't listed in his financial disclosure from
March 2017.
As a member of the Financial Stability Oversight Council of
senior regulators, Mr. Otting has participated in discussions about
whether to remove federal oversight of Prudential. The OCC
spokesman said Mr. Otting didn't participate in those discussions
"until the divestitures were complete." The spokesman said the need
for a recusal went away at that point.
Ethics experts said Mr. Otting's actions didn't appear to
violate ethics rules. They disagreed about whether they were
appropriate.
"Investing in financial firms while heading to an agency that
overseeing those companies is another example of senior officials
who seem to place their own interests above the public interest,"
said Scott Amey, general counsel at the nonprofit group Project on
Government Oversight.
Kathleen Clark, a professor of law at Washington University,
said Mr. Otting's actions may have been "suboptimal" because they
delayed his ability to exercise his duties, but "there is a
difference between suboptimal and violating regulations."
Mr. Otting is a career banker who over the years amassed large
holdings in financial stocks and other assets. The March 2017
financial disclosure valued his assets at more than $30
million.
After taking office on Nov. 27, Mr. Otting spent weeks recused
from policy decisions because he had not yet unwound his financial
holdings.
He was awaiting a certificate of divestiture allowing him to
sell financial holdings without facing an immediate tax bill, a
maneuver allowed under federal rules.
During that period, Mr. Otting had to amend the information he
submitted to ethic watchdogs, according to internal emails
disclosed in a Freedom of Information Act request.
Jennifer Dickey, an OCC ethics official, on Jan. 17 pressed
ethics watchdogs for an update on the status of Mr. Otting's
request for the certificate. "As I may have indicated before, this
situation is significantly impacting the OCC's ability to plan the
comptroller's calendar and the agency's activities," she wrote.
"As you know, this CD request has gone through many iterations
with each subsequent change requiring an updated review. The most
recent significant addition to the CD request came in on December
28," an OGE official wrote back, referring to the certificate of
divestiture.
Mr. Otting received the certificate on Jan. 19, and began
selling stock days later, the documents show.
The OCC said on Jan. 25 he was no longer recused from matters
affecting most institutions, though he is continuing to recuse
himself from matters affecting a handful of banks that he has
worked for or with during his career.
Write to Ryan Tracy at ryan.tracy@wsj.com
(END) Dow Jones Newswires
April 25, 2018 17:03 ET (21:03 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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