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Top Story: The OCC - 150 Years in Dramatic Historical Context
By Judy Morrison
Excitement, theft, fraud, danger, and international intrigue may not be the first words that come to mind when you think of the OCC, but they are certainly part of our history, which is evident from the historical discoveries unearthed and documented by OCC Historian Jesse Stiller.
While Stiller acknowledges that “knowledge of history is no panacea,” he does believe that useful lessons can be learned from what the OCC has already encountered and resolved.
So what has he discovered while unearthing OCC’s history over the last 24 years?
“Our discoveries are both intellectual and physical, as we think about old issues in new ways and identify new sources of information,” says Stiller An example of the latter was the papers of the 12th Comptroller of the Currency, Laurence O. Murray. No one knew they existed until members of Murray’s family contacted the OCC indicating that there were artifacts and wanted to know if the organization was interested in examining them. Stiller flew to New York and discovered papers that shed light on Murray’s importance as an agent of OCC reform and the source of his power—a close relationship with President Theodore Roosevelt. “These papers are a rare and exciting historical discovery,” says Stiller.
Problems in the federal banking system have often been the result of criminal behavior by individuals. One of the most notorious stories of theft involves Elizabeth Bigley, also known as Cassie Chadwick. Chadwick was a particularly flagrant thief who defrauded several national banks out of millions of dollars by claiming to be an illegitimate daughter and heiress of famous steel entrepreneur Andrew Carnegie. Between 1897 and 1904, she forged his name on checks and took out loans in his name. She was finally caught in 1904 when a banker examined her debts and discovered she had outstanding loans equaling more than $5 million. One bank, Citizen's National Bank of Oberlin, which had loaned her $800,000, suffered a massive run that forced it into bankruptcy. Chadwick died in prison in 1907 at the age of 50.
Fraud can bring down a bank and cause serious damage to the community that depends on it. A recent example occurred in the late 1990s with the collapse of the First National Bank of Keystone, W.Va. At one time, Keystone was hailed as one of the top-performing banks in the nation, growing its assets from $102 million in 1992 to $1.1 billion seven years later. The bank’s apparent success, and the tax revenues it generated, was a boon for the formerly impoverished coal-mining town of Keystone.
But federal regulators found that a lot of that growth was illusory. When the OCC dug deeper, it was revealed that half the assets claimed on the bank`s balance sheet had been sold to investors. Several bank officials were tried in the spring of 2000 and convicted on obstruction and fraud charges.
Examiners have not only a difficult job but occasionally a dangerous one. Retired OCC Ombudsman Samuel Golden recalled, during an interview with Stiller, the period during the late 1980s when bankers under duress would try to “intimidate and belittle” their OCC examiners. “It was not a time for the faint at heart,” said Golden. The most serious situation involved a bank borrower who threatened OCC bank examiners. He said he was “going to bring my rifle and we're going to line them up and we're going to shoot them one by one.” Although that never did happen, the threat was real.
On April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. Soldiers on the ground grew suspicious and searched the jet and found 128 black suitcases packed with 5.7 tons of cocaine valued at $100 million. Law enforcement officials also discovered something else. The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corporation and Bank of America.
Wells Fargo & Co., which bought Wachovia Corp. in 2008, admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers. After a 22-month investigation, the Justice Department charged Wachovia with violating the Bank Secrecy Act by failing to run an effective anti-money-laundering program. Wells Fargo promised to revamp its detection systems and paid $160 million in fines and penalties.
These are just a few of the many OCC stories that Stiller has documented, and with 150 years’ worth of material, many more are still waiting to be told. While the work of the typical OCC bank examiner may seem mundane and ordinary to many, this historical snapshot illustrates that it has the potential to be anything but.
Last Updated: 08/09/2014