(Adds missing letter in 'meant' in paragraph 13)
By Patrick Rucker
WASHINGTON Feb 28 A leading U.S. regulator has
given Santander Bank NA a failing grade for its
performance in community lending, but sources said a similar
move against Wells Fargo & Co was stalled.
Santander, a unit of Spain's Banco Santander, has
been deemed a bank that "needs to improve" under the Community
Reinvestment Act (CRA), a law meant to promote lending to poor
On Tuesday, Santander said that it accepted the verdict from
the Office of the Comptroller of the Currency (OCC), the leading
regulator for national banks.
"We are working with leading community groups and expect
that our rating will improve in our next exam," the bank said in
Santander had appealed the verdict to the OCC's internal
auditor, or ombudsman, and lost.
Wells Fargo faces a similar downgrade but its appeal is
still pending, according to industry and regulatory sources.
In September, Wells Fargo admitted that its employees opened
as many as 2.1 million phony accounts without customer approval.
With that in mind, sources said, examiners sought to give the
bank a failing grade for community investment.
Wells Fargo appealed, and the OCC ombudsman was due to rule
on the matter by earlier this month, according to the agency's
internal timeline. But that verdict has been stalled over
whether the "needs to improve" label is too harsh, according to
Banks that fail CRA tests do not face sanctions, but they
must clear more hurdles to open branches or otherwise expand.
The label also brings scrutiny from regulators and lawmakers.
Wells Fargo in December appealed the CRA downgrade,
according to sources. A company spokesperson on Tuesday declined
A spokesman for the OCC, Bryan Hubbard, declined comment.
In the case of an impasse, the OCC ombudsman may hear
directly from bank executives about the dispute, said Sam
Golden, who was the first to hold the position created in 1993.
"The ombudsman is meant to give fresh eyes to these issues,"
said Golden, of consulting firm Alvarez & Marsal.
But agency rules grant the Comptroller of the Currency,
Thomas Curry, the last word on industry appeals.
The Wells Fargo verdict may be one of the last major
decisions to come from Curry, who was appointed by President
Barack Obama and whose term ends in early April.
(Reporting by Patrick Rucker; Editing by Cynthia Osterman and