Wells Fargo Bank in Charleston, South Carolina/photo by Carmen Natale

In a rare move, a top U.S. bank regulator has said it will vet scandal-plagued Wells Fargo & Co.'s choice for its next chief executive, and at least one former general counsel-turned-law professor thinks that is a good idea.

Joseph Otting, head of the Office of the Comptroller of the Currency, told a U.S. Senate committee hearing on May 15 that he would use special legal powers to review any proposed candidate. Otting said his agency remains disappointed in the bank's progress on fixing risk management and governance problems that led to a number of customer abuse scandals, including the opening of millions of fake accounts along with more recent abuses in its mortgage and auto lending businesses.

A spokesman for Wells Fargo, which was not represented at the hearing, did not provide comment to news media. General counsel Allen Parker is filling in as acting CEO since the abrupt resignation under pressure of former CEO Tim Sloan in March.

William Black, an associate professor of economics and law at the University of Missouri-Kansas City, told Corporate Counsel Friday that Otting's move clearly shows regulators' “complete exasperation with Wells Fargo as an institution.”

“Frequently during the savings and loan debacle [of the 1980s] with troubled institutions we would very much have a role in saying you have to run this by us first,” said Black, who has worked with several regulatory agencies, including as litigation director of the Federal Home Loan Bank Board, deputy director of the Federal Savings and Loan Insurance Corp., general counsel of the Federal Home Loan Bank of San Francisco, and senior deputy chief counsel in the Office of Thrift Supervision.

“But it is extraordinarily rare in the modern era,” Black said, to be talking about such oversight. He said it is especially rare under a Trump administration that doesn't vigorously enforce bank regulations.

Congress has granted regulators special legal powers to review the “competence, character, experience or integrity” of candidates for senior management positions in a troubled bank.

At the hearing, U.S. Sen. Elizabeth Warren asked that Otting's review of the nominee be made public. Otting said it was confidential supervisory information that would not be released to the public.

Then came a heated exchange between the two.

Warren criticized Otting's regulators, saying they had repeatedly “ducked” their oversight duties with Wells Fargo. “You need to show your work and make your supervision public,” Warren said. “That way, consumers and Congress can hold you accountable, too.”

“No one has been tougher on Wells Fargo than the OCC,” Otting said.

Warren responded: “That's a low bar.”

Otting shot back, “I disagree, and I find that insulting that you make that comment.”

And Warren replied, “Good.”