Consumer banking giant Wells Fargo agreed to pay $3.7 billion to settle a laundry list of charges that it harmed consumers by charging illegal fees and interest on auto loans and mortgages, in addition to incorrectly applied overdraft fees against savings and checking accounts.
The Consumer Financial Protection Bureau on Tuesday ordered Wells to repay $2 billion to consumers and enacted a $1.7 billion penalty against the bank.
It’s the most important fantastic to this point against any bank by the CFPB and the most important fantastic against Wells, which has spent years attempting to rehabilitate itself after a series of scandals tied to its sales practices.
Regulators made it clear, nevertheless, that they imagine Wells Fargo had not done enough to wash up its act.
“Put simply: Wells Fargo is a company recidivist that puts one out of three Americans in danger for potential harm,” said CFPB Director Rohit Chopra, in a call with reporters.
Chopra said this pattern of behavior made make it mandatory for regulators to take additional actions against Wells Fargo that goes beyond the $3.7 billion in fines and penalties.
Wells Fargo CEO Charles Scharf said the agreement with the CFPB is an element of the hassle to “transform operating practices at Wells Fargo and to place these issues behind us.”AFP via Getty Images
The bureau says bank’s violations impacted greater than 16 million customers. Along with improperly charging its auto loan customers with fees and interest, in some cases the bank wrongfully repossessed borrowers’ vehicles. The bank also improperly denied 1000’s of mortgage loan modifications to homeowners.
Wells Fargo has been repeatedly sanctioned by regulators for violations of consumer protections law going back to 2016, when Wells employees were found to have opened tens of millions of accounts illegally in an effort to meet unrealistic sales goals. Since then, Wells executives have repeatedly said the bank is cleansing up its act, only to have the bank be present in violation of other parts of consumer protection law, including in its auto and mortgage lending businesses.
Back in 2018, Wells paid a $1 billion penalty to cover widespread consumer law violations. That, on the time, was the most important fantastic to this point against a bank for consumer law violations.
The bank had previously signaled to investors that it was expecting additional fines and penalties from regulators. The bank put aside $2 billion within the third quarter to cover potential regulatory matters.
Wells stays under a Federal Reserve order forbidding it from growing any larger until the Fed deems that its corporate culture problems are resolved. That order, originally enacted in 2018, was expected to last only a 12 months or two.
In an announcement, CEO Charles Scharf said the agreement with the CFPB is an element of the hassle to “transform operating practices at Wells Fargo and to place these issues behind us.”
While Wells Fargo tried to border the agreement with the CFPB as a resolution of established bad behavior, CFPB officials said a few of the violations cited in Tuesday’s order happened as recently as this 12 months.
“This mustn’t been seen as Wells Fargo has moved past its problems,” Chopra said.
