Wells Fargo & Co. will pay $1 billion to settle U.S. probes into mistreatment of consumers, the largest sanction of a U.S. bank under President Donald Trump, as the firm tries to resolve a year and a half of scandals across its operations.
The bank will pay $500 million in penalties each to the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, according to a statement Friday from the CFPB. Wells Fargo warned shareholders last week it would soon face a fine of that size, which it planned to book retroactively in the first quarter. The bank remains under a Federal Reserve penalty that bans growth in total assets.
The settlement covers issues in Wells Fargo’s auto-lending and mortgage units. The bank revealed last year that it had forced unwanted insurance on customers who took out car loans, prompting investigations by U.S. and California regulators. It was also accused of imposing inappropriate charges for locking in interest rates on new home loans.
“We have said all along that we will enforce the law,” Mick Mulvaney, acting director of the CFPB, said in the statement. “That is what we did here.”
CEO Tim Sloan, who took the helm after scandals began erupting in 2016, shuffled management and promised to overhaul the bank’s culture and controls to rebuild public trust. Ensuing scrutiny — some initiated by the bank itself — exposed more misconduct that had festered for years. The company even caught the ire of Trump, who tweeted in December it should face heightened penalties for “bad acts against their customers.”
Wells Fargo announced preliminary results for the first quarter on April 13, saying net income came in at a better-than-expected $5.53 billion, or $1.12 a share. This would be the second straight quarter that legal costs hurt results. In the fourth quarter, Wells Fargo booked a record $3.25 billion charge related to regulatory investigations, sales practices and other matters.
“We recognize that it will take time to put all of our challenges behind us,” Sloan said in the April 13 statement.