What You Need to Know
- The penalty adds to the $5 billion in fines and legal settlements the bank has paid over the last five years for fake accounts and more.
Wells Fargo & Co. was handed a fresh regulatory action and a $250 million fine over its lack of progress addressing long-standing problems, the first such sanction under Chief Executive Officer Charlie Scharf.
The penalty adds to the more than $5 billion in fines and legal settlements that the firm has paid over the last five years tied to a series of scandals that began with fake accounts in its branch network.
The latest order, from the Office of the Comptroller of the Currency, cites deficiencies in Wells Fargo’s home-lending loss mitigation practices — the steps firms take to avoid foreclosure — that have prevented the bank from being able to “fully and timely remediate harmed customers.”
“Wells Fargo has not met the requirements of the OCC’s 2018 action against the bank,” Michael Hsu, the regulator’s acting chief, said in a statement Thursday. “This is unacceptable.”
Wells Fargo leaders have been in Washington’s crosshairs following a series of scandals that began with the 2016 revelation that bank employees opened millions of potentially fake accounts to meet sales goals.
In addition to the penalty, Hsu said the OCC is putting limits on the bank’s future activities until it fixes problems tied to its mortgage-servicing business.
The regulator ordered the bank not to acquire certain third-party residential mortgage-servicing rights and to ensure borrowers aren’t transferred out of its loan-servicing portfolio until remediation is provided.
The regulator had warned the company it may bring new sanctions tied to the company’s pace in fulfilling its obligations, privately signaling it’s still not satisfied with the bank’s progress in compensating victims and shoring up controls, Bloomberg News reported last month.
The bank, which signed so-called consent orders with the OCC and the Consumer Financial Protection Bureau three years ago, had sought more time to get the work done, according to people with knowledge of the situation.