Wells Fargo to Pay $3.7B for Mistreating Clients
The action includes a $1.7 billion fine tied to issues with the bank's car loans, mortgages and deposit accounts.
Wells Fargo & Co. agreed to a $3.7 billion settlement with the Consumer Financial Protection Bureau to settle a variety of allegations of mistreating customers, including a $1.7 billion fine that’s the biggest in CFPB history.
The agreement includes more than $2 billion in “redress to consumers,” the CFPB said in a statement Tuesday that cited “widespread mismanagement” of auto loans, mortgages and deposit accounts.
“Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” CFPB Director Rohit Chopra said in the statement. “The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. This is an important initial step for accountability and long-term reform of this repeat offender.”
Under Chief Executive Officer Charlie Scharf, Wells Fargo has been trying to resolve a raft of scandals that began in 2016 with the revelation that the bank opened millions of bogus accounts. Problems surfaced across business lines, resulting in the ousters of two CEOs and a number of costly penalties, including the Federal Reserve’s decision to cap the firm’s assets.
The bank set aside $2 billion in the third quarter to cover a variety of regulatory and legal issues, including making harmed customers whole. Scharf warned in October that the charge “isn’t the end of it.”
Chopra has previously vowed to make punishments of large firms more painful. In 2016, the agency fined San Francisco-based Wells Fargo $100 million for opening accounts without customers’ permission. In 2018, the agency imposed a $1 billion sanction for additional misconduct, but gave the bank a $500 million credit for a concurrent settlement with the Office of the Comptroller of the Currency.
Chopra, appointed by President Joe Biden, is under pressure from progressives in the Democratic party to reinvigorate the consumer watchdog, which they say pulled back from tougher policy making and enforcement under former Republican President Donald Trump.
(Image: Bloomberg)
Copyright 2022 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.