Yesterday, Wells Fargo agreed to pay a $1.7 billion civil penalty and an additional $2+ billion to customers in a settlement with the Consumer Financial Protection Bureau (CFPB) over consumer abuses. The fine is the largest in the history of the CFPB.
The scope of the wrongdoing detailed by the CFPB shows that from “at least” 2011 through 2022, Wells Fargo misapplied home and auto loan payments, leading to illegal repossessions of some borrowers’ cars and wrongful foreclosures of some houses. Wells Fargo also charged surprise overdraft fees and froze more than 1 million customer accounts (for about two weeks on average). The mismanagement harmed more than 16 million consumer accounts.
The resolution lifts one overhang for Wells Fargo, which has been led by CEO Charlie Scharf since October 2019. Last year, the bank told investors that it was “likely to experience issues or delays” in satisfying demands from its multiple U.S. regulators. Then, in October, the bank set aside $2 billion for legal, regulatory and customer remediation matters, igniting speculation that a settlement was nearing.
But other regulatory hurdles remain: Wells Fargo is still operating under consent orders tied to its 2016 fake accounts scandal, including one from the Federal Reserve that caps its asset growth.
“In the CFPB’s 11 years of existence, Wells Fargo has consistently been one of the most problematic repeat offenders,” CFPB Director Rohit Chopra said.
Unfortunately, the bank’s problems aren’t over yet. In a statement on Tuesday, Chopra expressed concerns that Wells Fargo’s efforts to boost profitability have delayed its reforms, adding that the settlement doesn’t mean that the agency’s work is done.
Additional measures against the bank may still be taken.
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