Wells Fargo fined US$1b for mortgage, auto lending abuses
Wells Fargo will pay US$1 billion to federal regulators to settle charges tied to misconduct at its mortgage and auto lending business, the latest punishment levied against the banking giant for widespread customer abuses.
In a settlement announced Friday, Wells will pay US$500 million to the Office of the Comptroller of the Currency (OCC), its main national bank regulator, as well as a net US$500 million to the Consumer Financial Protection Bureau (CFPB) . The fine is the largest ever imposed by the CFPB and its first since the Trump administration took control of the bureau in late November.
Starting in September 2016, Wells has admitted to a number of abusive practices across multiple parts of its business that duped consumers out of millions of dollars. Regulators, in turn, have fined Wells several times and put unprecedented restrictions on its ability to do business, including forcing the bank to replace directors on its board. Even President Trump, whose administration has been keenly focused on paring back financial regulations, has called out Wells for its "bad acts."
Improperly charging fees
In Friday's announcement, the CFPB and the OCC penalised Wells for improperly charging fees to borrowers who wanted to lock in an interest rate on a pending mortgage loan and for sticking auto loan customers with insurance policies they didn't want or need. The bank admitted that tens of thousands of customers who could not afford the combined auto loan and extra insurance payment fell behind on their payments and had their cars repossessed.
These abuses are separate from Wells Fargo's well-known sales practices scandal, where employees opened as many as 3.5 million bank and credit card accounts without getting customers' authorisation. The account scandal torpedoed Wells Fargo's reputation as the nation's best-run bank.
In that case, Wells Fargo paid a combined US$187 million in fines and penalties to federal regulators, including the CFPB and the Los Angeles City Attorney's Office, and the company's then-CEO John Stumpf stepped down after being bashed by politicians on both side of the aisle.
Even with the latest settlement, Wells Fargo isn't in the clear. Its wealth management business is reportedly under investigation for improprieties similar to those that impacted its consumer bank. And the Department of Justice is investigating the bank's currency trading business.
The US$500 million paid to the Comptroller of the Currency will go directly to the US Treasury, according to the order. The US$500 million paid to the CFPB will go into the bureau's civil penalties fund, which is used to help consumers who might have been harmed in other cases. Wells has previously said it began reimbursing auto loan and mortgage customers last year.