Trump vows fines for Wells Fargo
WASHINGTON — President Trump on Friday denied a report that the federal consumer financial watchdog might drop sanctions against Wells Fargo & Co. for alleged mortgage lending abuses, and said the bank could face even tougher penalties.
Trump’s comments on Twitter appeared to be in response to a Reuters report that Mick Mulvaney — whom Trump installed last month as acting director of the independent Consumer Financial Protection Bureau — was reviewing whether Wells Fargo should pay tens of millions of dollars in penalties for charging fees to certain home buyers to secure low mortgage rates.
Trump tweeted that “fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped,” and declared the Reuters report incorrect. If anything, he said, fines and penalties will be “substantially increased.”
He renewed his promise to cut regulations, which he and congressional Republicans have been doing in recent months, but said he would “make penalties severe” when companies are “caught cheating.”
A spokesman for Wells Fargo declined to comment. A spokesman for Mulvaney did not respond to a request for comment.
The consumer bureau was created in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act and designed to serve as an independent agency free from presidential interference. The president appoints the director, who also needs confirmation from the Senate and then cannot be removed except for cause during a five-year term.
The bureau’s first director, Richard Cordray, resigned Nov. 24. He promoted his chief of staff, Leandra English, to deputy director and said she would serve as acting director under a Dodd-Frank provision.
Within hours of Cordray’s resignation announcement, Trump appointed Mulvaney to fill the post under the Federal Vacancies Act of 1998. That set off a legal battle. On Wednesday, English asked a federal judge for an injunction to install her as the agency’s acting chief instead of Mulvaney.
U.S. District Judge Timothy J. Kelly denied English’s request last week for a temporary restraining order to remove Mulvaney, who also is the White House budget director.
Consumer advocates said Friday that Trump’s comments show he is trying to impose his influence on bureau activities.
“If anyone needed more evidence of the serious threat to the independence of the Consumer Financial Protection Bureau from this administration, it appeared on Twitter this morning as Trump appeared to intervene directly into enforcement action,” said Lisa Donner, executive director of Americans for Financial Reform, a coalition of groups advocating tougher oversight of the financial system.
Mulvaney, as a White House official, should not be leading the bureau, she said.
Jaret Seiberg, an analyst with brokerage and investment bank Cowen & Co., said in a research note that Trump’s comments show that Wells Fargo remains “a political punching bag given the bank’s initial mishandling of the fake account controversy.”
That scandal, in which aggressive sales quotas led employees at the San Francisco bank to open as many as 3.5 million accounts without customers’ consent, was uncovered by the Los Angeles Times in 2013.
“We do not believe the president’s tweet has anything to do with whether Wells Fargo deserves a large penalty for any potential violations of the law,” Seiberg said. “We see this as a purely political move divorced from the broader issue of whether penalties of the scale the CFPB had been contemplating are warranted.”
Wells Fargo, one of the nation’s largest banks, has been under fire for a series of scandals since it was fined $185 million last year by the CFPB and other regulators over the unauthorized accounts. It also has been accused of forcing auto-loan customers into unneeded insurance policies and charging improper fees to some mortgage borrowers.
The Times reported in July on a wrongful-termination lawsuit by a former Wells Fargo mortgage banker who alleged that the bank falsified records so it could blame mortgage-processing holdups on borrowers. The banker said Wells Fargo fired him for trying to report the practice.
Accusations of improper mortgage fees also have been the subject of a classaction lawsuit, and the bank reported in August that the consumer bureau was investigating the matter. Wells Fargo has acknowledged that the controversy was a factor in a shake-up of the bank’s mortgage division.
In October, Wells Fargo announced that it would refund “rate-lock extension” fees to some mortgage borrowers whose delays in completing mortgage applications were primarily the bank’s fault. The fees in question were charged from Sept. 16, 2013, through Feb. 28, 2017.
The fees are supposed to be charged only when borrowers fail to finish their paperwork on time and want to retain the interest rate that initially was quoted for the loan.
Wells Fargo said that about $98 million in extension fees were assessed to about 110,000 borrowers during that period, but that it thinks a substantial number of the fees were appropriately charged. The bank said the amount to be refunded probably would be lower because not all of the fees assessed were actually paid and some fees already have been refunded.
Reuters reported Thursday that the consumer bureau had accepted an internal review from Wells Fargo and set settlement terms in early November. But that matter and about a dozen others were now in question, it said, because Mulvaney said he was reviewing the bureau’s prior work.