Wells Fargo fined $1B for lending abuse

NEW YORK — Wells Fargo will pay $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 Fargo will pay $500 million to the Office of the Comptroller of the Currency, its main national bank regulator, as well as a net $500 million to the Consumer Financial Protection Bureau.

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 Fargo 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 Fargo several times and put unprecedented restrictions on its ability to do business, including forcing the bank to replace directors on its board.

Even President Donald Trump, whose administration has been focused on paring back financial regulations, has called out Wells Fargo for its “bad acts.”

In Friday’s announcement, the CFPB and the OCC penalized Wells Fargo 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 sales practices scandal, where employees opened as many as 3.5 million bank and credit card accounts without getting customers’ authorization.

In that case, Wells Fargo paid a combined $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.

The Department of Justice also is investigating the bank’s currency trading business.

Wells Fargo adjusted its previously reported first-quarter earnings Friday to reflect the penalty.

The nation’s third-largest bank now says it made $4.7 billion in the first 90 days of the year, down from $5.46 billion in the same period a year earlier.