Wells Fargo fined $1B for lending misconduct
NEW YORK — Wells Fargo will pay $1 billion US 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 $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 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 Trump, whose administration has been keenly focused on paring back financial regulations, has called out Wells for its “bad acts.”
In Friday’s announcement, the CFPB and the OCC penalized 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 cars repossessed.
These abuses are separate from Wells Fargo’s well-known sales practices scandal, where employees opened 3.5 million bank and credit card accounts without getting customers’ authorization. The account scandal torpedoed Wells Fargo’s reputation as the nation’s best-run bank.
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. The bank’s wealth management business and currency trading business are under investigation by federal authorities.
On Friday, Wells Fargo adjusted its previously reported first-quarter earnings to reflect the penalty. America’s thirdlargest 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.