Documents: Feds Hit Wells Fargo for $1B Penalty for Consumer Abuses

Wells Fargo & Co. has formally settled for $1 billion allegations the San Francisco-based bank violated consumer protection laws in administering a mandatory insurance program tied to auto loans and assessing certain improper mortgage fees. The bank agreed to pay $1 billion to the Consumer Financial Protection Bureau and $500 million to the Office of the Comptroller of the Currency. The consumer bureau said it credited the $500 million penalty to the satisfaction of the larger fine.

The OCC said its penalty “reflects a number of factors, including the bank’s failure to develop and implement an effective enterprise risk management program to detect and prevent the unsafe or unsound practices, and the scope and duration of the practices.”

Wells Fargo executives had earlier told investors the bank was negotiating a settlement with the two agencies. The bank has paid out hundreds of millions of dollars in recent years—to federal regulators and to resolve class actions—stemming from a sham-accounts scandal in which employees opened new accounts without customer authorization. In 2016, the bank paid $100 million to the CFPB to resolve claims tied to the accounts scandal. That amount had marked the largest penalty in the agency’s history until now.

Timothy Sloan, the Wells Fargo president and chief executive officer, said in a statement Friday:

“For more than a year and a half, we have made progress on strengthening operational processes, internal controls, compliance and oversight, and delivering on our promise to review all of our practices and make things right for our customers. While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency. Our customers deserve only the best from Wells Fargo, and we are committed to delivering that.”

The CFPB said in a statement:

“Today the Bureau of Consumer Financial Protection (Bureau) announced a settlement with Wells Fargo Bank, N.A. in a coordinated action with the Office of the Comptroller of the Currency (OCC). As described in the consent order, the Bureau found that Wells Fargo violated the Consumer Financial Protection Act (CFPA) in the way it administered a mandatory insurance program related to its auto loans. The Bureau also found that Wells Fargo violated the CFPA in how it charged certain borrowers for mortgage interest rate-lock extensions. Under the terms of the consent orders, Wells Fargo will remediate harmed consumers and undertake certain activities related to its risk management and compliance management. The Bureau assessed a $1 billion penalty against the bank and credited the $500 million penalty collected by the OCC toward the satisfaction of its fine.”

Read the CFPB’s consent order here:

And the OCC civil penalty order is posted here:

C. Ryan Barber in Washington contributed to this report.

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