Wells Fargo to Pay $3.7 Billion for Mistreatment of Auto and Mortgage Customers
In a $3.7 billion settlement with the Consumer Financial Protection Bureau, Wells Fargo & Co. agreed to settle allegations of mistreating customers, including the agency's $1.7 billion fine that's the largest ever imposed.
On Tuesday, t he CFPB said that the agreement involves more than $2 billion in "redress to consumers" and blamed "widespread mismanagement" of auto loans, mortgages, and deposit accounts.
"Wells Fargo's rinse-repeat cycle of violating the law has harmed millions of American families," said CFPB Director Rohit Chopra. "The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. This is an important initial step for accountability and long-term reform of this repeat offender."
Wells Fargo has been working to settle several scandals under CEO Charlie Scharf since it came to light in 2016 that the bank had opened millions of fictitious accounts. Multiple business lines experienced issues, leading to two CEOs' resignations and many expensive fines, including the Federal Reserve's decision to cap the company's assets.
The bank set aside a $2 billion charge in October to cover a range of regulatory and legal issues. Scharf warned that the charge "isn't the end of it."
"We and our regulators have identified a series of unacceptable practices that we have been working systematically to change and provide customer remediation where warranted," Scharf said. "This far-reaching agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us."
In the fourth quarter, Wells Fargo expects a pretax operating loss of about $3.5 billion, including the CFPB civil penalty, remediation, and other litigation expenses.
Chopra has already threatened to make penalties for big businesses more severe. Wells Fargo of San Francisco received a $100 million fine in 2016 for creating accounts without consumers' consent.
For additional misconduct in 2018, the agency imposed a $1 billion sanction but gave the bank a $500 million credit for settling concurrently with the Office of the Comptroller of the Currency.
Progressive Democrats are pressuring Chopra to revive the consumer watchdog because they believe that the organization backed away from stricter policymaking and enforcement under Donald Trump.
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