Wells Fargo’s penance: What’s been done, what’s to come
April 19, 2018 9:42 PM
Daniel Tepper/Bloomberg
Wells Fargo was hit by regulators on Friday with a $1 billion fine related to its alleged overcharging of customers for auto insurance and home loans.
But it is far from the San Francisco bank's only fine in recent years, and there may be more on the way. Following is a roundup of what Wells has paid so far and what's still in play:
But it is far from the San Francisco bank's only fine in recent years, and there may be more on the way. Following is a roundup of what Wells has paid so far and what's still in play:
Patrick T. Fallon/Bloomberg
Auto insurance and home loans
The latest regulatory fine concerns allegations that Wells overcharged nearly 1 million auto loan borrowers for insurance they didn't need, pushing a quarter of them into delinquency. Roughly 20,000 customers had their vehicles wrongfully repossessed, including some military service members who were on active duty.
Wells also allegedly made unauthorized charges to mortgage borrowers who were in bankruptcy, putting them at risk of default and foreclosure. The Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau announced the fine on Friday, the first significant action by the Trump administration against a big bank.
Wells also allegedly made unauthorized charges to mortgage borrowers who were in bankruptcy, putting them at risk of default and foreclosure. The Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau announced the fine on Friday, the first significant action by the Trump administration against a big bank.
Phony-accounts scandal
In September 2016, the CFPB, OCC and Los Angeles city attorney forced Wells Fargo to pay $190 million in fines and restitution after thousands of former employees were found to have opened as many as 2.5 million fake accounts.
The scandal led to two congressional hearings and the eventual ouster of Wells Fargo CEO John Stumpf. But it didn't stop there ...
The scandal led to two congressional hearings and the eventual ouster of Wells Fargo CEO John Stumpf. But it didn't stop there ...
Fed caps Wells' growth
Janet Yellen's final official act as head of the Federal Reserve was to sign off on the central bank's order against Wells related to the bogus-accounts scandal.
The Feb. 2 order bars Wells from growing beyond its asset size as of the end of 2017; the bank held $1.95 trillion on Dec. 31. At the same time, the bank announced that four members of its board were leaving.
The Feb. 2 order bars Wells from growing beyond its asset size as of the end of 2017; the bank held $1.95 trillion on Dec. 31. At the same time, the bank announced that four members of its board were leaving.
Overcharging veterans for home loans
In 2017, Wells Fargo settled with the Department of Veterans Affairs to pay $108 million related to a 2006 lawsuit claiming it overcharged veterans for home loans.
Wells Fargo and other banks were accused of defrauding veterans and the U.S. of millions of dollars under a Veterans Administration loan refinancing program. The lenders overcharged veterans and concealed their conduct from the government to obtain guarantees for the loans, according to filings. The bank denied the allegations.
Wells Fargo and other banks were accused of defrauding veterans and the U.S. of millions of dollars under a Veterans Administration loan refinancing program. The lenders overcharged veterans and concealed their conduct from the government to obtain guarantees for the loans, according to filings. The bank denied the allegations.
Wes Frazer/Bloomberg
False certification of FHA loans
The Justice Department settled with Wells Fargo in 2016 for $1.2 billion over charges the bank falsely certified mortgages for Federal Housing Administration insurance.
Interestingly, unlike other settlements, Wells Fargo admitted it had deceived the government from 2001 to 2008. The settlement was the largest penalty in the FHA's history.
Interestingly, unlike other settlements, Wells Fargo admitted it had deceived the government from 2001 to 2008. The settlement was the largest penalty in the FHA's history.
Andrew Harrer/Bloomberg
Alleged race discrimination
Wells settled with the Justice Depatment in 2012 for $175 million over allegations it charged African-American and Hispanic borrowers more for home loans in the run-up to the financial crisis. The bank denied the charges, saying it agreed to the settlement to avoid protracted litigation.
Bloomberg News
Still to come: Wealth management
The Securities and Exchange Commission and Justice Department are investigating Wells over allegations that its wealth management unit sold clients products that were not in their best interest.
Still to come: Foreign exchange trading
Federal prosecutors are still investigating the bank over allegations of improprieties related to foreign exchange trading with a single client, reportedly Restaurant Brands International, the owner of Burger King.
The bank has already fired four traders connected to the trading after an internal investigation, and has said it plans to refund money to the client. But that may not be enough to stop another penalty by regulators.
The bank has already fired four traders connected to the trading after an internal investigation, and has said it plans to refund money to the client. But that may not be enough to stop another penalty by regulators.
