Wells Fargo to pay record $5 billion in fines and damages
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For decades, Wells Fargo has struggled to fix its practices despite run-ins with regulators.
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NEW YORK – Wells Fargo’s years-long mistreatment of its customers has resulted in another record-breaking fine and a warning that more restrictions on its ability to do business could soon follow.
On Tuesday, the bank agreed to pay US$3.7 billion (S$5 billion) – comprising US$1.7 billion in penalties and an additional US$2 billion in damages – to settle claims that it engaged in an array of banking violations over the past decade that harmed millions of consumers, the Consumer Financial Protection Bureau (CFPB) said.
The latest developments contribute to a picture, years in the making, of Wells Fargo as one of America’s worst-run big banks. For decades, the 170-year-old bank has struggled to fix its practices despite run-ins with regulators, even as employees and customers continued to identify new problems.
The CFPB said that Wells Fargo did not record customer payments on home and auto loans properly, wrongfully repossessed some borrowers’ cars and homes, and charged overdraft fees even when customers had enough money to cover purchases they made with their bank cards. Wells Fargo stopped the conduct this year as part of a larger effort to clean up other unlawful practices stretching back to 2011, the filing said.
The fine is the largest imposed by the regulator, breaking a previous record of US$1 billion, also set by an action against Wells Fargo. It brings the total penalties that the government has levied against the bank for mistreating customers and investors to US$6.2 billion since 2016.
The settlement is the latest development in a series of crises that led to the ouster of two of the bank’s previous chief executives, Mr John Stumpf in 2016 and Mr Timothy Sloan in 2019. Mr Sloan took the top post to help clean up the bank’s reputation, which was reeling from self-inflicted scandals, but he became a lightning rod for criticism and was replaced after three years on the job by Mr Charles Scharf.
CFPB director Rohit Chopra told reporters on Tuesday that the action against the bank “should not be read as a sign that Wells Fargo has moved past its longstanding problems or that the CFPB’s work here is done”.
As part of its settlement with the regulator, Wells Fargo has also begun repaying customers, returning improperly charged fees and offering some financial relief to those whose finances and credit ratings were hurt by the bank’s practices. NYTIMES
