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Wells Fargo ordered to pay $3.7 billion for ‘illegal activity’ including unjust foreclosure and vehicle repossession




New York
CNN

Federal regulators fined Wells Fargo a record $1.7 billion on Tuesday for “common mismanagement” over the years harmed more than 16 million consumer accounts.

The Consumer Financial Protection Bureau says Wells Fargo’s “illegal activity” includes repeatedly applied the wrong loan paymentillegal house confiscation, illegal vehicle confiscation, incorrect Evaluate fees and interest rates and charge unexpected overdraft fees.

CFPB ordered Wells Fargo

(WFC)
must pay a $1.7 billion civil penalty in addition to more than $2 billion to compensate consumers for a range of “illegal activities.” CFPB officials say this is the largest penalty the agency has imposed.

Misbehavior described by CFPB . echo previously reported revelations has been floating about Wells Fargo since 2016 when the bank’s fake account scandal created a nationwide firestorm.

“Wells Fargo’s cycle of repeated violations of the law has harmed millions of American families,” said Rohit Chopra, director of the CFPB.

Officials also clarified on Tuesday that Wells Fargo is not nearly out of the box with regulators.

Chopra described Wells Fargo as a “repeated offender” and a “collective repeat offender”, adding that Tuesday’s fine was only a “first step” towards holding the bank accountable.

In one call To reporters, Chopra said the new settlement should not be interpreted as a signal that “Wells Fargo has overcome longstanding problems or that the CFPB’s work is done here.”

For example, Chopra noted that the settlement does not provide immunity to individuals at Wells Fargo, and that the agency recognizes a $3.7 billion fine and settlement will not fix the problems. of the bank.

While Chopra credits Wells Fargo for making some progress, he said it’s unclear “they’re making progress fast enough” and said the agency is concerned that product launches, initiatives ​The bank’s growth and drive to boost profitability has “slowed the needed reform.”

Hinting at further penalties, the CFPB official said regulators “must consider whether there is a need to place additional limits on Wells Fargo” beyond the unprecedented asset cap imposed in 2018. or not.

In a statement, Wells Fargo emphasized that the large-scale settlement with the CFPB resolves many issues, most of which have been “remaining for several years.” The bank said the necessary actions were “basically completed.”

Wells Fargo CEO Charlie Scharf said in a statement: “We and our regulators have identified a range of unacceptable practices that we are working with in a prudent manner. system to make changes and provide remedial action to the customer if necessary.” “This sweeping agreement is an important milestone in our work to transform the ways we operate at Wells Fargo and leave these issues behind.”

Wells Fargo said it expected the CFPB settlement to cost $3.5 billion before taxes in the fourth quarter.

According to enforcement action by the CFPB, Wells Fargo had a “systemic error” in its auto loan business, damaging more than 11 million accounts. Regulators say those failures have led Wells Fargo to incorrectly recall the vehicles of some borrowers, charge unreasonable fees and interest, and fail to repay certain fees.

What’s more, regulators say Wells Fargo has unjustly denied thousands of mortgage modifications, causing some customers to lose their homes to “wrong foreclosures.” left”.

The CFPB said: “The bank was aware of the problem for many years before finally resolving the issue.

Wells Fargo also charges “unlawfully” unexpected overdraft fees and “illegally” freezes over 1 million consumer accounts, preventing consumers from accessing their funds for at least two weeks.

The Wells Fargo scandal that began in 2016 caught the attention of Wells Fargo treat employees and clients, triggering congressional hearings, countless regulatory investigations, and ultimately the downfall of two bank CEOs.

In her final act as Federal Reserve chair, Janet Yellen in February 2018 throw the book at Wells Fargo by imposing unprecedented penalties on the bank that are still in force to this day.

Senator Elizabeth Warren on Tuesday welcomed the new penalties against Wells Fargo and pushed for more.

Warren mentioned above Twitteradded that more regulators should follow Chopra “to protect the public.

The CFPB says more than $2 billion in customer refunds Wells Fargo has been ordered to pay including more than $1.3 billion for consumers harmed by the bank’s auto loan tactics and more than $500 million in illegal unexpected overdraft fees and other misconduct related to deposit accounts.

Regulators say Wells Fargo has also been ordered to pay nearly $200 million in refunds to people harmed by the bank’s mortgage payment accounts.

Going forward, Wells Fargo has been required by the CFPB to ensure auto loan borrowers receive refunds for certain additional fees and to stop charging unexpected overdraft fees to bank account holders.

The agency said these fees apply when customers have funds available at the time of purchase but then have a negative balance after the transaction is settled.

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