Wells Fargo ordered to pay $3.7 billion for ‘illegal activity’ including foreclosures and vehicle repossessions

New York
CNN
–

Federal regulators fined Wells Fargo $1.7 billion on Tuesday for “Widespread mismanagementOver several years it has affected over 16 million consumer accounts.

The Consumer Financial Protection Bureau said Wells Fargo’s “illegal activity” was involved Repeated misapplication of loan paymentsillegal foreclosures on homes, illegal vehicle repossession, Incorrectly Evaluate fees and interest and charge sudden overdraft fees.

The CFPB has ordered Wells Fargo to pay a $1.7 billion civil penalty plus more than $2 billion to compensate consumers for a range of “illegal activity.”

The misconduct described by the CFPB mirrors previously revealed revelations that have surfaced about Wells Fargo since 2016 when the bank’s fake accounts scandal created a national firestorm.

“Wells Fargo’s repeated rinse cycle of lawbreaking has harmed millions of American families,” CFPB director Rohit Chopra said in a statement.

Chopra called Wells Fargo a “repeat offender” and said Tuesday’s fine is just an “initial step” toward holding the bank to account. This suggests that Wells Fargo may not be out of the box with regulators anytime soon.

The misconduct described by the CFPB mirrors previously revealed revelations that have surfaced about Wells Fargo since 2016 when the bank’s fake accounts scandal created a national firestorm.

In a statement, Wells Fargo stressed that the broad settlement with CFPB resolves multiple issues, most of which have been “outstanding for several years.” The bank said the required procedures “have already been completed”.

“We and our regulators have identified a series of unacceptable practices that we have been working systematically to change and provide remediation to customers when necessary,” Wells Fargo CEO Charlie Scharf said in the statement. “This far-reaching agreement is a significant milestone in our work to transform Wells Fargo’s operating practices and put these issues behind us.”

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

According to enforcement action by the CFPB, Wells Fargo had “systemic failures” in its auto loan business that affected more than 11 million accounts. Regulators say these failures have caused Wells Fargo to wrongfully repossess some borrowers’ cars, incorrectly charge fees and interest, and not refund some fees.

Furthermore, regulators say Wells Fargo has inappropriately denied thousands of mortgage loan modifications, causing some customers to lose their homes in “false mortgage foreclosures.”

“The bank was aware of the problem for years before finally addressing the problem,” the French central bank said.

Wells Fargo also “illegally” charged sudden overdraft fees and “illegally” frozen more than 1 million consumer accounts, preventing consumers from accessing their funds for at least two weeks on average.

The Wells Fargo scandal that began in 2016 brought Wells Fargo into the spotlight Treating employees and clients, resulting in congressional hearings, countless regulatory investigations and the eventual ouster of Two of the bank’s chief executives.

In her last term as Chair of the Federal Reserve, Janet Yellen in February 2018 He threw the book at Wells Fargo By imposing unprecedented penalties on the bank that are still in effect today.

The CFPB said the more than $2 billion in customer refunds Wells Fargo was ordered to pay include more than $1.3 billion to consumers affected by the bank’s automatic lending methods and more than $500 million for illegal sudden overdraft fees and other misconduct related to deposit accounts.

Regulators said Wells Fargo has also been ordered to pay nearly $200 million in refunds to those affected from the bank’s mortgage servicing accounts.

Going forward, CFPB ordered Wells Fargo to ensure that auto loan borrowers receive refunds for certain additional fees and to stop charging sudden overdraft fees to bank account holders.

The agency said this fee is charged when customers have funds available at the time of purchase but then have a negative balance once the transaction is settled.