Years of mistreatment of its customers by Wells Fargo has led to another record-breaking fine, and it has warned that its ability to conduct business may soon be more restricted.
On Tuesday, the bank agreed to pay a $1.7 billion fine and another $2 billion in restitution, the Consumer Financial Protection Bureau said, to settle its involvement in a string of banking breaches that have harmed millions of consumers over the past decade. accused.
According to the order filed by the Consumer Protection Agency, the bank misused customers’ home and auto loan payments, wrongfully repossessed some borrowers’ cars and homes, and charged overdraft fees even when customers had enough money to cover payments they made with their cards. Buy. Wells Fargo stopped the practice this year as part of a larger effort to clean up other abuses dating back to 2011, the filing said.
The fine is the largest ever imposed by regulators and shatters the previous record of $1 billion set by the Wells Fargo lawsuit.
The settlement allows the bank to resolve one of a series of crises that led to the ouster of its former chief executive Timothy Sloan in 2019. Sloan took the top job to help clean up the bank’s reputation tainted by its own scandal, but he became a lightning rod for criticism and was replaced after three years by Charles W. Scharf.
But the bank still has to grapple with other regulatory challenges, including a 2018 consent decree from the Federal Reserve that constrained its growth until it resolves a number of issues, and restrictions imposed by the U.S. Comptroller’s Office on its mortgage-servicing capabilities in 2021. currencies for similar reasons.
Rohit Chopra, director of the Consumer Protection Bureau, told reporters Tuesday that the action against the bank “should not be read as a sign that Wells Fargo has resolved long-standing problems, or that the CFPB’s work here is done.”
Wells Fargo has also been repaying customers as part of a settlement with regulators, refunding improperly charged fees and providing some financial relief to customers whose financial and credit ratings were damaged by the bank’s actions.
Banks have begun paying some of their losses, including refunding overpaid home and auto loans; restoring value customers lost when banks seized their cars and foreclosing; and offering “guaranteed asset protection” to auto loan customers Once insured, the funds it has improperly held are returned, and if totaled or recovered, the insurance will cover the difference between the outstanding loan and the value of the vehicle.
Certain categories of remedies have already begun to flow to victims of bad practice, but other parts of the $2 billion payment are new, including having to repay $205 million in overdraft fees.
In a statement on Tuesday, bank officials stressed that the latest agreement with regulators showed the bank was making progress in improving its business practices.
“This far-reaching agreement is an important milestone in our work to transform the way Wells Fargo operates and put these issues behind us,” he said. Scharf said in a statement. Wells Fargo is “a different company,” he added.
The Consumer Protection Agency warned that the bank would be closely monitored as it worked to end and fix its latest breach and would review whether additional restrictions on the bank’s activities were needed. gentlemen. Chopra said in a statement that the bureau will work with other bank regulators, including the Federal Reserve and the Office of the Comptroller of the Currency.
The fines also include Wells Fargo charging customers improper mortgage and auto loan fees, as well as the bank’s practice of freezing customer bank accounts too quickly and closing accounts when automated fraud detection systems detect unusual activity. Some of the practices began as far back as 2011, but almost all of them went well beyond the bank’s initial liquidation with regulators that began in 2016 over its widespread breaches.
“Wells Fargo’s cycle of violations has harmed millions of American families,” he said. Chopra said in a statement to the regulator. “This is an important first step towards accountability and long-term reform for this repeat offender.”