The litany of fraudulent abuses on consumers perpetuated by banking giant Wells Fargo are numerous. They include illegal repossessions, overcharging clients, and an inability to even come through on the amends to consumers they promised. Bloomberg News is reporting that a settlement in the government’s ongoing investigations into Wells Fargo has been reached.
The bank will pay $500 million in penalties each to the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, according to a statement Friday from the CFPB. Wells Fargo warned shareholders last week it would soon face a fine of that size, which it will book retroactively in the first quarter. The bank remains under a Federal Reserve penalty that bans growth in total assets.
The settlement covers issues in Wells Fargo’s auto-lending and mortgage units. The bank revealed last year that it had forced unwanted insurance on customers who took out car loans, prompting investigations by U.S. and California regulators. It was also accused of imposing inappropriate charges for locking in interest rates on new home loans.
Wells Fargo has watched its consumer growth drop, though it’s hard to tell if that’s simply a correction from the fact that they aren’t signing up fake accounts anymore (half snark). They are about to see even more loses after Well’s Fargo’s CEO Timothy Sloan decided to threaten American teachers if they continued to pressure his company into divesting a little bit from gun manufacturers.* This is some form of atonement for the multi-billion dollar banking machine; and it’s also an important carrot for Donald Trump, and his head-of-most-things-money Mick Mulvaney, in their attempts to prove that they can at least have a patina of a working government.
Mr. Mulvaney is simultaneously working to defang the consumer bureau, an agency that has been a thorn in the side of the financial industry. He has criticized the bureau for wasteful spending and overzealous oversight.
Those dueling priorities — neutering the agency while fulfilling Mr. Trump’s promise to come down hard on Wells Fargo — have created friction.
But at the same time, according to several administration officials, Mr. Mulvaney has been eager to ensure that the bureau fulfilled the president’s commitment to go after Wells Fargo. In conversations with colleagues in the Trump administration, Mr. Mulvaney has emphasized his role in orchestrating the $1 billion fine.
Wells Fargo will be all right, having announced that it earned $5.9 billion in the first three months of 2018.
*American teachers hit back.