First the president tweeted it. Then the company warned about it. Now it is official: Wells Fargo & Co. has agreed to a $1 billion settlement with federal regulators.
In December, President Donald Trump posted a tweet indicating that contrary to press reports, fines and penalties against Wells for recent scandals would be pursued and possibly increased substantially.
Trump was referring to regulatory actions to be taken against the San Francisco-based company for charging borrowers rate-lock extension fees even though loan delays were not the fault of its customers.
In its first-quarter earnings report released last week, Wells disclosed that it has received a $1 billion settlement offer from federal regulators related to the rate-lock extensions and automobile collateral protection insurance policies.
On Friday, Wells disclosed that it agreed to consent orders with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency. The orders include civil penalties of $1 billion.
“Under the consent orders, Wells Fargo will also be required to submit, for review by its board, plans detailing its ongoing efforts to strengthen its compliance and risk management, and its approach to customer remediation efforts,” the company said.
The CFPB issued a statement indicating that while it assessed a $1 billion penalty against Wells, it credited $500 million collected by the OCC to its fine.
Wells violated the Consumer Financial Protection Act, according to the bureau.
The orders require Wells to remediate harmed consumers and undertake activities related to risk management and compliance management.
“I am especially pleased that we were able to work closely and effectively with our colleagues at the OCC, and I appreciate the key role they played in the negotiations,” Acting CFPB Director Mick Mulvaney said in the statement. “As to the terms of the settlement: we have said all along that we will enforce the law. That is what we did here.”
A news release from the OCC said Wells violated the Federal Trade Commission Act.
The actions were taken by the OCC because of the severity of the deficiencies and violations of law. Also behind the actions were the financial harm to consumers and Wells’ failure to correct the deficiencies and violations in a timely manner.
In addition to the scope and duration of the bad practices, the size of the OCC’s penalty reflects factors including Wells’
failure to develop and implement an effective enterprise risk management program to detect and prevent the unsafe and unsound practices.
