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

Date:


New York
CNN

Federal regulators fined Wells Fargo $1.7 billion on Tuesday for “widespread mismanagement” over several years that damaged more than 16 million consumer accounts.

The Consumer Financial Protection Bureau said Wells Fargo’s “illegal activities” included repeatedly misapplying loan payments, improperly foreclosure on homes, illegally repossessing vehicles, misestimating fees and interest and charging bringing surprising overdrafts.

The CFPB ordered Wells Fargo to pay the $1.7 billion civil fine, in addition to more than $2 billion to compensate consumers for a range of “illegal activities.”

The misconduct described by the CFPB echoes previously reported revelations that have emerged about Wells Fargo since 2016, when the bank’s counterfeit bill scandal sparked a national firestorm.

“Wells Fargo’s cycle of flushing and repeating law-breaking has harmed millions of American families,” Rohit Chopra, the director of the CFPB, said in a statement.

Chopra described Wells Fargo as a “multiple offender” and said Tuesday’s fine is just a “first step” in holding the bank accountable. That suggests Wells Fargo may not be getting out of the box with regulators any time soon.

The misconduct described by the CFPB echoes previously reported revelations that have emerged about Wells Fargo since 2016, when the bank’s counterfeit bill scandal sparked a national firestorm.

In a statement, Wells Fargo stressed that the far-reaching settlement with the CFPB resolves multiple cases, most of which have been “open for several years.” The bank said the required actions are “already largely completed”.

“We and our regulators have identified a set of unacceptable practices that we have been working systematically to change and provide remedial action to the customer where necessary,” Wells Fargo CEO Charlie Scharf said in the statement. “This far-reaching agreement is an important milestone in our work to transform operations at Wells Fargo and move beyond these challenges.”

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

According to the CFPB’s enforcement action, Wells Fargo had “systemic failures” in its auto loan business, hurting more than 11 million accounts. Those failures caused Wells Fargo to falsely repossess some borrowers’ vehicles, falsely charge fees and interest and fail to repay certain fees, regulators say.

In addition, regulators say Wells Fargo has falsely denied thousands of mortgage loan changes, leading some customers to lose their homes in “wrongful foreclosures.”

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

Wells Fargo also “unlawfully” charged surprise overdraft fees and “illegitimately” froze more than 1 million consumer accounts, preventing consumers from accessing their funds for an average of at least two weeks.

The Wells Fargo scandal that began in 2016 spotlighted Wells Fargo’s treatment of employees and customers, led to congressional hearings, numerous regulatory investigations, and the eventual impeachment of two of the bank’s CEOs.

In her final act as Federal Reserve Chair, Janet Yellen threw the book at Wells Fargo in February 2018 by imposing unprecedented fines on the bank that are still in effect.

The CFPB said the more than $2 billion in customer repayments that Wells Fargo must pay includes more than $1.3 billion to consumers hurt by the bank’s automatic lending tactics and more than $500 million to illegitimate overdrafts and other misconduct related to deposit accounts.

Regulators said Wells Fargo has also been ordered to pay nearly $200 million in repayments to those harmed by the bank’s mortgage bills.

Going forward, Wells Fargo has been directed by the CFPB to ensure auto loan borrowers receive repayments for certain add-on charges and to stop charging overdrafts.

The agency said these fees are imposed when customers have funds at the time of purchase, but then have a negative balance once the transaction is settled.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Popular

More like this
Related

Sal Bando Passes Away – MLB Trade Rumors

Long time former big leaguer and executive Sal Bando...

Big waves to deliver storied Hawaii surf contest The Eddie

HONOLULU (AP) — One of the world's most prestigious...