Author: Thomas Anderson
For several years, Wells Fargo can’t seem to get out of scandals. It has been in hot waters with the regulators, which is not good because it could hurt it more than expected.
According to a recent report, the Consumer Financial Protection Bureau (CFPB) will order Wells Fargo to settle more than $1 billion in fines. The overwhelming record fine is because of its alleged mistreatment of its customers.
Sources say that the settlement won’t probably get ready this month. After all, neither the financial institution nor the federal agency has confirmed the accuracy of settlement information.
Unfortunately, Wells Fargo has its name on the headlines for no-good reasons, and being a mega-bank makes the news more alarming. It might not be too much to say; it seemed to experience scandal after scandal. That’s why it is not surprising that CFPB has finally decided to launch a thorough investigation into some of the bank’s practices. One thing is for sure; the investigation could leave Wells Fargo with a substantial hole in its pocket.
Let’s dive deeper into the regulatory strife that has continuously embattled the bank.
Regulatory Strife Persists in Wells Fargo
In 2018, Wells Fargo made headlines as it was ordered by CFPB to pay a fine of $1 billion over misconduct in its auto and mortgage lending divisions. Yet, the federal agency gave the bank a $500 million credit for its coinciding settlement. A little time after that, in 2020, Wells Fargo finally agreed to pay $3 billion to settle the issue with its sales practices. The issue involved the wrong business practices of opening millions of accounts without its customers’ permission.
Interestingly, Wells Fargo didn’t seem to learn any lesson and continued its wrong practices because CFPB is pressuring it again to pay more than $1 billion in fines due to repeat offenses, including mortgage lending, consumer deposit accounts, and auto-lending.
According to the recent filing, the bank has set aside $2 billion in the third quarter to cover legal issues. Surely, the recent amount of fine is a record.
CFPB thoroughly investigates Wells Fargo
Because Wells Fargo has a very bad, displeasing history, CFPB is taking a hard look at its business practices, including mortgage lending, automobile lending, and consumer-deposit accounts. The possible result of the thorough investigation could cost the bank more than $1 billion in settlement fees. On top of that, CFPB could also have to charge restrictions against it. The track record is disappointing. This explains the severe consequences.
Aside from CFPB, the Department of Justice, and the Securities and Exchange Commission have also been investigating Wells Fargo because of its alleged hosting of fake job interviews. That’s certainly shocking and deserves punishment.
Final Thoughts
Even with the talks about the overwhelming amount of fines, CFPB and Wells Fargo have yet to state to clear things up. The only matter that is clear now is that financial measures might not have been enough punishment for offenders since Wells Fargo has repeated unlawful practices. Due to that, there have been suggestions that removing necessary operating licenses and other government privileges should be part of the penalties.
While it is hard to comprehend Wells Fargo taking a hit regarding unlawful business practices, necessary action should be taken if they are found guilty of the allegations. Large banks should never be free from punishment to set a strict reminder and reduce possible offenders.