Wells Fargo to Pay $1B to Settle Customer Abuse Charges
American banking giant Wells Fargo has agreed to pay federal regulators $1 billion to settle charges that it failed to identify and avert problems related to its mortgage and auto lending operations.
The bank has admitted it sold unwanted or unnecessary automobile insurance to hundreds of thousands of its auto loan customers.
Wells Fargo, the largest mortgage lender in the U.S., has also admitted to forcing thousands of customers to pay unnecessary fees in order to lock in interest rates on their home mortgages.
The bank will pay $500 million to the Consumer Financial Protection Bureau and another $500 million to the Treasury Department’s Office of the Comptroller, the largest fines ever imposed by either agency.
None of the money will go directly to the victims, although the bank has agreed to offer restitution.
This is the latest chapter in broad and long-running scandals that have brought the bank under intense federal scrutiny.
Wells Fargo was also rocked by a widely-reported scandal during which the bank admitted employees activated as many as 3.5 million bank and credit card accounts without customer authorization.
Citing “widespread abuses,” the Federal Reserve, the central banking system of the U.S., took an historical action earlier this year by ordering that Wells Fargo could not grow beyond $1.95 trillion in assets. The Federal Reserve also required the bank to replace several board members.