Could Wells Fargo be facing a record fine from the Consumer Financial Protection Bureau?
Late last year, reports began to emerge that the CFPB was considering fining Wells Fargo for mortgage lending abuses and other issues.
Former CFPB Director Richard Cordray supposedly signed off on the fine before resigning from the agency in November 2017, but Reuters reported in December that CFPB Acting Director Mick Mulvaney was reviewing the situation and could choose not to move forward with the fine.
That claim was refuted by none other than President Donald Trump himself, who took to Twitter to claim that Wells Fargo will be punished for its actions.
“Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported, but will be pursued and, if anything, substantially increased,” Trump tweeted in December. “I will cut Regs but make penalties severe when caught cheating!”
At the time, the potential fine was thought to be less than the $100 million fine levied against Wells Fargo by the CFPB for the bank’s fake account scandal in 2016.
But it looks like Wells Fargo could be facing a fine after all, one with a few more zeroes tacked onto it.
Reuters reported Monday that the CFPB is seeking a “record fine” against Wells Fargo for “auto insurance and mortgage lending abuses.” According to the article, the fine could be larger than the fake account fine, much larger.
Mulvaney is eyeing a penalty that would dwarf the $100 million the CFPB fined Wells Fargo in September 2016 to settle its phony accounts scandal, said two sources familiar with the talks. That 2016 fine had been the CFPB’s largest ever.
Settlement terms have not been finalized but Mulvaney is pushing for a figure as high as $1 billion, said two people with knowledge of the discussions.
The article does not identify which specific auto insurance and mortgage lending abuses would be the basis of the fine, but last year, Wells Fargo said that it planned to refund more than 100,000 borrowers who were improperly charged for rate lock extensions from Sept. 16, 2013, through Feb. 28, 2017.
According to the bank, approximately $98 million in rate lock extension fees were assessed to about 110,000 borrowers during the period.
Additionally, Wells Fargo disclosed last year that it may have wrongfully force-placed auto insurance on as many as 570,000 customers.
In each instance, Wells Fargo said that it planned to refund the affected customers, but those refunds may be the least of the financial fallout from the issues.
The move, if it happens, could be considered surprising when compared to many of the actions that Mulvaney has either taken or proposed during his tenure as the CFPB director.
Just last week, Mulvaney asked Congress to enact four major reforms that would drastically reduce the CFPB’s independence. Earlier this year, Mulvaney established a new mission for the CFPB that is far less aggressive than the tact taken by the bureau under Cordray.
“If there is one way to summarize the strategic changes occurring at the bureau, it is this: we have committed to fulfill the bureau’s statutory responsibilities, but go no further,” Mulvaney said back in February. “By hewing to the statute, this strategic plan provides the bureau a ready roadmap, a touchstone with a fixed meaning that should serve as a bulwark against the misuse of our unparalleled powers.”
Mulvaney previously told the bureau’s employees that the agency was ending regulation by enforcement, stating that the agency works not only for consumers, but also for the companies it supervises.
Mulvaney also reportedly stripped the bureau’s Office of Fair Lending of its enforcement powers, announced that the CFPB would “reconsider” its payday lending rules, defanged the changes in Home Mortgage Disclosure Act reporting that were to take effect this year, and reportedly put the brakes on the agency’s investigation into the massive data breach at Equifax.
So, fining Wells Fargo $1 billion would certainly be a different way of handling things than Mulvaney has shown thus far.