A new report from the Washington Post says that both the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency are preparing to fine Wells Fargo about $1 billion for misbehavior in the automotive and mortgage markets. Citing two people familiar with the negotiations, the Washington Post reported that the settlement could be announced as soon as Friday.
From the Washington Post report:
The settlement, which could be announced as soon as Friday, would be the most aggressive move by regulators during the Trump administration to punish a big bank. It also escalates problems at Wells Fargo, which has been under intense federal scrutiny since admitting in 2016 that it had opened millions of sham accounts that customers didn’t want.Sponsor Content
The regulators — the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency — have been investigating Wells Fargo for months after it acknowledged charging thousands of customers for auto insurance they didn’t need, driving some to default on their loans and lose their cars through repossession. Wells Fargo also admitted that it had charged some customers improper fees to lock in an interest rate for a mortgage. The combined $1 billion fine would be among the largest ever levied by either regulator.
Earlier this month, reports emerged that the CFPB was seeking a “record fine” against Wells Fargo for mortgage and auto insurance issues and a Reuters report suggested that CFPB Acting Director Mick Mulvaney was considering a fine of as much as $1 billion for the issues.
As HousingWire’s Ben Lane reported last week, in its first quarter earnings release, Wells Fargo confirmed that it is facing a civil penalty of $1 billion from both the CFPB and the Office of the Comptroller of the Currency.
The bank reported on April 13 that its net income was $5.9 billion, or $1.12 per diluted common share, for first quarter 2018. That’s up from $5.6 billion, or $1.03 per share, for first quarter 2017, and down from $6.2 billion, or $1.16 per share, for fourth quarter 2017.
Wells Fargo cautioned that its first quarter earnings may need to be restated, depending on what happens with the pending fine from the CFPB and the OCC.
“These preliminary results are subject to change due to our ongoing discussions with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency to resolve matters regarding our compliance risk management program and our past practices involving certain automobile collateral protection insurance policies and certain mortgage interest rate lock extensions, which the CFPB and OCC have collectively offered to resolve for an aggregate of $1 billion in civil money penalties,” Wells Fargo said in its earnings release. “At this time, we are unable to predict final resolution of the CFPB/OCC matter and cannot reasonably estimate our related loss contingency.”
Wells Fargo doesn’t specifically reveal which matters are the sources of the pending 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.