Wells Fargo fined $1 billion for insurance and mortgage abuses
CNN — Two federal regulators are fining Wells Fargo $1 billion for forcing customers into car insurance and charging mortgage borrowers unfair fees.
The penalty was announced early Friday by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency.
It is the harshest action taken by the Trump administration against a Wall Street bank.
Wells Fargo (WFC) apologized last year for charging as many as 570,000 clients for car insurance they didn’t need.
An internal review by Wells Fargo found that about 20,000 of those customers may have defaulted on their car loans and had their vehicles repossessed in part because of those unnecessary insurance costs.
In October, the bank revealed that some mortgage borrowers were inappropriately charged for missing a deadline to lock in promised interest rates, even though the delays were Wells Fargo’s fault.
CEO Timothy Sloan said Friday that the scandal-plagued bank has made progress toward “delivering on our promise to review all of our practices and make things right for our customers.”
“Our customers deserve only the best from Wells Fargo, and we are committed to delivering that,” he said.
In February, the Federal Reserve handed down unprecedented punishment against Wells Fargo for what it called “widespread consumer abuses,” including its creation of as many as 3.5 million fake customer accounts.
Under that penalty, Wells Fargo won’t be allowed to get any bigger than it was at the end of last year — $2 trillion in assets — until the Fed is satisfied that it has cleaned up its act.
Such a large fine is noteworthy for the CFPB under Mick Mulvaney, the acting director appointed by President Trump.
As a congressman, he called for the bureau’s destruction. And under his leadership, the bureau has delayed payday-loan rules, dropped lawsuits against payday lenders and stripped a fair-lending division of its enforcement powers.
He told a House hearing this week that the bureau has not launched any enforcement actions since he took over last fall.