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 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.

The two regulators provided a roadmap for Wells to fix practices that led to consumer abuses, including the creation of a compliance committee to oversee the process.

The bank will now be required to update regulators on its progress. Wells must also show how it plans to identify customers hurt by its misconduct and explain plans to compensate them.

Regulators said the bank had already begun to take steps to fix the wrongdoing. CEO Timothy Sloan said 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 following the penalty announcement.

Wells Fargo was fined $500 million by each agency. It will need to pay its penalty to the consumer watchdog within 10 days. The OCC did not specify a payment deadline.

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.

Related: The Fed drops the hammer on Wells Fargo

Other regulators have come down hard on Wells, too. 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.</s>NEW YORK - Federal regulators plan to fine Wells Fargo as much as $1 billion as early as Friday for abuses tied to its auto-lending and mortgage businesses, The New York Times and other news outlets reported, citing unnamed sources.

The potential $1 billion fine would be largest ever imposed by the Office of the Comptroller of the Currency, the bank's main national regulator, and the Consumer Financial Protection Bureau, the federal watchdog bureau set up after the Great Recession.

The fine against Wells Fargo had been expected. San Francisco-based Wells Fargo said last week that it was negotiating with federal regulators to pay as much as $1 billion in fines to settle various charges.

A CFPB spokesman declined to comment, as well as a spokesman for the Comptroller's Office. A spokeswoman for Wells Fargo also declined to comment.

The problems with Wells Fargo this time are not tied directly to its well-known sales-practices scandal, where the bank admitted its employees opened as many as 3.5 million bank and credit card accounts without getting customers' authorization. But they do involve to significant parts of the bank's businesses: auto lending and mortgages.

Last summer, Wells Fargo admitted that hundreds of thousands of its auto-loan customers had been sold auto insurance that they did not want or need. In thousands of cases, customers who could not afford the combined auto-loan and extra insurance payment fell behind on their payments and had their cars repossessed.

In a separate case, Wells Fargo also admitted that thousands of customers were charged unnecessary fees in order to lock in their interest rates on their home mortgages. Wells Fargo is the nation's largest mortgage lender.

This would be the first fine against a bank by the Trump administration since Mick Mulvaney, acting director of the CFPB, took over the bureau in late-November.

While banks have benefited from looser regulations and lower taxes under President Donald Trump, Wells Fargo has been called out specifically by Trump as a bank that needs to be punished for its bad behaviour.

"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. I will cut Regs but make penalties severe when caught cheating!" Trump wrote on Twitter back in December.</s>SAN FRANCISCO — Wells Fargo is being targeted for a $1 billion fine from a federal agency for alleged improper dealings, including forcing people to buy insurance they didn’t need, according to news reports.

San Francisco-based Wells Fargo has stumbled into hot water several times in recent years, including a scandal that erupted in 2016 linked to the banking behemoth’s opening of as many as 3.5 million bogus accounts without its customers’ permission.

“Wells Fargo just can’t seem to get any traction in a positive direction,” said Ken Thomas, a Miami-based independent bank analyst. “They seem to take one step forward and two steps back all the time.”

“We do not have a comment,” Wells Fargo spokesman Ruben Pulido said.

The latest misdeeds are expected to result in punishments imposed on Wells Fargo by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, the Washington Post and the New York Times reported, citing anonymous sources who have been briefed on the regulatory action.

“Wells Fargo’s reputation has clearly been tarnished,” said Marty Mosby, an analyst with Vining Sparks, a Tennessee-based investment firm. “They have gone from being the highest-quality bank that we had known in our lifetime to a bank that is average, or below-average, in its reputation and quality.”

The regulators, in the latest action, are penalizing Wells Fargo for requiring people to sign up for auto insurance they didn’t need, improperly charging people for mortgages and for failing to maintain adequate risk management, the New York Times reported.

This fine would be the largest imposed by President Donald Trump’s administration on a major bank. The Trump Administration has been criticized over fears that the White House was gutting the Consumer Financial Protection Bureau. Sources believe the fine could be announced as soon as Friday.

San Francisco-based Wells Fargo for years had earned a reputation as a respected, well-managed financial institution.

However, since the bank accounts scandal erupted less than two years ago, the bank has staggered from the perception that it sometimes acts in a predatory fashion against customers.

In September 2016, Wells Fargo was fined $185 million for its role in allowing the accounts to be opened fraudulently.

“All bets are now off when it comes to Wells Fargo,” Thomas said. “Wells seems to be the favorite new target of the regulators.”

The embattled bank, however, seems to have a penchant for battling back, even when it is battered by fresh scandals and unsettling disclosures, Thomas stated.

“Wells Fargo is kind of a punching bag for regulators right now, but like Rocky in the movie, they get bloodied, they get knocked down, but they keep getting up,” Thomas said.

Mosby believes Wells Fargo could financially withstand the impact of a $1 billion fine.

“Wells Fargo is very well-capitalized, and they have the capital to absorb this,” Mosby, said. “There is no threat to the franchise from these fines. The penalty will reduce one quarter’s earnings, but after that they will move ahead again.”</s>SAN FRANCISCO — Wells Fargo is being targeted for a $1 billion fine from a federal agency for alleged dealings, including forcing people to buy insurance they didn’t need, according to news reports.

Wells Fargo has stumbled into hot water on an array of fronts in recent years, including a scandal that erupted in 2016 linked to the banking behemoth’s opening of as many as 3.5 million bogus accounts without the permission of its customers.

The latest misdeeds are expected to result in punishments imposed on Wells Fargo by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, the Washington Post and the New York Times reported, citing anonymous sources who have been briefed on the regulatory action.

“Wells Fargo just can’t seen to get any traction in a position direction,” said Ken Thomas, a Miami-based independent bank analyst. “They seem to take one step forward and two steps back all the time.”

The regulators, in the latest action, are penalizing Wells Fargo for requiring people to sign up for auto insurance they didn’t need, improperly charging people for mortgages and for failing to maintain adequate risk management, the New York Times reported.

This fine would be the largest imposed by President Donald Trump’s administration on a major bank.

San Francisco-based Wells Fargo for years had earned a reputation as a respected, well-managed financial institution.

However, since the bank accounts scandal erupted less than two years ago, the bank has staggered from the perception that it sometimes acts in a predatory fashion against customers and its reputation has been tainted.

In September 2016, Wells Fargo was fined $185 million when the banking accounts scandal first came to light, for its role in allowing the accounts to be opened fraudulently.

“All bets are now off when it comes to Wells Fargo,” Thomas said. “Wells seems to be the favorite new target of the regulators.”</s>Wells Fargo will pay $1 billion to settle federal charges into consumer abuses related to its auto lending and mortgage businesses, the U.S. government said Friday.

Wells Fargo violated the Consumer Financial Protection Act "in the way it administered a mandatory insurance program related to its auto loans," the Consumer Financial Protection Bureau (CFPB) said in a news release.

The fine is the biggest in the history of the CFPB, which was created in 2010 under the Dodd-Frank financial reform law, and the largest bank penalty administered under the Trump administration.

The agency also found Wells violated the CFPA in how it charged certain borrowers for mortgage interest rate-lock extensions.

"While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them," Wells CEO Tim Sloan said in a separate statement.

Sloan took the top position at Wells after the bank's scandals started blowing up in 2016.

The action came in coordination with the Office of the Comptroller of the Currency (OCC), which said Wells Fargo had failed to maintain adequate risk management controls since at least 2011.

"The bank's failure to implement and maintain a satisfactory compliance risk management program has caused the bank to engage in reckless unsafe or unsound practices and violations of law," the OCC said in a consent decree issued as part of the settlement.</s>Wells Fargo & Co (NYSE: WFC) has agreed to pay a $1-billion fine to the government related to abusive lending and auto insurance practices.

Wells Fargo said Friday that it has agreed to a $1-billion settlement with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency that will reduce the company’s $5.9-billion in first-quarter profits by $800 million.

Wells Fargo committed violations related to its mandatory auto loan insurance program and charges for mortgage interest rate lock products, according to the CFPB. As part of the settlement, Wells Fargo agreed to change its policies and reimburse customers who were impacted.

“While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency,” Wells Fargo CEO Tim Sloan said in a statement.

Wells Fargo has been dealing with regulatory fallout for nearly two years after employees were exposed for creating fraudulent accounts for millions of customers in an attempt to hit aggressive sales targets. The bank was fined $185 million in September 2016 in response to the accounts scandal. The bank also fired 5,300 employees and replaced CEO John Stumpf with Sloan.

Earlier this year, the Federal Reserve restricted Wells Fargo from growing its assets beyond its $2-trillion size until it can demonstrate is has adequately addressed “widespread consumer abuses.”

Some Americans were critical of the fine as yet another slap on the wrist for abuses from huge financial institutions.

Wells Fargo stock traded higher by 2 percent on Friday on investor optimism that, with legacy problems now behind the company, the regulatory environment could soon be much more favorable for big banks. The Trump administration has proposed cutting the funding for the CFPB — the agency created to police the financial sector following the 2008 financial crisis — by $150 million, or roughly 25 percent of its budget.

In addition, Republicans in the Senate passed a bank deregulation bill just last month.

Trump Calls Out OPEC, Says 'Oil Prices Are Artificially Very High'</s>A billion-dollar fine is big, for sure, but the bank still faces costs to keep its risk-management system in compliance with regulators.

A billion-dollar fine is big, for sure, but the bank still faces costs to keep its risk-management system in compliance with regulators.

Wells Fargo & Co.'s $1 billion settlement with regulators already has some saying that this marks the end of a troubled period for the scandal-plagued bank. That might be wishful thinking.

Part of the reason for the optimism is the size of the fine. Wells Fargo paid only $185 million for its fake-account scandal, which impacted as many as 3.5 million customers. The current fines are for abuses that relate to about 600,000 auto borrowers who were wrongly charged, as well as a much smaller group of customers at its mortgage division. The excessive fees were generally around $1,000. In total, Wells Fargo estimates that it overcharged all of its auto borrowers by about $80 million going back to 2012. You could argue that the bank shouldn't have to pay a fine of more than 10 times the damage it did, which makes the $1 billion fee hefty indeed.

But the fake account scandal is an odd comparison because while a lot of customers were affected, very few were actually damaged. What's more, part of the settlement over that scandal included the bank firing more than 5,000 employees. There were no mass disciplinary actions in response to the auto-lending abuses. Also, the amount of damages to fines might not even be the right comparison.

Wells Fargo, from 2012 to 2016, made $3.1 billion from auto lending. Its consumer bank in the same time made over $60 billion, and overall the bank netted $100 billion. You can make the case that at least some portion of those profits came from the fact that what Wells Fargo was spending on oversight wasn't what it should have been. So fines to profits, rather than just what customers were overcharged, is likely the right comparison, and on that scale what Wells Fargo is paying isn't that large. After all, the Consumer Financial Protection Bureau is fining Wells Fargo not just for the abusive practices (which is says have stopped), but also for the lack of oversight of its business.

And that's the problem. It's not clear that the oversight issue has been fixed. This past February, the Federal Reserve sanctioned Wells Fargo for not having the correct risk management controls in place. The CFPB isn't convinced either. The settlement agreement includes a large action plan so the bank can prove to regulators that it has the right compliance system in place to make sure the bank's incentive structures don't spin it out of control in the future. That's going to take money, and there has been little evidence that Wells Fargo has dramatically increased what it spends on its risk management, even in the wake of these many scandals.

There's this, too: While Tim Sloan has repeatedly said Well's Fargo's problems are in the past, it's not clear management actually believes that. According to the bank's most recent financial statement, it still expects future legal fees and fines could result in billions more in charges.

Investors have been looking for Well Fargo to cut costs. In fact, the bank has pledged it will. That may please shareholders, but likely not regulators. And right now pleasing regulators may be the best way the bank can eventually please investors.</s>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.</s>Wells Fargo will pay $1 billion to federal regulators to settle charges tied to its mortgage and auto lending business, the latest chapter in years-long, wide-ranging scandal at the banking giant. However, it appears that none of the $1 billion will go directly to the victims of Wells Fargo’s abuses.

In a settlement announced Friday, Wells will pay $500 million to the Office of the Comptroller of the Currency, its main national bank regulator, as well as a net $500 million to the Consumer Financial Protection Bureau.

The action by the CFPB is notable because it is the first penalty imposed by the bureau under Mick Mulvaney, who President Trump appointed to take over the consumer watchdog agency in late November. The $500 million is also the largest penalty imposed by the CFPB in its history, the previous being a $100 million penalty also against Wells Fargo, and matches the largest fine ever handed out by the Comptroller of the Currency, which fined HSBC $500 million in 2012.

In a statement, the OCC said it imposed such a large fine against Wells “given the severity of the deficiencies and violations of law, the financial harm to consumers, and the bank’s failure to correct the deficiencies and violations in a timely manner.”

The fine against San Francisco-based Wells Fargo had been expected. The company disclosed last week that it was in discussions with federal authorities over a possible settlement related to its mortgage and auto lending businesses, and that the fine could be as much as $1 billion.

The settlement also contains other requirements that would restrict Wells Fargo’s business. The bank will need to come with a risk management plan to be approved by bank regulators, and get approval from bank regulators before hiring senior employees.

“While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency,” said Wells Fargo Chief Executive Tim Sloan in a statement.

The $500 million paid to the Comptroller of the Currency will be paid directly to the U.S. Treasury, according to the order. The $500 million paid to the CFPB will go into the CFPB’s civil penalties fund, which is used to help consumers who might have been impacted in other cases. But zero dollars of either penalty is going directly to Wells Fargo’s victims.

The bank has already been reimbursing customers in its auto and mortgage businesses for these abuses. Wells Fargo has been refunding auto loan customers since July and been mailing refund checks to impacted mortgage customers since December.

On Friday, Wells Fargo adjusted its previously reported first-quarter earnings to reflect the penalty. The nation’s third-largest bank now says it made $4.7 billion in the first 90 days of the year, down from $5.46 billion in the same period a year earlier.

While banks have benefited from looser regulations and lower taxes under President Trump, Wells Fargo has been called out specifically by Trump as a bank that needed to be punished for its bad behavior.

“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. I will cut Regs but make penalties severe when caught cheating!,” Trump wrote on Twitter back in December.

The abuses being addressed Friday are not tied directly to Wells Fargo’s well-known sales practices scandal, where the bank admitted its employees opened as much as 3.5 million bank and credit card accounts without getting customers’ authorization. But they do involve significant parts of the bank’s businesses: auto lending and mortgages.

Last summer Wells Fargo admitted that hundreds of thousands of its auto loan customers had been sold auto insurance that they did not want or need. In thousands of cases, customers who could not afford the combined auto loan and extra insurance payment fell behind on their payments and had their cars repossessed.

In a separate case, Wells Fargo also admitted that thousands of customers had to pay unnecessary fees in order to lock in their interest rates on their home mortgages. Wells Fargo is the nation’s largest mortgage lender.

Wells Fargo has been under intense scrutiny by federal regulators for several months. The Federal Reserve took a historic action earlier this year by mandating that Wells Fargo could not grow larger than the $1.95 trillion in assets that it currency held and required the bank to replace several directors on its board. The Federal Reserve cited “widespread abuses” as its reason for taking such an action.

This settlement does not involve Wells Fargo’s wealth management business, which is reportedly under investigation for improprieties similar to those that impacted its consumer bank. Nor does this involve an investigation into the bank’s currency trading business.

Consumer advocates have been critical of the Trump administration’s record since it took over the CFPB late last year. However, advocates were pleased to see Wells Fargo held to account.

“Today’s billion dollar fine is an important development and a fitting penalty given the severity of Wells Fargo’s fraudulent and abusive practices,” said Pamela Banks, senior policy counsel for Consumers Union.</s>SAN FRANCISCO >> Wells Fargo agreed on Friday to pay a $1 billion fine to government regulators to settle the banking behemoth’s misdeeds over improper practices in its auto insurance and mortgage businesses, the latest scandal to engulf the banking behemoth — but it’s not assured that victims of the abuses will ever receive any cash as a result of the agreement.

The bank reached the settlement with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, Wells Fargo’s principal government regulator.

“We have said all along that we will enforce the law,” said Mark Mulvaney, acting director of the finance protection bureau. “That is what we did here.”

Wells will pay $500 million to the Comptroller of the Currency, and $500 million to the Consumer Financial Protection Bureau, according to the settlement terms disclosed Friday. It’s the largest fine that the financial protection bureau has ever imposed and matches the largest fine that the currency Comptroller has ever issued.

The Comptroller of the Currency portion will be paid directly to the U.S. Treasury, while the CFPB’s $500 million will go into its civil penalties fund, which is used to help consumers potentially impacted in other cases, according to the order. No Wells Fargo victims will receive any money directly from either penalty, though the bank has already been reimbursing customers in its auto and mortgage businesses for these abuses.

San Francisco-based Wells Fargo has stumbled into hot water several times in recent years, including a scandal that erupted in 2016 linked to the bank’s opening of as many as 3.5 million bogus accounts without its customers’ permission.

“For more than a year and a half, we have made progress on strengthening operational processes, internal controls, compliance and oversight, and delivering on our promise to review all of our practices and make things right for our customers,” Wells Fargo Chief Executive Officer Timothy Sloan said in a prepared release. Sloan, however, added, “We have more work to do.”

In the latest action, regulators penalized Wells Fargo for requiring people to sign up for auto insurance they didn’t need, improperly charging people for mortgages and for failing to maintain adequate risk management.

In 2017, Wells Fargo admitted that it sold auto insurance to hundreds of thousands of its customers that the consumers didn’t want or need. Thousands of customers who weren’t able to keep up with the insurance and vehicle payments lost their cars to repossessions.

Separately, Wells Fargo, the nation’s largest mortgage lender, has admitted that thousands of mortgage customers were forced to pay unnecessary fees to lock in the interest rates on their home loans.

“Wells Fargo had achieved a really lofty reputation, but that reputation has now fallen down to average or below average,” said Marty Mosby, an analyst with Vining Sparks, a Tennessee-based investment firm. “Wells Fargo is going through a confluence of events that has now become a full-fledged storm against their reputation.”

In February of this year, the Federal Reserve ordered that Wells Fargo would not be allowed to grow beyond its $1.95 trillion in assets at the time and ordered the bank to replace four members of its board of directors by the end of this year.

“Widespread abuses” and “compliance breakdowns” were cited by the Federal Reserve for taking the unprecedented action against Wells Fargo, which for decades was a staid and vanilla bank that stayed out of trouble.

Many of the current problems at Wells Fargo have emerged in the decade after Wells bought Wachovia Bank in 2008. That deal helped transform Wells Fargo from a regional bank with a primary focus on the West Coast and the Midwest into a coast-to-coast bank with customers up and down the East Coast and in the Southeast.

But along with its new nationwide reach, the Wachovia deal deposited an array of problems on Wells Fargo’s doorstep. Those negative issues included Wachovia’s high-pressure sales culture that led to the accounts scandal and unsavory mortgage practices that originated with World Savings.

“When Wells Fargo bought Wachovia, that doubled the size of the bank almost instantaneously, and with that increase in size came intrinsic risks that management did not fully comprehend,” Mosby said. “Wells Fargo will be able to absorb these fines. After they take a hit to earnings in one quarter, Wells will move ahead again.”

Will victims of the misdeeds receive any compensation? That’s unclear, although possible.

“The consent order separately requires restitution to harmed consumers via a remediation plan that must be submitted within 120 days to the OCC for review,” Bryan Hubbard, a public affairs official with the Office of the Comptroller of the Currency, said in an email sent to this news organization.
Wells Fargo bank is fined US$1 billion by the United States government for mishandling of mortgages and automobile loans. Wells Fargo is also ordered to reimburse customers who were overcharged.