- Wells Fargo is facing a settlement of more than $1 billion with the Consumer Financial Protection Bureau (CFPB) over the bank’s consumer abuses, Bloomberg reported Friday, citing sources familiar with the matter.
- In addition to a financial penalty, which isn’t imminent, the CFPB may seek restrictions on the bank’s businesses, sources told the wire service.
- The report comes as the bank disclosed in a regulatory filing last week that the CFPB was investigating its automobile lending, consumer-deposit accounts and mortgage lending practices. The bank, which set aside $2 billion last quarter to deal with “historical” regulatory matters, said it was in “resolution discussions” with the CFPB.
A settlement of more than $1 billion would be an agency record — one currently held by Wells Fargo. The CFPB fined the San Francisco-based lender $1 billion in 2018 for overcharging consumers on mortgages and its mishandling of auto loan insurance.
The regulator also fined the bank $100 million in 2016 for opening up fake consumer accounts.
The reported record-settlement falls in line with CFPB Director Rohit Chopra’s mission to impose stricter penalties on banks that repeatedly violate consumer protection laws.
Since taking the helm of the regulator in September 2021, Chopra has called for other regulatory agencies to work in concert with the CFPB to give banks new punishments, such as stripping operating licenses and special government privileges from repeat offenders.
“Many large institutions see the law as mere expenses on their income statement,” Chopra said in a March speech at the University of Pennsylvania’s Carey Law School. “How do we stop large, dominant firms from violating the law over and over again with seeming impunity?”
The Securities and Exchange Commission (SEC) and the Department of Justice are also investigating the firm’s hiring practices related to diversity.
The probes came after roughly a dozen current and former employees told The New York Times in May that the bank held phony job interviews for nonwhite and female job-seekers for positions that had already been offered to other candidates. The effort was meant to keep Wells Fargo in line with an internal policy mandating that half of candidates for certain positions be diverse.
Wells Fargo’s ongoing legal and regulatory woes come as the bank continues to operate under a $1.95 trillion asset-cap set by the Federal Reserve in 2018.
The CFPB and Wells Fargo both declined Banking Dive’s request for comment.