Charles Scharf, chief executive of Wells Fargo & Co., listens during a House Financial Services Committee hearing in Washington, DC, U.S., Tuesday, March 10, 2020.
Andre Harrer | Bloomberg | Getty Images
Wells Fargo agreed to a $3.7 billion settlement with the Consumer Financial Protection Bureau over customer abuse related to bank accounts, mortgages and auto loans, the regulator said Tuesday.
The bank was ordered to pay a $1.7 billion civil penalty and “more than $2 billion in consumer reparations,” the CFPB said in a statement. In a separate statement, the San Francisco-based company said many of the “required actions” related to the settlement have already been completed.
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“The bank’s illegal behavior has resulted in billions of dollars in financial harm to its customers and, for thousands of customers, the loss of their vehicles and homes,” the agency said in its statement. “Consumers have been illegally charged fees and interest on auto and mortgage loans, had their cars wrongfully repossessed, and had auto and mortgage loan payments misapplied by the bank.”
The resolution lifts an overhang for the bank, which has been led by the CEO Charlie Scharf since October 2019. In October, the bank set aside $2 billion for legal, regulatory and customer remediation issues, sparking speculation that a settlement is approaching.
But other regulatory hurdles remain: Wells Fargo is still operating under consent orders related to its 2016 fake account scandal, including one from the Fed capping its asset growth.
In addition, the bank said fourth-quarter expenses would include an operating loss of $3.5 billion, or $2.8 billion after tax, from additional CFPB civil penalty costs and efforts. client remediation, as well as other legal matters. The bank is still expected to show an overall profit when it reports results in mid-January, according to a person with knowledge of the matter.
Shares of the bank rose 1.2% in early trading.
“This far-reaching agreement is an important step in our work to transform Wells Fargo’s operating practices and put these issues behind us,” Scharf said in the statement. “We and our regulators have identified a series of unacceptable practices which we have worked systematically to change and provide corrective action to customers where warranted.”
CFPB Director Rohit Chopra said Wells Fargo’s “rinse and repeat cycle of breaking the law” has hurt millions of American families and the settlement is an “important first step for accountability” of the bank.
This story is developing. Please check for updates.