Wells Fargo Agrees to Pay $575 Million
Posted by BANKUS on January 04th 2019
Wells Fargo have agreed to pay $575 million to stop investigations on all 50 states and Washington, D.C., regarding a range of practices which the bank is accused of as part of its long-running legal problems. The deal puts an end on inquiries that started after federal regulators brought to light back in September 2016 that Wells Fargo employees had for years opened millions of unauthorized bank accounts using customers’ names and data. The employees said they had done so to meet Wells Fargo’s aggressive sales goals in order to save their jobs.
“Wells Fargo’s conduct was unlawful and disgraceful,” California’s attorney general, Xavier Becerra, said."
The disclosure led to the resignation of Wells Fargo’s chief executive at the time, John G. Stumpf, and other senior executives. It also revoked the company’s status as the best-behaved American bank after the 2008 financial crisis. Wells Fargo admitted the accusations and paid fines of $185 million, but more claims of bad behavior kept coming as some customers who took out car loans were forced to buy unwanted auto insurance. An estimated of more than 500,000 people are believed to be in a bill-paying service they may not have be aware of joining it. Also some mortgage customers had been overcharged including life-insurance policies they did not requested.
The bank said in its release that it had $400 million of the settlement amount ready and would have the rest by the end of the quarter. Wells Fargo has gotten some relief from its legal woes over the past year, but its troubles are far from over.
In April 2017, the bank paid $1 billion to the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency to settle investigations into its mortgage- and auto-lending practices. On December 2018, an agreement was finalized under which Wells Fargo will pay $480 million to settle a class-action claim by shareholders who said they were affected by the bank’s false statements about its misdeeds. Back in February 2017, the Federal Reserve said it would restrict the bank from growing until it improved its internal checks and balances. Wells Fargo said at the time that it would replace four directors and use an independent review to check its risk-management practices.
The bank is however still trying to fulfil regulators’ requirements. In October 2017, Wells Fargo was forced to suspended two top executives. Mr. Sloan also warned investors that the bank would not meet an expectation that it would be free from regulatory conditions by the end of 2018 or the start of 2019.