By: April Carson
On Tuesday, federal regulators issued a historic fine of $1.7 billion to Wells Fargo due to years of mismanagement and negligence which resulted in the detriment of over 16 million consumer accounts.
The Consumer Financial Protection Bureau has reported Wells Fargo's unlawful conduct, which included misappropriating loan payments, unlawfully foreclosing on homes without consent, seizing vehicles without the right to do so and charging unnecessary fees and interest with no prior warning. Moreover, they were also accused of imposing unpleasant overdraft charges to unsuspecting customers.
The CFPB imposed a penalty of $1.7 billion on Wells Fargo (WFC), as well as an expansive compensation to consumers totaling over $2 billion, due to their illegal practices. This is the largest sanction issued by the CFPB thus far.
The settlement is a result of multiple investigations that took place between 2011 and 2019, during which authorities collected evidence of WFC's wrongful conduct. Wells Fargo was found to have taken advantage of vulnerable consumers with little or no financial literacy to coerce them into using their services or products.
In a disconcerting parallel to the fiasco that was Wells Fargo's 2016 fake-accounts scandal, the CFPB recently released details of further misconduct on behalf of the bank. These reports only serve as an augmentation to previous bombshell revelations concerning Wells Fargo.
In a stern statement, Rohit Chopra, director of the CFPB declared that Wells Fargo's continuous and shameful disregard for the law has caused suffering to millions of American citizens. Officials also strongly communicated on Tuesday that Wells Fargo is far from being forgiven by regulators.
Chopra unequivocally declared Wells Fargo to be a "repeat offender" and an "inveterate corporate wrongdoer," emphasizing that Tuesday's fine is only the start of holding them responsible for their actions.
During a call with journalists, Chopra highlighted that the new settlement should not be perceived as an indication that "Wells Fargo has put its long-standing issues behind it or that the CFPB's work is complete." He further stated that the Bureau will remain vigilant in using "the full range of its enforcement authority to stop misconduct and uncover additional wrongdoing."
For example, Chopra acknowledged that the settlement does not provide protection for individuals of Wells Fargo and recognizes that the $3.7 billion in fines and reparations will not resolve all issues within the bank.
Despite the steps Wells Fargo has taken, Chopra indicated that he is uncertain about whether those efforts are occurring quickly enough. He further noted that initiatives like product launches and profit-enhancing strategies have impeded much-needed reformations at the bank.
In an ominous warning, a CFPB representative declared that regulators must evaluate if additional restrictions need to be placed on Wells Fargo beyond the significant asset cap imposed in 2018.
In a press release, Wells Fargo underscored the magnitude of the settlement with the CFPB to resolve multiple matters that have been unresolved for years. The bank stated that they are close to finishing all required actions.
According to Wells Fargo CEO Charlie Scharf, "We and our regulators have identified certain practices that were unacceptable – which we are now systematically addressing and providing remediation for affected customers. This far-reaching agreement marks a major step in our mission to turn around the operations at Wells Fargo while putting these issues firmly behind us."
In an effort to illustrate the systemic failures of Wells Fargo's auto loan business, the CFPB discovered that over 11 million accounts had been negatively impacted in some way. These findings included wrongfully repossessing borrowers' vehicles, charging excessive fees and interest rates, as well as failing to reimburse certain fees for those affected customers.
Furthermore, regulators explicitly outline that Wells Fargo has wrongfully denied thousands of mortgage loan modifications, resulting in a number of customers having their homes unjustifiably foreclosed. "The bank was aware of the situation years before it chose to take action," indicated the CFPB.
The $3.7 billion settlement is the largest of its kind in US history and includes a $500 million civil penalty paid by Wells Fargo, as well as no less than $2.8 billion dedicated to aid affected customers.
Wells Fargo has committed a serious offense against consumers by unlawfully charging surprise overdraft fees, and freezing over 1 million consumer accounts for an average of two weeks. This unethical practice left customers unable to access their funds.
The beginning of the 2016 Wells Fargo scandal revealed a glaring light to its employees' and customers’ mistreatment, prompting Congressional hearings, numerous regulatory investigations, and eventually leading to two CEOs being dismissed.
Janet Yellen's last act as the chair of the Federal Reserve in February 2018 was to impose unique penalties on Wells Fargo that are still enforced today. Senator Elizabeth Warren applauded this action and called for even more punitive measures against Wells Fargo.
On Twitter, Senator Elizabeth Warren applauded the fine imposed on Wells Fargo for its repeated mistreatment of customers. She praised Chopra's initiative in safeguarding public interest and called upon other regulators to emulate his example.
The Consumer Financial Protection Bureau (CFPB) recently announced that Wells Fargo must issue refunds totaling more than $2 billion to customers who were wronged by the bank's auto lending tactics, unexpected overdraft fees, and other misconduct linked to deposit accounts. Additionally, regulators have mandated Wells Fargo to pay approximately $200 million in restitution for those impacted by their mortgage servicing practices.
Moving ahead, the CFPB has mandated that Wells Fargo issue refunds to auto loan borrowers for certain add-on fees and put an end to unexpected overdraft charges for bank account holders.
The bank is also required to pay a $1 billion penalty for its auto loan and mortgage activities. This comes after an intense investigation by the CFPB that revealed Wells Fargo had engaged in potentially illegal practices, overcharging certain customers and creating unauthorized accounts without customers’ consent.
Billy Carson & Doctah B Sirius Blueprint for Godpower.
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April Carson is the daughter of Billy Carson. She received her bachelor's degree in Social Sciences from Jacksonville University, where she was also on the Women's Basketball team. She now has a successful clothing company that specializes in organic baby clothes and other items. Take a look at their most popular fall fashions on bossbabymav.com
To read more of April's blogs, check out her website! She publishes new blogs on a daily basis, including the most helpful mommy advice and baby care tips! Follow on IG @bossbabymav
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