Wells Fargo to Pay $3.7B Settlement for Illegal Practices

Facts

• Wells Fargo on Tuesday agreed to pay $3.7B to settle charges that it harmed customers by charging illegal fees and interest on auto loans and mortgages as well as assigning incorrect overdraft fees on checking and savings accounts.
• The Consumer Financial Protection Bureau ordered Wells Fargo to pay more than $2B in redress to consumers and a $1.7B civil penalty for legal violations across multiple products the financial company offered.
• Holders of 16M customer accounts will be repaid for Wells Fargo’s illegal fees and charges, wrongful car repossessions, and misapplied mortgage loans. A $1.6B fine will go to the Bureau's Civil Penalty Fund.
• Consumer Financial Protection Bureau director Rohit Chopra said the bank’s status as a “repeat offender” played a role in the severity of the fine. Chopra added that the fine is only an “initial step," and more penalties may await Wells Fargo.
• In a statement, Wells Fargo accepted the terms of the settlement. Wells Fargo CEO Charlie Scharf said, "This far-reaching agreement is an important milestone in our work to transform the operating practices at Wells Fargo and to put these issues behind us.”

Sources: Finance, Consumer Finance, CNN, and Newsroom.

Narratives

• Narrative A, as provided by Better Markets. Wells Fargo has continued to abuse its customers with no genuine remorse. While the Consumer Financial Protection Bureau should be applauded for levying its largest fine ever, individuals responsible for Wells Fargo’s corruption should also be targeted. Regulators need to have serious conversations about breaking up the financial behemoth.
• Narrative B, as provided by Invezz. Most of the dust has settled around Wells Fargo’s long-running issues with regulators. While there still are problems to resolve, this hefty settlement should be the last major obstacle in the way of the bank’s rebound. The company has completed its list of required actions and is looking to the future.