Wells Fargo will be fined $1 billion fine for auto loan and mortgage abuses
NEW YORK — Two federal regulators are close to fining Wells Fargo $1 billion for forcing customers into car insurance and charging mortgage borrowers unfair fees.
The hefty penalty will be announced as early as Friday by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, according to a person familiar with the enforcement action.
It will be the harshest action taken by the Trump administration against a Wall Street bank.
Wells Fargo apologized last year for charging as many as 570,000 clients for car insurance they didn’t need. The bank warned last week that it may revise its first quarter earnings results because of the fine. The New York Times first reported that the fine would come this week. Wells Fargo declined to comment.
An internal review by Wells Fargo found that about 20,000 of those customers may have defaulted on their car loans and had their vehicles repossessed in part because of those unnecessary insurance costs.
Representatives from the CFPB and the OCC declined to comment on the pending action.
In October, the bank revealed that some mortgage borrowers were inappropriately charged for missing a deadline to lock in promised interest rates, even though the delays were Wells Fargo’s fault.
Such a large fine would be a noteworthy move for the CFPB under Mick Mulvaney, the acting director appointed by President Trump.
As a congressman, Mulvaney called for the bureau’s destruction. And under his leadership, the bureau has delayed payday-loan rules, dropped lawsuits against payday lenders and stripped a fair-lending division of its enforcement powers. He told a House hearing this week that the bureau has not launched any enforcement actions since he took over last fall.
In February, the Federal Reserve handed down unprecedented punishment to Wells Fargo for what it called “widespread consumer abuses,” including its creation of as many as 3.5 million fake customer accounts.
Under that penalty, Wells Fargo won’t be allowed to get any bigger than it was at the end of last year — $2 trillion in assets — until the Fed is satisfied that it has cleaned up its act.
In a conference call last week, CEO Tim Sloan told analysts that he can’t promise no new scandals will emerge.
“We’ve certainly had a thorough look in every nook and cranny in the company, and we’re continuing on that process,” he said. “[But] in terms of declaring victory and walking ahead, we’re not at that spot right now.”