Wells Fargo federal consent order ends. It covered mortgage, other account ‘mismanagement’
Wells Fargo saw the end of another one of its federal agency consent orders tied to prior problems, the bank announced Tuesday morning.
In 2022, the Consumer Financial Protection Bureau ordered the bank to pay nearly $4 billion for what it called “widespread mismanagement” of its automobile lending, consumer deposit accounts and mortgage lending. The consent order that was terminated was related to that action.
This is the seventh consent order closed by the bank’s regulators since 2019, Wells Fargo said.
Seven public consent orders remain outstanding, Wells Fargo spokeswoman Beth Richek told The Charlotte Observer.
“Wells Fargo is a repeat offender that continues to have serious issues,” the CFPB said in a statement to The Charlotte Observer. “While the duration of an individual CFPB order elapsed, the agency’s Repeat Offender Unit is continuing to closely scrutinize the bank.”
That includes a 2018 consent order from the Federal Reserve: Wells Fargo remains under the heels of the major punishment of a $1.95 trillion asset cap that prevents the bank from growing until regulators believe it has fixed problems dating back to its fake accounts scandal.
To meet excessive sales goals, thousands of Wells Fargo’s Community Bank employees opened millions of unauthorized or fraudulent accounts and other financial products from 2002 to 2016.
In November, Reuters reported that sources told it the asset cap may be lifted in the first half of 2025 as Wells Fargo was “in the last stages of a process to pass regulatory tests” before the cap could end.
The San Francisco-based bank has its largest employment center in Charlotte, with about 27,000 employees.
CFPB’s 2022 order for restitution
In 2022, CFPB ordered Wells Fargo Bank to pay a $1.7 billion fine and more than $2 billion for repeated auto lending, mortgage and account deposit practices that harmed over 16 millions customers.
Bank customers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank, the 2022 CFPB order said.
Wells Fargo also charged consumers “unlawful surprise overdraft fees” and applied incorrect charges to checking and savings accounts. Wells Fargo agreed to the order without admitting or denying any of the CFPB findings.
Included in Wells Fargo’s restitution:
▪ More than $1.3 billion for affecting more than 11 million auto lending accounts.
▪ More than $500 million for more than 1 million affected customer deposit accounts, including $205 million for illegal overdraft fees.
▪ Nearly $200 million for affected mortgage servicing accounts.
Wells Fargo’s scandal and regulatory problems
Wells Fargo has seen regulatory sanctions since its 2016 fake accounts scandal was discovered in 2016. Since then, regulators identified additional problems with how the bank handled mortgages, auto loans and consumer deposit accounts.
▪ In 2018, Wells Fargo was charged a combined $1 billion from the bureau CFPB and the Office of the Comptroller of the Currency for improper mortgage and auto-lending practices that harmed consumers.
▪ In 2020, the bank agreed to pay a $3 billion fine to federal prosecutors and the SEC over its practices.
Also that year, 11 former Wells Fargo senior executives were charged by the comptroller’s office. Eight settled paying over $43 million in civil penalties, including former CEO John Stumpf who was ordered to pay $17.5 million.
▪ In May 2023, Wells Fargo was settling a class-action lawsuit from shareholders for $1 billion over claims the bank misled them about how it was complying with regulators in the aftermath of its fake sales scandal.
▪ In September 2023, Carrie Tolstedt, the only Wells Fargo leader criminally charged in the scandal, was sentenced to three years’ probation, including six months of home confinement, for her role in misleading investors.
▪ Last month, the CFPB sued Wells Fargo for failing to stop “widespread” Zelle fraud. Bank of America and JPMorgan Chase are also named in the lawsuit. Customers have lost more than $870 million during the Zelle network’s seven-year existence because of the actions, according to the consumer agency.
▪ This month, three former executives were ordered to pay over $18 million. Claudia Russ Anderson, the former community bank group risk officer, was ordered Tuesday to pay $10 million; David Julian, former chief auditor, was ordered to pay $7 million; and Paul McLinko, former executive audit director, was ordered to pay $1.5 million.
This story was originally published January 28, 2025 at 9:33 AM with the headline "Wells Fargo federal consent order ends. It covered mortgage, other account ‘mismanagement’."
