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Wells Fargo Reaches $3.7b Deal with US CFPB

Wells Fargo Reaches $3.7b Deal with US CFPB

by Starling Insights

Starling Insights Editorial Board

Dec 29, 2022


Wells Fargo has reached a $3.7 billion deal with the Consumer Financial Protection Bureau (CFPB) to resolve allegations that it harmed more than 16 million people with deposit accounts, auto loans, and mortgages. According to the CFPB, the bank illegally assessed fees and interest charges on loans for cars and homes, leading some vehicles to be repossessed unlawfully.

The settlement with CFPB includes a $1.7 billion penalty and more than $2 billion in consumer restitution. For example, the bank has already paid $1.3 billion to 11 million customers with auto-loan service issues.

For years, Wells Fargo has been working to resolve its regulatory issues, beginning with its 2016 fake-accounts scandal. In the meantime, the bank has been plagued with other culture and compliance issues, such as the ones involved in this case.

"Wells Fargo's rinse-repeat cycle of violating the law has harmed millions of American families," CFPB Director Rohit Chopra said in a statement.

The CFPB noted that Wells Fargo has accelerated efforts to improve misconduct and other risk governance since 2020. As part of the settlement, the agency will terminate one of the Consent Orders it imposed on the bank in 2016. It also clarified that a 2018 Consent Order would terminate within three years.

"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," said Charlie Scharf, the bank's chief executive.

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