Wells Fargo, which some have described as "perpetually scandal-prone," has been setting aside hefty sums in recent quarters to deal with its "laundry list" of outstanding legal and regulatory issues. However, the bank has indicated that more of its scandals are headed to a conclusion soon.
In December last year, the beleaguered bank was fined a record $3.7 billion by the Consumer Financial Protection Bureau over consumer abuses, which consumed some of these allotted funds. "Wells Fargo's rinse-repeat cycle of violating the law has harmed millions of American families," CFPB Director Rohit Chopra said in a statement at the time.
Wells Fargo has also faced harsh criticism from others in government for what is viewed as recidivism. “I have sounded the alarm about repeat offenders like Wells Fargo," Congresswoman Maxine Waters, Chairwoman of the House Committee on Financial Services, wrote in response to the CFPB fine. "I have held multiple hearings to force Wells Fargo’s CEO and other megabank CEOs to answer to the public for their actions. I am disturbed by the fact that some violations in this order occurred or continued since September 2019 when Wells Fargo came under new leadership, which leads me to believe that much, much more needs to be done to rein in Wells Fargo... I applaud Director Chopra for this action and I look forward to other regulators joining him to take further actions to hold Wells Fargo accountable,” Waters added.
While these recent penalties have eaten into the bank's profits, they are reducing the amount it will have to pay in the coming months and years. "I wouldn't say we are done with all the regulatory work, but I would say we put a lot of matters behind us in the last couple of quarters," Mike Santomassimo, Wells Fargo's chief financial officer, told reporters.
Late last year, Starling Insights published The Costs of Misconduct, a Deeper Dive supplement to our 2022 Compendium. The report discusses the massive fines and societal impact stemming from misconduct in the financial sector, and whether, going forward, they can be treated even tacitly as “costs of doing business.”