https://original.newsbreak.com/@jalyn-smoot-1588339/2872832502492-wells-fargo-could-be-shut-down-by-federal-regulators-after-costly-3-7-billion-scandal
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Jalyn Smoot
Wells Fargo could be shut down by federal regulators after costly $3.7 billion scandal
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Jalyn Smoot
3 days ago
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SAN FRANCISCO- Facing its fifth lawsuit in six years, Wells Fargo could be shut down for good after the bank's latest scandal.
After federal investigations revealed "widespread mismanagement" that grieved 16 million consumer accounts, Wells Fargo was charged with the largest financial penalty ever.
Wells Fargo was mandated by the Consumer Financial Protection Bureau to pay a $1.7 billion civil penalty in addition to over $2 billion in consumer restitution for a variety of "illegal activities."
The fine is the largest ever imposed by the regulator, breaking the previous record of $1 billion, also set by Wells Fargo.
Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families,” CFPB director Rohit Chopra said in a statement.
According to the CFPB's enforcement action, Wells Fargo's auto loan business experienced "systematic failures" that negatively impacted more than 11 million accounts. Regulators claim that these mistakes led to Wells Fargo wrongfully seizing some borrowers' vehicles, charging fees and interest without authorization, and failing to reimburse some expenses.
Regulators also said that Wells Fargo improperly denied thousands of mortgage loan modifications, causing some customers to lose their homes in “wrongful foreclosures.”
These costly errors are just the latest black eye for the now-infamous bank. Four years removed from a massive fake account scandal, in which 5,300 employees were fired, Wells Fargo has yet to right the ship.
In response to the record-breaking fine, Wells Fargo chief executive officer Charlie Scharf released a statement.
We and our regulators have identified a series of unacceptable practices that we have been working systematically to change and provide customer remediation where warranted,” 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.”
Despite Scharf's best efforts to portray this case as a mutual discovery, this is a significant setback for Wells Fargo. The bank estimates that the lawsuit will cost them $3.7 billion dollars to settle.
On top of the near $4 billion fine, additional penalties for the bank are being discussed, including limitations and shutting down the bank altogether.
The consumer protection bureau warned that the bank would be closely monitored as it works to refund the consumers it hurt.
CFPB director Rohit Chopra said the bank has done some things to make amends but could make progress much faster.
Over the past several years, Wells Fargo executives have taken steps to fix longstanding problems, but it is also clear that they are not making rapid progress," he said. "We are concerned that the bank’s product launches, growth initiatives, and other efforts to increase profits have delayed needed reform."
In its fifth lawsuit in six years, Wells Fargo will likely tread lightly to not draw another.
Still, the bank is not out of the woods just yet and faces several upcoming legal battles.