Wells Fargo Pays $3.7-B For Abuses; Critics Want Bank Broken Up

Wells Fargo reached a $3.7 billion deal with regulators over the bank's "widespread mismanagement" that allegedly hit more than 16 million consumer accounts. A full $2 billion of the settlement is going to compensate customers.

Photo Insert: Wells Fargo is still very much in the penalty box and is described as a "repeat offender" and a "corporate recidivist," adding that Tuesday's fine is just an initial step toward holding the bank accountable.

The watchdog agency also ordered Wells Fargo to pay a $1.7 billion civil penalty, Allison Morrow and Matt Egan wrote for CNN Business Nightcap.

The Consumer Financial Protection Bureau (CFPB) said Wells Fargo's systemic failures included some stuff that's so egregious they make people wonder whether the bank was just testing how evil it could be before it got caught.

Things like: Repeatedly misapplying loan payments; wrongfully foreclosing on homes; illegally repossessing vehicles; incorrectly assessing fees and interest, and; charging surprise overdraft fees. All of this echoes its 2016 fake-accounts scandal, Mike Egan also wrote for CNN Business.

Back then, the bank pressured rank-and-file employees to push consumer products to boost sales and revenue to quotas. Wells Fargo workers ended up creating millions of bank accounts for customers without their knowledge.

In 2020, the bank paid $3 billion to the Justice Department and Securities and Exchange Commission (SEC) after admitting that, between 2002 and 2016, it pressured employees to meet "unrealistic sales goals that led thousands of employees to provide millions of accounts or products to customers under false pretenses or without consent, often by creating false records or misusing customers' identities."

CFPB's director, Rohit Chopra, commented on the settlement: “Wells Fargo's rinse-repeat cycle of violating the law has harmed millions of American families."

The bank is still very much in the penalty box. Chopra described Wells Fargo as a "repeat offender" and a "corporate recidivist," adding that Tuesday's fine is just an initial step toward holding the bank accountable.

"This latest litany of lawbreaking cannot be fairly characterized or dismissed as mere 'mismanagement,'" wrote Dennis Kelleher, CEO of the nonprofit Better Markets, calling for regulators to consider breaking up the bank.

"This type of longstanding pattern and practice of illegal activities is more frequently seen in criminal enterprises, not at gigantic US banks. Any other business in America with such a recidivist record of breaking the law...would almost certainly have already been shut down."

The breakup idea would likely have support. Senator Elizabeth Warren last year urged the Fed to revoke Wells Fargo's status as a financial holding company and require it to separate its traditional banking activities from nonbanking activities.

"The only way these consumers and their bank accounts can be kept safe is through another institution —one whose business model is not dependent on swindling customers for every last penny they can get," Warren wrote in a letter to the central bank.

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