FOR IMMEDIATE RELEASE
Dec. 21, 2022
Record-Setting CFPB Action Against Wells Fargo Brings Consumer Relief
Could presage more action for durable change at scandal-ridden megabank
Washington, D.C. – The record Consumer Financial Protection Bureau settlement with Wells Fargo over widespread wrongdoing in providing auto loans, mortgages, and deposit accounts represents an opportunity for all federal regulators to force durable change at the oft-penalized megabank.
“In the last decade, Wells Fargo has repeatedly violated consumer protection laws, often to the detriment of low-income individuals and people of color,” said Elyse Hicks, consumer policy counsel at Americans for Financial Reform. “The CFPB settlement will bring much-needed relief to millions of consumers and families harmed in specific cases. Now other regulators need to follow its lead and use the full range of tools available to crack down on Wells Fargo for repeated wrongdoing.”
The CFPB settlement – at $3.7 billion, it is the largest ever in the 12-year history of the agency – responds to a litany of abuses and underscores the ability of a strong federal regulator to win restitution for consumers. From unlawfully repossessed vehicles to improperly denied mortgage modifications, illegally charged surprise overdraft fees, and unlawfully frozen consumer accounts, this particular case is very wide-ranging. But Wells Fargo has been caught breaking the law repeatedly in many other ways.
CFPB Director Rohit Chopra also highlighted plans for further action: “finding a permanent resolution to this bank’s pattern of unlawful behavior is a top priority” and cited plans to work with other banking regulators on changing Wells Fargo.
Chopra has made enforcing the law for repeat offenders like Wells Fargo a centerpiece of his work at the agency. He has cited MoneyGram, a money-transfer service, and TransUnion, one of the three major credit bureaus, as other examples of corporate recidivism.
The Federal Reserve, which regulates big bank holding companies like Wells, imposed a $1.95 trillion asset cap on Wells Fargo in 2018 after a massive scandal involving fake bank accounts came to light in 2016. Fed Chair Jerome Powell said last year the cap would remain in place until Wells improved internal governance while adding that fresh penalties are also possible if the megabank does not change enough. The Office of the Comptroller of the Currency has also restricted Wells Fargo’s mortgage servicing business until it remedies serious deficiencies in how it handles homeowner payments.
“Wells Fargo has been sued multiple times for its abusive and discriminatory practices, but it has clearly made insufficient changes to how it does business,” said Hicks. “If we are going to stop Wells Fargo’s damaging practices permanently, regulators need to work together on an approach that grapples in a systematic way with their repeat offenses.”