Wells Fargo has agreed to pay $1bn to settle claims tied to its auto insurance, mortgage and other financial products in what is the largest fine levied against a major bank so far in the Trump administration.
The penalty is part of a settlement between the bank and two regulators, the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency, that derives from a series of consumer-practice crises at the bank.
The fine had been widely anticipated and comes after Donald Trump warned that they planned to hold Wells Fargo to account.
Last year, Trump warned on Twitter: “Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported, but will be pursued and, if anything, substantially increased. I will cut Regs but make penalties severe when caught cheating!”
Wells Fargo, once regarded as one of the most steadfast of coast-to-coast banks has been beset by scandal. The bank paid $185m to settle a 2016 claim that it had opened as many as 3.5m accounts in its customers’ names without their knowledge.
The $1bn fine comes on top of the $4.25bn the bank has set aside for liabilities related to the fake accounts scandal and the mortgage-backed securities issues it had before the financial crisis.
“The OCC took these actions given the severity of the deficiencies and violations of law, the financial harm to consumers, and the bank’s failure to correct the deficiencies and violations in a timely manner,” the OCC said in a statement.
“While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency,” said Wells Fargo’s chief executive, Tim Sloan, in a statement.
While pushing for aggressive new fines against Wells Fargo, the CFPB head, Mick Mulvaney, is also charged with limiting the powers of the consumer protection bureau.
“The bureau is far too powerful, and with precious little oversight of its activities,” he wrote in a letter to Congress this month.
After Reuters reported the possibility of the $1bn penalty, Mulvaney turned on staff and said he had instructed bureau officials to look into leaks by employees.
“I recognize that there may well be some (a few? a lot?) of people who work here who aren’t happy that I’m working here. That’s fine. I also recognize that these folks might be interested in undermining my leadership here, or in quite simply looking to make me look bad,” he reportedly told staff.