Good morning, and thank you all for being here today.
Wells Fargo is one of the most powerful banks in the world. Unlike some other massive U.S. banks, Wells Fargo primarily concentrates on consumer banking. One in three American households are customers and are affected by its corporate culture and business practices.
In the CFPB’s eleven years of existence, Wells Fargo has consistently been one of the most problematic repeat offenders of the banks and credit unions we supervise:
- In 2015, CFPB ordered Wells Fargo to pay $24 million in penalties for its role in an illegal mortgage kickback scheme.
- In 2016, it paid $4 million to the CFPB for scamming student loan borrowers. A few months later, the CFPB fined Wells Fargo $100 million for its fake account fraud.
- In 2018, the CFPB assessed a $1 billion fine for illegal fees and insurance practices in its auto lending and mortgage lending business.
The list could go on and on, from defrauding the government to labor abuses and more. The Department of Justice, state attorneys general and other federal regulators have obtained billions more in forfeitures, including civil and criminal fines.
Put simply, Wells Fargo is a corporate recidivist that puts one third of American households at risk of harm. Finding a permanent resolution to this bank’s pattern of unlawful behavior is a top priority. Today, CFPB is announcing an important step toward that goal: restitution for victims of Wells Fargo’s widespread illegal activities.
Law Enforcement Action
Today, the CFPB is ordering Wells Fargo to pay more than $2 billion in redress to over 16 million consumers and a $1.7 billion civil penalty for widespread illegal activity across its major product lines for which it has never been held to account. The bank’s illegal conduct led to billions of dollars in financial harm to its customers and, for thousands of customers, the loss of their vehicles and homes.
Between at least 2011 and 2022, consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank. Consumers were also charged unlawful surprise overdraft fees and had other incorrect charges applied to their checking and savings accounts.
Individuals affected by illegal conduct related to the bank’s auto finance business line will receive more than $1.3 billion; those affected by violations related to deposit accounts will receive more than $500 million; and mortgage servicing customers will receive at least $195 million.
This milestone in accountability and reform of Wells Fargo would not be possible without the cooperation and support from the broader law enforcement and regulatory community, including the Office of the Comptroller of the Currency and the Federal Reserve.
We see this as an initial step to bring relief quickly to families who had their cars illegally possessed, who were tricked into seeing their accounts drained by illegal junk fees, and who had their accounts frozen without cause.
First Step Toward Long-Term Reform
While today’s order addresses a number of consumer abuses, it should not be read as a sign that Wells Fargo has moved past its longstanding problems or that the CFPB’s work here is done. Importantly, the order does not provide immunity for any individuals, nor, for example, does it release claims for any ongoing illegal acts or practices.
While $3.7 billion may sound like a lot, the CFPB recognizes that this alone will not fix Wells Fargo’s fundamental problems. 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. We are concerned that the bank’s product launches, growth initiatives, and other efforts to increase profits have delayed needed reform.
We will continue our work with the other federal banking regulators to end the rinse-repeat cycle of consumer abuse at this firm. After the CFPB and law enforcement partners took action against Wells Fargo in 2016 for its fake account fraud, other agencies used their authorities to restrict Wells Fargo’s activities and hold certain executives accountable. As regulators, we must collectively consider whether additional limitations need to be placed on Wells Fargo to supplement the existing asset cap put in place by the Federal Reserve Board of Governors in 2018, as well as the Office of the Comptroller of the Currency’s mortgage servicing restrictions imposed in 2021. Our nation’s banking laws provide strong tools to ensure that insured depository institutions do not breach the public trust, and in the new year we expect to work with our fellow regulators on whether and how to use them.
In closing, I want to thank all of the individual consumers who filed complaints and the many individuals across the federal regulatory agencies who made this first step toward accountability and reform possible. Thank you.