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Wells Fargo reached a $3.7 billion settlement with regulators over the bank’s “widespread mismanagement” that allegedly affected more than 16 million consumer accounts.
The Consumer Financial Protection Bureau said Wells Fargo’s systemic failures included some things so egregious that you have to wonder if the bank was just testing how bad it could be before it got caught. Things like:
- Repeated application of loan payments
- Improper foreclosure of houses
- Illegal repossession of vehicles
- Miscalculation of fees and interest
- Charging unexpected overdraft fees
Fully $2 billion of the settlement will compensate customers. (Which, I’m sure, is a welcome payday, though it can hardly undo the trauma of having your house wrongly foreclosed on or your car repossessed…)
The watchdog also ordered Wells Fargo to pay a $1.7 billion civil penalty.
THE KEY CONTEXT
Sadly, all of this echoes previous reports about Wells Fargo’s practices that have surfaced since 2016, when the fake account scandal made national headlines, writes my colleague Matt Egan.
As a refresher: At the time, it was revealed that the bank’s leadership had pressured employees to aggressively push consumer products to increase sales and revenue to meet certain quotas. Wells Fargo workers ended up setting up millions of bank accounts for customers without their knowledge.
In 2020, the bank paid $3 billion to the Department of Justice and the Securities and Exchange Commission after admitting that, between 2002 and 2016, it pressured employees to meet “unrealistic sales goals that led thousands of employees to offer millions of accounts.” or products to customers under false pretenses or without consent, often by creating false registrations or misusing customers’ identities.”
The good news is that the scam was busted and the really rich, powerful people who are responsible for it all went to jail… I am joke. This is America. Some executives have faced charges of defrauding investors, although most have settled out of court because they are wealthy and can afford to pay hefty fees (unlike many of the clients they bilked out of their hard-earned money).
Wells has tried to right himself and move past the scandal. It’s not going well.
Here’s CFPB Director Rohit Chopra on Tuesday’s ruling:
“Wells Fargo’s repeat cycle of wrongdoing has harmed millions of American families.”
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.
Chopra hinted that more fines could be on the way.
In response, Wells Fargo noted that the far-reaching settlement with the CFPB resolves numerous issues, most of which have been “unresolved for several years.”
The bank said the required actions are “already substantially complete”.
“We and our regulators have identified a number of unacceptable practices that we have worked systematically to change and provide customer redress where warranted,” said Wells Fargo CEO Charlie Scharf, who took over in 2019. with a mission to clean up the mess left behind. from his ancestors.
TIME FOR A BREAKUP?
The web of scandals at Wells Fargo is massive, and after six years of fallout, many people are not convinced the bank can save itself.
“This latest litany of wrongdoing cannot be 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 pattern and long-term practice of illegal activities is more often seen in criminal enterprises, not in the giant American banks. Any other business in America with such a recidivist record of breaking the law… would almost certainly have closed by now.”
The idea of separation is likely to have support. Senator Elizabeth Warren last year asked the Fed to revoke Wells Fargo’s status as a financial company and require it to separate its traditional banking activities from non-banking activities.
“The only way these consumers and their bank accounts can be kept safe is through another institution — one whose business model doesn’t depend on scamming customers for every last penny they can get,” Warren wrote in a letter to the central bank.
Twitter has been a mess for the past couple of months being owned by Elon Musk. This has been good news for its increasingly popular rival. Mastodon had approximately 300,000 monthly active users in October. As of last month, that number has reached 2.5 million — an increase of more than 730% — according to its founder. Mastodon has a look and feel similar to Twitter and has quickly become the preferred alternative for people who have been put off by the Musk era of the biggest social platform.
Meanwhile, on Twitter: After a Twitter poll showed a majority of users wanted Elon Musk to step down as CEO, Musk is changing the way polls work.
- 3M, the conglomerate behind Post-Its and Scotch tape, will “forever” stop producing chemicals found in hundreds of household items by the end of 2025. The latest science suggests the chemicals are far more dangerous to human health than scientists believe they had originally thought.
- Following tradition, the United Kingdom will soon issue new banknotes featuring the portrait of the monarch, King Charles III. Here’s what they’ll look like.
- The European Union has reached an agreement with Amazon that will resolve multiple antitrust investigations into the company and impose binding restrictions on its business. It includes a commitment not to use third-party seller data to profit from Amazon’s marketplace listings, a practice that policymakers around the world say is anti-competitive.
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