Wells Fargo slapped by multi-million fine
Consumer missteps come back to haunt it
Wells Fargo & Co. will pay a $250 million fine after the Office of the Comptroller of the Currency said the company has deficiencies in its home-lending business and violated a 2018 order tied to past consumer missteps.
The order, the first such sanction under chief executive officer Charlie Scharf, cited problems in home-lending loss mitigation practices -- the steps firms take to avoid foreclosure -- that have impaired the bank from being able to “fully and timely” make harmed customers whole. Bloomberg reported last week that the regulator had warned the company it may bring new sanctions tied to the company’s pace in fulfilling its obligations.
“Wells Fargo has not met the requirements of the OCC’s 2018 action against the bank,” Michael Hsu, the regulator’s acting chief, said in a Thursday statement. “This is unacceptable.”
In addition to the penalty, Hsu said the OCC is putting limits on the bank’s future activities until it fixes problems tied to mortgage servicing. The regulator ordered the bank not to acquire certain third-party residential mortgage servicing and to ensure borrowers aren’t transferred out of its loan-servicing portfolio until remediation is provided.
Scandals have plagued Wells Fargo since 2016, beginning with the revelation that employees opened millions of fake accounts to meet sales goals. Problems multiplied across business lines, leading to additional sanctions from regulators including a costly asset cap from the Federal Reserve.
The problems also led to leadership shakeups including the resignations of two CEOs, and a six-month search for an outsider to do the job. Scharf, who took over almost two years ago, has called satisfying US authorities' demands his highest priority.
“Our work to build the right foundation for a company of our size and complexity will not follow a straight line,” Scharf said in a statement Thursday. “We are managing multiple issues concurrently, and progress will come alongside setbacks. That said, we believe we’re making significant progress, the work required is clear, and I remain confident in our ability to complete it.”
Shares of Wells Fargo rose 1.2% to $44.90 at 6:25 p.m. in New York after-market trading. The stock has gained about 47% this year.