Federal regulators slapped Wells Fargo with yet another fine for failing to move fast enough to compensate customers who were victims of the bank’s “unsafe or unsound” practices.
The Office of the Comptroller of the Currency, the banking regulator within the Treasury Department, told the scandal-plagued bank it must pay $250 million because it couldn’t -— or wouldn’t — make good on its promises. The punishment stems from a 2018 order that found problems with the bank’s auto and home lending operations, including insufficient risk-management practices and improper fines imposed on customers. At the time, as part of a $1 billion settlement, the bank agreed to improve its practices and pay restitution to customers. But that’s not happening fast enough, according to the OCC.
“Wells Fargo has not met the requirements of the OCC’s 2018 action against the bank. This is unacceptable,” said Acting Comptroller Michael J. Hsu. In addition to the fine, the regulator is restricting the bank’s mortgage business until it can address the problems. Wells Fargo has struggled to get its house in order after a series of scandals erupted five years ago. Since fall 2016, the bank has admitted to forcing customers to pay unnecessary fees and opening millions of fake accounts in what the Federal Reserve has described as “widespread customer abuse.” In 2018 the Fed imposed a cap on Wells Fargo’s assets — essentially barring the it from increasing its balance sheet until it addresses the compliance failures that led to the scandals.
“The OCC’s actions today point to work we must continue to do to address significant, longstanding deficiencies,” said Charlie Scharf, Wells Fargo’s fourth CEO in five years, in a statement Thursday. “Building an appropriate risk and control infrastructure has been and remains Wells Fargo’s top priority.” Wells Fargo shares were up slightly midday Friday, signaling that investors were shrugging off the OCC fine. “Overall, I think this is a modest positive for the stock,” said Kyle Sanders, a senior analyst at Edward Jones. Sanders noted that the stock took a hit last week after media reports suggested bigger regulatory setbacks were around the corner. “For many investors, today’s announcement was less punitive than feared.”