In a “coordinated action” with the Office of the Comptroller of the Currency (OCC), the Bureau of Consumer Financial Protection Bureau (CFPB) announced a settlement with Wells Fargo on Friday (April 20): The CFPB assessed a $1 billion penalty against the bank, but the bureau credited the $500 million penalty collected by the OCC against the fine, the bureau said in a statement.
“I am especially pleased that we were able to work closely and effectively with our colleagues at the OCC, and I appreciate the key role they played in the negotiations,” Consumer Financial Protection Bureau Acting Director Mick Mulvaney said in a statement. “As to the terms of the settlement: we have said all along that we will enforce the law. That is what we did here.”
The bureau had found that the bank violated the Consumer Financial Protection Act (CFPA) through the way it ran an insurance program related to its auto loans and how it charged certain borrowers for mortgage interest rate-lock extensions. Beyond the penalty, the bureau said that the bank will need to take steps to remediate harmed consumers – and undertake activities related to risk management and compliance management.
The fine stems from its auto unit, in which the bank was forced last year to apologize for giving 570,000 customers car insurance they didn’t want or ask for. An internal review by Wells Fargo found that around 20,000 customers may have defaulted on their auto loans and lost their vehicles partly because of the cost of the auto insurance that they didn’t request but was tacked on to their loans.
According to CNN Money earlier on Friday (April 20), fining Wells Fargo $1 billion would be a departure for Mick Mulvaney, the acting director of the CFPB. He has been an outspoken critic of the government watchdog — and as a congressman, he wanted the agency dismantled. As the head of the CFPB, he has halted all new actions, postponed increased regulation on the payday lending market and dropped lawsuits against companies in that space. He has also said the agency hasn’t engaged in any new enforcement actions since he took over.