Last year, Wells Fargo faced fines of as much as $10 billion from the Consumer Financial Protection Bureau, but instead settled for a fraction of that.
According to a news report in Reuters, citing regulatory documents that were released on Tuesday (Sept. 19), the CFPB opted not to pursue the huge fine so that the matter could be resolved in a speedy manner. Based on the documents, the CFPB and two other regulatory agencies settled with Wells Fargo for $185 million after they found the bank had opened 2.1 million fake bank accounts for customers without their permission. That number has since grown to 3.5 million, noted the report. The CFPB got $100 million in the settlement, which is the largest fine levied against a company in its short time functioning as a watchdog.
The CFPB, however, could have claimed more than 100 times the amount if its statutory penalties were multiplied based on the number of violations with which Wells Fargo had been charged. The staff at the government watchdog had recommended a lesser fine, stating that the amount was big enough to send a message and for everyone to reach a settlement quickly, according to a memo seen by Reuters.
“We ordered Wells Fargo to pay the largest penalty we have ever imposed and achieved relief for millions of customers harmed by the bank’s egregious and illegal conduct,” David Mayorga, a spokesman for the CFPB, told Reuters. Meanwhile, a Wells Fargo representative said the bank was reviewing the documents.
The documents were unveiled as part of a Republican report, and could increase the debate about whether or not the CFPB should continue. Created by Democrats after the financial crisis of 2007 through 2009, Republicans have long criticized it and called for it to be dismantled. At the very least, they want to take power away from Director Richard Cordray. With President Trump in office in the wake of the Wells Fargo scandal, the Republicans are now more emboldened.