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Wells Fargo has reached a $3.7 billion settlement with regulators over the bank’s “pervasive mismanagement” of more than 16 million consumer accounts.
The Consumer Financial Protection Bureau’s report of Wells Fargo’s systematic failures includes some of the most egregious, and you should think about how bad things can get before the bank is caught. as a –
- Abuse of frequent loan payments
- Closing houses by mistake
- Illegal recovery of vehicles
- Accurately assess fees and interest
- Charging unexpected support fees
$2 billion to compensate customers in full. (Which I’m sure is a welcome payday, even if your house is wrongly foreclosed on or your car is towed can’t undo the damage we’ve done…)
The watchdog agency ordered Wells Fargo to pay a $1.7 billion civil penalty.
Key context
Sadly, all of this echoes reports about Wells Fargo’s practices from 2016, when the fake accounts scandal was covered nationally, writes my colleague Matt Egan.
To refresh: It was then observed that the bank’s management was putting pressure on the rank-and-file employees to aggressively push consumer products to meet certain quotas and increase sales and revenue. Wells Fargo employees unwittingly created millions in bank accounts for customers.
In the year 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 sell millions of accounts or products to customers.” Impersonation or unauthorized use, often by creating false records or misusing customer identities.
The good news is that the scam went bust and the rich and powerful responsible for it all went to jail… joking. This is America. A few executives have faced charges for misleading investors, although most have settled out of court because they are wealthy and can afford to pay the high fees (unlike many clients, who withdraw their money from the bank).
Wells is trying to correct himself and overcome the scandal. Not very good.
Here’s CFPB Director Rohit Chopra’s take on Tuesday’s settlement:
“Wells Fargo’s cycle of repeated violations has harmed millions of American families.”
The bank is still in the penalty box. Chopra described Wells Fargo as a “repeated offender” and a “corporate recidivist,” adding that Tuesday’s fine was the first step in holding the bank accountable.
Chopra indicated that more fines may be on the way.
In response, Wells Fargo emphasized that the broad settlement with the CFPB would resolve a number of issues, many of which have been “outstanding for several years.”
The bank said the required steps are “already substantially complete”.
“We and our supervisors have identified a series of unacceptable practices that we have been working to provide customers with system changes and improvements,” said Wells Fargo CEO Charlie Scharf, who is tasked with cleaning up the rest of the problem in 2019.
Time off?
The web of scandals at Wells Fargo is huge, and after six years of failure, many people are unsure if the bank can save itself.
Dennis Kelleher, chief executive of the non-profit Better Markets, said: “This latest breach cannot be properly explained or ruled out,” urging regulators to consider breaking up the bank. “This type of illegal activity has long been practiced and practiced by criminal enterprises, not by large American banks.” Any other business in the US with such a record of breaking the recidivist law… would surely have already been shut down.
The idea of separation will probably have support. Senator Elizabeth Warren last year urged the Fed to revoke Wells Fargo’s financial company status and separate its traditional banking activities from non-banking activities.
“The only way to keep these consumers and their bank accounts safe is with another institution—the business model is not based on defrauding customers for every last penny,” Warren wrote in a letter to the central bank.
Twitter has been in turmoil for the past two months and is owned by Elon Musk. This was good news for his increasingly popular rival. Mastodon counted nearly 300,000 monthly active users in October. Since last month, that number is up to 2.5 million — an increase of more than 730% — according to the founder. Mastodon has a similar look and feel to Twitter, and has become an instant alternative for people turned off by the larger social platform in the Musk era.
Meanwhile, it’s over on Twitter: After a Twitter poll showed a majority of users want Elon Musk to step down as CEO, Musk is changing how he does … elections.
- 3M, the company behind Post-Its and Scotch tape, will stop producing “forever chemicals” found in hundreds of household items by the end of 2025. Recent science suggests that chemicals are far more dangerous to human health than scientists first thought. .
- As per tradition, the United Kingdom will soon introduce new banknotes featuring the portrait of His Majesty King Charles III. Here’s what they look like.
- The European Union has struck a deal with Amazon to settle several antitrust investigations into the company and impose binding restrictions on its business. Amazon’s own marketplace includes a commitment not to use data from third-party sellers to exploit listings, a practice that policymakers around the world say is counterproductive.
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