Wells Fargo is not having a good summer. As reported by Bloomberg News, even as the banking giant strives to rehabilitate its reputation in the wake of a series of high-profile scandals, new information about further improprieties is coming to light. Exposure of its widespread false-accounts scandal led to the bank paying fines amounting to $185 million, but July found the bank having to reveal bad conduct relating to auto loan insurance. The bank has also been accused of malfeasance relating to mortgage lending and consumer-overdraft fees, and faces discrimination complaints as well as allegations of fraud relating to shareholder losses. As Bloomberg puts it, “Investors aren’t happy.” To say nothing of the bank’s aggrieved customers.
The newest allegations include accusations by mortgage customers that Wells Fargo made unauthorized changes to their mortgages, in some cases extending them by decades. (“Some borrowers allege the practice sent them into bankruptcy,” notes Bloomberg). Separately, the bank is dealing with more than 25 lawsuits working towards class action status over manipulation of overdraft fees in pursuit of heightened profits. There’s another lawsuit accusing the bank of discriminatory credit policies, and additional class actions claiming the bank led 800,000+ customers into buying unnecessary automobile insurance that drove about a quarter of a million of them into delinquency.
Numerous government agencies are looking very closely at Wells Fargo’s conduct and practices, including the Department of Labor, the Consumer Financial Protection Bureau, Financial Industry Regulatory Authority, the Office of the Comptroller of the Currency, the U.S. Securities and Exchange Commission, and the Department of Justice. Finra recently joined the investigations after the bank’s “inadvertent” release of the confidential personal and banking information of thousands of its customers, and the bank further noted in an early August regulatory filing that “issues in its auto-lending business may spark investigations” as well.
Experts suggest that Wells Fargo has already spent over $500 million between fines, remediation, litigation costs, and the hiring of experts relating to the various improprieties and scandals, and the bank itself reported to investors earlier in the year that it anticipates further outlays of $70-80 million per quarter “for at least the next several quarters.” (Bloomberg further points out that the most recent mortgage and insurance scandals can only add to the costs).
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