Wells Fargo Pays $1 Billion to Federal Regulators

Wells Fargo will pay two federal regulators a total of $1 billion to settle an array of investigations into its mortgage and auto-lending practices.

The settlements, with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, were announced Friday.

The joint action is the most significant move by federal banking regulators under the Trump administration. It is also the consumer bureau’s first enforcement measure since President Donald Trump appointed Mick Mulvaney, the White House budget director and a longtime critic of the bureau, as interim director in November.

Wells Fargo agreed to submit plans to regulators detailing how it plans to strengthen its compliance and risk-management programs and “remediation efforts” for customers.

The consumer bureau said that at least 50,000 customers would probably “require remediation” and that the total to be repaid would exceed $10 million. Wells Fargo said the settlement would result in the $5.9 billion in first-quarter profits it reported last week being reduced by $800 million.

Under the deal announced Friday, Wells Fargo will effectively pay $500 million to each regulator. The consumer bureau said it was imposing a $1 billion penalty but was deducting from that the amount that Wells Fargo was paying to the currency comptroller’s office.

“As to the terms of the settlement: we have said all along that we will enforce the law,” Mulvaney said in a brief statement announcing the punishment. “That is what we did here.”

In a separate statement, Timothy J. Sloan, Wells Fargo’s chief executive, said the bank had “more work to do” but was committed to doing right by its customers.

Even before Friday, state and federal regulators and the Justice Department had levied almost $1.5 billion in penalties against Wells Fargo for offenses that included opening millions of false accounts in customers’ names, punishing whistle-blowers and unlawfully repossessing military service members’ cars.

Mulvaney’s comment Friday was reserved compared to what Richard Cordray, the consumer bureau’s former director, said in September 2016 when Wells Fargo was punished for opening the unauthorized accounts.

“Today’s action should serve notice to the entire industry that financial incentive programs, if not monitored carefully, carry serious risks that can have serious legal consequences,” Cordray said.

It was unclear whether the $1 billion penalty was a harbinger of more enforcement actions by the consumer bureau. Mulvaney told lawmakers last week that the bureau had about 100 open investigations.