Wells Fargo nears SEC, DOJ settlement over fake-accounts scandal
Wells Fargo is nearing a settlement with federal authorities over accusations of widespread consumer abuses that have haunted the bank for more than three years, a person familiar with the discussions said.
The settlement with the Securities and Exchange Commission and Department of Justice could be announced as soon as Friday, said the person, who was not authorized to speak on the record about the settlement. Wells Fargo had previously said it would set aside about $3 billion for a settlement of the investigations.
The settlement, which was first reported by The New York Times, would be the latest in a series of fines and penalties against the San Francisco bank since it admitted in 2016 that it had opened millions of accounts customers didn't request. In 2018, it was fined $1 billion by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency.
Last month, the OCC went further, taking the rare step of filing cases against specific Wells Fargo employees. It banned former Wells Fargo CEO John Stumpf from working in banking again and fined him $17.5 million and filed civil cases against five other employees, including Carrie Tolstedt, the former head of community banking. It is seeking a $25 million fine from Tolstedt.
The bank imposed unrealistic sales goals on employees, who were "intimidated and badgered" to comply, the OCC suit says. "For more than 14 years, the systemic sales practices misconduct resulted in compromise of customer accounts, misuse of customer personal information, and actual financial harm to consumers."
In 2010, one employee told senior executives: "[T]he noose around our necks ha[s] tightened: we have been told we must achieve the required solutions goals or [we] will be terminated." Another employee wrote to the CEO's office and another senior leader in 2013, saying: "I was in the 1991 Gulf War. . . . This is sad and hard for me to say, but I had less stress in the 1991 Gulf War than working for Wells Fargo."
Bank executives ignored those warnings about their aggressive sales goals, which helped fuel the bank's profits. Wells Fargo has agreed to pay consumers more than $100 million as part of various settlements related to the fake-accounts scandal.
Once among the country's largest and most profitable banks, Wells Fargo has struggled to overcome the scandal, which ballooned as the bank admitted to other consumer abuses, including mistakenly foreclosing on hundreds of clients and repossessing the cars of thousands of others. It has overhauled its board and gone through three CEOs in three years, hiring an industry veteran, Charles Scharf, to take the helm last year.
Scharf told analysts last month that he is spending nearly all of his time addressing the regulatory headaches that have dogged Wells Fargo. The bank had made "terrible mistakes," he said, adding, "I don't have all the answers yet."
The scandals have made Wells Fargo a frequent target of Democrats on Capitol Hill, particularly Rep. Maxine Waters, D-Calif., chair of the powerful Financial Services Committee, and Sen. Elizabeth Warren, D-Mass. "Bank executives like former @WellsFargo CEO John Stumpf should face jail time when the banks they lead break the law. I've got a bill to hold Wall Street executives personally accountable," Warren said in a recent tweet.
The potential settlement is not likely to satisfy all of the bank's critics and the Federal Reserve has yet to lift a ban it imposed on the bank, which has nearly $2 trillion in assets, from growing any larger until it fixes the cultural issues uncovered by the recent scandals.
