Wells Fargo close to $1 bn US settlement: reports

Wells Fargo is close to paying $1 billion to settle a US probe over its risk management policies in another blow to the banking giant, US media reported on Thursday.

The settlement, which could come as soon as Friday, would cover problems uncovered in the mortgage and auto lending businesses, according to The Wall Street Journal, which cited people familiar with the matter.

The New York Times and The Washington Post also reported that a $1 billion settlement was close at hand.

Wells Fargo itself said last Friday in its earnings press release that regulators from the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency have proposed $1billion in penalties to resolve the investigations but that there was not yet a final resolution.

Wells Fargo is close to paying $1 billion to settle a US probe over its risk management policies in another blow to the banking giant, US media reported on Thursday

The penalty is the latest regulatory problem to befall Wells Fargo, which also came under fire from investors and lawmakers over a fake account scandal. 

The Federal Reserve, in an unprecedented move, in February ordered the bank to halt its expansion until it improves governance, following ‘persistent misconduct.’

The bank, once the world’s largest by market capitalization, will face its own shareholders on Tuesday at an annual meeting in Iowa. 

Bank executives were on the receiving end of blistering criticism at last year’s annual meeting at which several board members scraped to re-election.

Four board members announced in March they would resign after this year’s meeting.

In the fall of 2016, it was learned that Wells Fargo employees under pressure to meet aggressive sales targets had opened 2.1 million accounts that customers might not have even been aware existed.

Last August, the bank revised the estimate, saying that between 2009 and 2016 about 3.5 million such accounts were opened.

Wells Fargo said last summer that about half a million of the newly discovered accounts were missed during the original review, which covered the years 2011 to 2015. 

After Wells Fargo acknowledged the fake accounts last year, evidence quickly appeared that the sales practices problems dated back even further.

So Wells Fargo hired an outside consulting firm to analyze 165 million retail bank accounts opened between 2009 and 2016.

Wells said the firm found that, along with the 2.1 million accounts originally disclosed, 981,000 more accounts were found in the expanded timeline. And roughly 450,000 accounts were found in the original window.

The scandal was the biggest in Wells Fargo’s history. 

It cost then-CEO John Stumpf his job, and the bank’s once-sterling industry reputation was in tatters. 

The company ended up paying $185 million to regulators and settled a class-action suit for $142 million.

New managers have been trying to amends with customers, politicians and the public.

But it’s been tough, as new revelations keep coming. 

Wells Fargo said last year that roughly 570,000 customers were signed up for and billed for car insurance that they didn’t need or necessarily know about. 

Many couldn’t afford the extra costs and fell behind in their payments, and in about 20,000 cases, cars were repossessed.

Other customers have filed lawsuits against Wells Fargo saying they were victims of unfair overdraft practices.

Wells Fargo said that of the 3.5 million accounts potentially opened without permission, 190,000 of those incurred fees and charges.

That’s up from 130,000 that the bank originally said. 

Wells Fargo pledged to refund $2.8million to customers, in addition to the $3.3million it already agreed to pay.

In addition, San Francisco-based Wells admitted that 528,000 customers were likely signed up for online bill payment without authorization. 

It promised to refund $910,000 in fees to those customers.

Since the fall of 2016, Wells has changed its sales practices, ousted other executives and called tens of millions of customers to check on whether they truly opened the accounts.    

Read more at DailyMail.co.uk