Monday, 22 October, 2018

Bureau of Consumer Financial Protection Hits Wells Fargo With $1 Billion Fine

Wells Fargo will be fined $1 billion Wells Fargo will be fined $1 billion
Andy Castillo | 01 May, 2018, 12:48

Amg Funds Limited Liability Com holds 0.99% of its capital in Wells Fargo & Company (NYSE:WFC) for 30,236 shs. Beach Investment Management LLC. acquired a new stake in shares of Wells Fargo in the 2nd quarter valued at about $1,010,000.

In that case, Wells Fargo paid a combined $187 million in fines and penalties to federal regulators, including the bureau and the Los Angeles city attorney's office, and the company's CEO, John Stumpf, stepped down after being bashed by politicians on both side of the aisle.

"Anything in the hundreds of millions is going to be in the conversation that executives at banks and other financial institutions are having, so the difference may not be driven by the deterrent effect", he said.

By the time the CFPB and OCC announced their fines this week, Wells Fargo's white-collar criminality had already earned it an unprecedented punishment from the Federal Reserve, which announced in February that it would not allow the bank to take on any more assets than it held previous year, until it has proven itself a responsible lender.

In the latest action, regulators penalized Wells Fargo for requiring people to sign up for auto insurance they didn't need, improperly charging people for mortgages and for failing to maintain adequate risk management.

The bank has been under investigation for other practices since then.

Friday's action came in coordination with the Office of the Comptroller of the Currency (OCC), which said Wells Fargo had failed to maintain adequate risk management controls since at least 2011.

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Wells Fargo is in the spotlight after its employees allegedly created up to 2 million bank and credit card accounts, transferred customers' money.

"Wells Fargo is committed to taking a leadership role in supporting the transition to a low-carbon economy and promoting environmental sustainability through our products and services, operations and culture, and philanthropy", said Wells Fargo CEO Tim Sloan, who made the announcement during his keynote at the CECP CEO Force for Good Investor Forum in San Francisco. But groups pushing for stronger federal bank oversight called for steeper penalties against Wells Fargo for a track record of scandals and customer abuse. Analysts at Wall Street see Wells Fargo & Company's 4.46 % EPS growth compared to $1.12 earnings per share for last quarter.

Wells said it will adjust its first-quarter preliminary financial results by an additional $800 million, which is not tax-deductible. The company even caught the ire of Trump, who tweeted in December it should face heightened penalties for "bad acts" against customers. But they do involve significant parts of the bank's businesses: auto lending and mortgages. But Wells Fargo acknowledged that of the roughly 2 million auto loans that it put into that program, it "forcibly placed duplicative or unnecessary insurance on hundreds of thousands of those borrowers' vehicles".

Wells Fargo apologized past year for charging as many as 570,000 clients for vehicle insurance they didn't need. Madison Inv invested 0.23% in Wells Fargo & Company (NYSE:WFC).

The settlement is among the most aggressive moves by regulators during the Trump administration to punish a big bank.

The CFPB fines are the first from former Charlotte-area congressman Mick Mulvaney, whom President Donald Trump tapped a year ago to head the agency.

Wells Fargo has been under intense scrutiny by federal regulators for several months. Last week, Wells reported a profit of $5.9 billion for the first quarter but said that number could change if it has to restate earnings once the settlement is reached. And the Department of Justice is investigating the bank's currency-trading business. BMO Capital Markets reaffirmed a "hold" rating and issued a $60.00 price target on shares of Wells Fargo in a research note on Monday, February 5th.

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