WFC Wells Fargo and Company

By Yuka Hayashi 

WASHINGTON -- Wells Fargo & Co. agreed to pay $1 billion to settle federal claims of misconduct in its auto and mortgage lending businesses.

The settlement with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency concerned the bank's failures to catch and prevent problems, including improper charges to consumers in its mortgage and auto-lending businesses.

The fine is the largest against a bank so far in the Trump administration and a signal that while officials are working to ease postcrisis regulatory rules they won't let companies off the hook for misconduct.

"We have said all along that we will enforce the law. That is what we did here," CFPB acting director Mick Mulvaney said in a statement.

As part of the settlement, the bank also agreed to offer restitution to customers and improve risk and compliance management practices.

"The OCC took these actions given the severity of the deficiencies and violations of law, the financial harm to consumers, and the bank's failure to correct the deficiencies and violations in a timely manner," the OCC said in its release detailing the settlement.

The regulator added that it "found deficiencies in the bank's enterprisewide compliance risk management program that constituted reckless, unsafe or unsound practices."

The settlement covers the bank's practices in two main areas: charging improper fees for rate-lock extensions in mortgage lending and selling unwanted insurance products to auto-loan customers.

"While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments," said Timothy J. Sloan, president and chief executive officer of Wells Fargo.

The settlement is the latest in a series of regulatory woes for the San Francisco-based bank. It has faced a number of regulatory problems in recent years, including regulatory scrutiny of illegal sales practices that involved the opening of as many as 3.5 million accounts without customers' consent. Regulators have since probed the bank's practices in auto lending, mortgages, wealth and investment management and foreign exchange.

Wells Fargo restated its first-quarter earnings, lowering its net income to $4.7 billion, or 96 cents a diluted share, a reduction of $800 million, or 16 cents a diluted share, from previously reported figures.

Write to Yuka Hayashi at yuka.hayashi@wsj.com

(END) Dow Jones Newswires

April 20, 2018 11:04 ET (15:04 GMT)

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