Wells Fargo Enters into Agreement with CFPB to Resolve Multiple Issues
December 20 2022 - 9:16AM
Business Wire
CFPB is terminating 2016 consent order and providing clarity and
a path forward for termination of 2018 consent order; recognizes
recent acceleration of efforts
Wells Fargo said today that it has reached a broad-reaching
settlement with the Consumer Financial Protection Bureau (“CFPB”)
resolving multiple matters, the majority of which have been
outstanding for several years, related to automobile lending,
consumer deposit accounts, and mortgage lending. Current leadership
has made significant progress to transform Wells Fargo; in fact,
the CFPB recognized that since 2020, the company has accelerated
corrective actions and remediation, including to address the
matters covered by today’s settlement. The required actions related
to many of the matters described in the settlement are already
substantially complete. The company is pleased to bring closure to
these issues. As part of the settlement, Wells Fargo entered into a
consent order, which lays out a path to termination after the
company completes the remainder of the required actions. The
company also agreed to pay a civil penalty of $1.7 billion.
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Wells Fargo Bank branch located in the
Wells Fargo Center (Photo: Wells Fargo)
“As we have said before, we and our regulators have identified a
series of unacceptable practices that we have been working
systematically to change and provide customer remediation where
warranted. This far-reaching agreement is an important milestone in
our work to transform the operating practices at Wells Fargo and to
put these issues behind us,” said Charlie Scharf, Wells Fargo’s
Chief Executive Officer. “Our top priority is to continue to build
a risk and control infrastructure that reflects the size and
complexity of Wells Fargo and run the company in a more controlled,
disciplined way.”
In addition, the CFPB is clarifying how and when its April 20,
2018 consent order will terminate. Also today, the CFPB is
terminating its August 20, 2016 consent order relating to Wells
Fargo’s student loan servicing.
“We have made significant progress over the last three years and
are a different company today,” Scharf said. “We remain committed
to doing the right thing for our customers and working closely with
our regulators and others to deal appropriately with any issue that
arises.”
Wells Fargo expects operating losses expense, which is included
in its noninterest expense, will be approximately $3.5 billion
(approximately $2.8 billion, net of tax) for the three months
ending on December 31, 2022. This includes, among other things, the
incremental costs of the CFPB civil penalty and related customer
remediation as well as amounts related to outstanding litigation
matters and other customer remediation. The company’s full fourth
quarter financial results will be reported on January 13, 2023.
Wells Fargo has made significant progress in strengthening its
risk and control infrastructure over the past several years.
Today’s news follows the termination or expiration of several
consent orders since 2020, as follows:
- The December 2021 termination of the Office of the Comptroller
of the Currency’s (“OCC”) consent order issued in June 2015
regarding add-on products that the bank sold to retail banking
customers before 2015;
- The September 2021 expiration of a CFPB consent order issued in
2016 regarding the bank's retail sales practices;
- The January 2021 termination of the OCC’s 2015 consent order
regarding Wells Fargo’s Bank Secrecy Act/Anti-Money Laundering
(BSA/AML) compliance program; and
- The January 2020 expiration of a CFPB consent order issued in
January 2015 regarding claims that the bank violated the Real
Estate Settlement Procedures Act.
Since 2019, the company has made a series of changes to
transform the way it operates, including:
- Split three business groups into five and created four new
Enterprise Functions to enable greater oversight and
transparency;
- Made significant changes to senior leadership, including 12 of
17 Operating Committee members and over 50% of the leaders one
level below the Operating Committee being new to Wells Fargo since
October 2019;
- Embedded greater accountability for risk management into
performance management and compensation practices;
- Strengthened the ability to identify and mitigate operational
risks;
- Established a new Control Management organization and program;
and
- Launched the Office of Consumer Practices, an enterprise-wide,
consumer-focused advisory group designed to help ensure the
consumer’s voice is heard in the decision-making across the
consumer product lifecycle.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a leading financial
services company that has approximately $1.9 trillion in assets,
proudly serves one in three U.S. households and more than 10% of
small businesses in the U.S., and is a leading middle market
banking provider in the U.S. We provide a diversified set of
banking, investment and mortgage products and services, as well as
consumer and commercial finance, through our four reportable
operating segments: Consumer Banking and Lending, Commercial
Banking, Corporate and Investment Banking, and Wealth &
Investment Management. Wells Fargo ranked No. 41 on Fortune’s 2022
rankings of America’s largest corporations. In the communities we
serve, the company focuses its social impact on building a
sustainable, inclusive future for all by supporting housing
affordability, small business growth, financial health, and a
low-carbon economy.
Cautionary Statement about Forward-Looking Statements
This news release contains forward-looking statements about our
future financial performance and business. Because forward-looking
statements are based on our current expectations and assumptions
regarding the future, they are subject to inherent risks and
uncertainties. Do not unduly rely on forward-looking statements as
actual results could differ materially from expectations.
Forward-looking statements speak only as of the date made, and we
do not undertake to update them to reflect changes or events that
occur after that date. For information about factors that could
cause actual results to differ materially from our expectations,
refer to our reports filed with the Securities and Exchange
Commission, including the discussion under “Risk Factors” in our
Annual Report on Form 10-K for the year ended December 31, 2021, as
filed with the Securities and Exchange Commission and available on
its website at www.sec.gov.
News Release Category: WF-CF
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version on businesswire.com: https://www.businesswire.com/news/home/20221220005501/en/
Media Beth Richek, 704-374-2545
beth.richek@wellsfargo.com
Investor Relations John Campbell, 415-396-0523
john.m.campbell@wellsfargo.com
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