Wells Fargo & Co agrees to $110-mn deal to settle fraudulent accounts claims
29 March 2017
Wells Fargo & Co has agreed to a $110-million settlement with customers nationwide over claims its employees set up fraudulent accounts to increase their own pay, in a deal that would help the lender close the scandal of last year.
After revelations that Wells Fargo employees might have opened over two million deposit and credit-card accounts without customers' permission, the San-Francisco-based lender had completely overhauled its systems. The bank scrapped its system of sales targets that regulators said encouraged workers to create fake accounts and also fired or demoted five people who had served as senior managers in the consumer business.
Wells Fargo had agreed, six months ago to pay $185 million in fines and penalties, under a settlement with federal regulators and the Los Angeles city attorney's office. However, as party to the deal, the bank did not admit or deny wrongdoing, as permitted by law.
The deal, announced yesterday by the bank and in a court filing, covered dozens of lawsuits filed across the country, including 10 in San Francisco federal court. The agreement would still need to be approved by a judge.
''We want to ensure that each customer impacted by our sales practices issue has every opportunity for remediation, and this agreement presents an additional option,'' Wells Fargo chief executive officer Tim Sloan said in a statement.
Meanwhile, in a report yesterday, the Office of the Comptroller of the Currency (OCC) faulted Wells Fargo for engaging in an ''extensive and pervasive pattern'' of discriminatory and illegal lending practices for years. Many of the cases, which the OCC had cited were announced years ago in settlements, including some misconduct that pre-dated the 2008 financial crisis.
The OCC had lowered the bank's overall compliance score with community banking laws to ''needs to improve.''
''We are disappointed with this rating given Wells Fargo's strong track record of lending to, investing in and providing service to low- and moderate-income communities,'' Sloan said in a separate statement. ''However, we are committed to addressing the OCC's concerns because restoring trust in Wells Fargo and building a better bank for our customers and our communities is our top priority.''