Wells Fargo CEO Charlie Scharf (Getty, iStock)
Wells Fargo can’t seem to escape its troubles with regulators.
A federal oversight body hit the banking giant with a $250 million penalty this week for unsafe practices regarding its mortgage lending loss mitigation program. The Office of the Comptroller of the Currency, a Treasury Department bureau, said Thursday that the bank has failed to comply with a 2018 consent order mandating, among other things, that it identify and reimburse customers charged improper fees by its mortgage lending arm.
“Wells Fargo has not met the requirements of the OCC’s 2018 action against the bank,” said acting Comptroller Michael Hsu. “This is unacceptable.”
The OCC said the bank failed to fully implement and maintain adequate loss mitigation practices under the terms of the 2018 order and that its lack of controls led to a failure to detect and prevent inaccurate loan modification decisions, impairing the bank’s ability to remediate customers.
On top of the fine, the OCC put restrictions on the bank’s future activities until it fixes its existing problems with its mortgage servicing business. A cease and desist order restricts Wells Fargo from acquiring some residential mortgage servicers and prevents the bank from transferring borrowers out of the bank’s loan serving until remediation is provided.
“Building an appropriate risk and control infrastructure has been and remains Wells Fargo’s top priority,” said Wells Fargo CEO Charlie Scharf in a statement. “The OCC’s actions today point to work we must continue to do to address significant, longstanding deficiencies.”
The company also reported that, as of Wednesday, a separate consent order issued in 2016 by the Consumer Financial Protection Bureau regarding the bank’s retail sales practices had expired.
Wells Fargo has been subject to a number of regulatory actions and consent orders in recent years, costing the firm billions of dollars. Most notably, the bank agreed to pay $3 billion last year to settle a fake account scandal in which Wells Fargo employees set up fraudulent accounts and credit cards in order to meet sales goals.
