NEW YORK–Wells Fargo has been hit with a $3-billion fine by the federal government for actions related to its fake accounts scandal.
Late last year, the bank also agreed to pay $575 million to resolve claims the bank violated state consumer protection laws as part of a major settlement agreement covering consumers in all 50 states and the District of Columbia. It had also earlier paid hundreds of millions of dollars in other fines for the same activities.
As CUToday.info has extensively reported, in 2016 Wells Fargo acknowledged its employees had created millions of bogus accounts in the names of customers as employees struggled to meet aggressive cross-sales goals.
The new settlement with the Justice Department and Securities and Exchange Commission resolves Wells Fargo's criminal and civil liabilities for the fake-accounts scandal. The agreement does not, however, remove the threat of prosecution against current and former Wells Fargo employees.
As part of the deal with the federal government Wells Fargo admitted that between 2002 and 2016, it falsified bank records, harmed the credit ratings of customers, unlawfully misused their personal information and wrongfully collected millions of dollars in fees and interest.
‘A Stark Reminder’
"Today's announcement should serve as a stark reminder that no institution is too big, too powerful, or too well-known to be held accountable and face enforcement action for its wrongdoings," U.S. Attorney Andrew Murray for the Western District of North Carolina said in a statement.
The settlement is related to the fake accounts scandal only, and does not involve other scandals in which Wells Fargo has been embroiled, including mistreatment of workers, auto borrowers, homebuyers and other small business customers.
For example, numerous Wells Fargo employees have said they were fired after calling Wells Fargo hotline to report activities related to the opening of fake accounts.
According to authorities, the criminal investigation into false bank records and identify theft at Wells Fargo is being resolved by what's known as a deferred prosecution agreement. Under that agreement, authorities have agreed not to prosecute Wells Fargo for three years as long as it abides by certain conditions, including its continued cooperation with "further" government investigations.
Misbehavior by Senior Management
As part of the agreement, Wells Fargo has acknowledged senior executives were aware of the illegal activity for a long period of time.
"The top managers of the community bank were aware of the unlawful and unethical gaming practices as early as 2002," the settlement reads.
According to authorities, senior executives at the mega-bank "minimized the problems" by shifting the blame to "individual misconduct instead of the sales model itself."
"This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customers' private information," Michael Granston, deputy assistant attorney general at the Department of Justice's civil division, said in the statement
Wells Fargo continues to operate under a rare asset size cap imposed by the Federal Reserve that limits the bank to no more than $2 trillion in assets.
As CUToday.info reported earlier, in January former CEO John Stumpf agreed to a lifetime ban from the banking industry and a $17.5-million fine for his role in the scandals. Seven other former Wells Fargo executives were also fined about $70 million for what regulators described as described as "the bank's systemic sales practices misconduct."