Over the last few years, it seems like Wells Fargo (WFC) has come under investigation for no small number of regulatory infractions or discrimination practices.
Just under a month ago, the Consumer Financial Protection Bureau (CFPB) launched an investigation into the bank’s automobile lending, consumer-deposit accounts, and mortgage lending practices. The ongoing investigation could cost the bank more than $1 billion in settlement fees. It could also result in the CFPB levying restrictions against the bank—Wells Fargo is reportedly in negotiations with the agency now.
Earlier this year, the New York Times published a report alleging that Wells Fargo was hosting fake job interviews to bolster diversity requirements. The report claims that Wells Fargo would continue to interview nonwhite and female applicants after positions had already been filled. In 2020, the bank was accused of discrimination against Black job applicants and agreed to pay $8 million in back wages. Seven years earlier in 2013, Wells Fargo paid a $175 million settlement in response to allegations that it offered higher rates and mortgage fees to Black and Hispanic candidates.
Now, a new ruling on a major Wells Fargo scandal could see some former executives of the major bank hit with some substantial consequences.
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Former Wells Fargo Execs Face Hefty Consequences
Administrative law judge Christopher McNeil recommended $18.5 million worth of fines for three former Wells Fargo executives. The ruling comes in response to the bank’s 2016 scandal involving the creation of fake accounts in order to meet internal company quotas.
If the recommendation is followed, Wells Fargo’s former Risk Officer Claudia Russ Anderson will be fined $10 million. The bank’s former Chief Auditor David Julian will have to shell out $7 million, while the former Executive Audit Director Pal McLinko will have to pay $1.5 million.
Julian and Russ Anderson could also be banned from working in the banking sector, while McLinko will receive a personal cease-and-desist order. Each defendant will have 30 days to contest the judge’s recommendations, and lawyers for each plan to continue contesting details of the Office of the Comptroller of the Currency’s (OCC) investigation.
The OCC’s acting chief, Michael Hsu, will have 90 days to make a final decision.
The Future of Wells Fargo's Banking Practices
In the past, Wells Fargo has paid millions of dollars to settle various disputes involving its banking practices. But the dollars lost have little to no effect on the mega-bank's overhead profit, causing some government officials to worry that the bank will continue unfavorable practices if the consequences aren't steep enough.
CFPB Director Rohit Chopra has spoken in the past about the need for more impactful penalties, while several U.S. Senators have spoken out about the bank's hiring and other practices. It's hard to imagine Wells Fargo taking a hit large enough to impact its business. But there could also be an example made of the major company. Consequences for high-ranking individuals could be a more tangible way to enforce penalties, as could the revoking of necessary operating licenses.
