In March of 1852, a time of rapid change in the financial industry, Henry Wells and William G. Fargo established a business then considered cutting-edge. The pair founded a pioneering company that would help customers build startup businesses and manage their money.
Their legacy was established on creative solutions for what would become multi-generational change-makers. Recently, that legacy was once again tarnished following a multi-billion dollar settlement in a lawsuit filed by their customers accusing the company of charging illegal fees and interests on motor vehicle loans and home mortgages. In addition, the consumer banking company was alleged to have improperly charged overdraft fees on savings and checking accounts.
Record-setting penalties
In the largest fine levied against a bank and the largest against Wells, consumers will receive $2 billion in repayments and a $1.7 billion penalty, an order that came from the Consumer Financial Protection Bureau.
Sixteen million customers were affected, with many having vehicles repossessed and improperly turning down thousands of mortgage loan modifications.
Ironically, Wells was already in the process of turning around their reputation after several scandals surrounding their so-called “sales practices.” Regulators believe the bank has a long journey towards that goal. Violations go back to 2016 when national banner headlines detailed bank staff opening millions of accounts in an attempt to make sales goals.
Significant restrictions
The ongoing problems have resulted in the Federal Reserve mandating that the bank does not grow any larger until all issues are resolved once and for all. Launched in 2018, the recovery was supposedly going to take up to two years.
The clock is ticking as Wells Fargo continues its journey to resolve current woes while potentially anticipating new ones.
