Wells Fargo, a major US bank, has agreed to pay $3bn (£2.3bn) to resolve a government investigation into its sales practices, including opening millions of fake customer accounts.
The bank admitted it had wrongly collected millions of dollars in fees, misused customer information and harmed the credit rating of customers.
The settlement comes about four years after the scandal first erupted.
It has already forced out two chief executives and led to hefty fines.
Since 2018, Wells Fargo has been operating under an order from the US Federal Reserve that limits its growth.
Wells Fargo & Co., the bank working to contain a scandal over bogus accounts, was suspended from doing some business with its hometown of San Francisco.
The city’s Board of Supervisors on Tuesday suspended the firm for two years from providing services as a broker dealer, in commercial banking and in commercial paper. The measure, sponsored by Supervisor John Avalos, also removed Wells Fargo from securities investments and counterparty/repurchasing agreements. San Francisco had barred the lender in September from a banking program for low-income residents.
Wells Fargo is being investigated for alleged identity theft linked to the bank’s fake account scandal.
The California attorney general served Wells Fargo with a search warrant on October 5 seeking a heap of documents linked to the bank’s creation of as many as 2 million unauthorized accounts, CNNMoney confirmed.
The L.A. Times first reported the existence of the search warrant, the latest in a string of legal challenges facing Wells Fargo (WFC).
The search warrant said there is “probable cause” to believe Wells Fargo employees committed “identity theft” by using unlawfully obtained customer information to open bank accounts, credit cards and other products that customers didn’t request.
The California investigation is being run by Attorney General Kamala Harris, who is running for U.S. Senate.
Wells Fargo has a lot of explaining to do.
The bank, once the largest bank in the US by market cap, and its CEO, John Stumpf, have been raked over the coals following the revelation that 2 million accounts were opened without customers’ knowledge from 2011 to 2015.
According to Mike Mayo, a banking analyst at CLSA, even after Stumpf’s testimony on Capitol Hill, there are still some important questions the bank has to answer.
I recently had the chance to sit down with Chris Britt, the CEO of Chime. Chime is an innovative company in the FinTech space that aspires to be the banking solution for Millennials.
There are several outstanding companies in mobile banking/fintech space right now, such as Acorns, Atom, Robinhood, Betterment and Wealthfront. It’s a particularly exciting time to be in fintech for entrepreneurs and investors.
Why did you decide to start Chime?
Chris Britt: Millennials hate the traditional banking options. Of the 10 LEAST loved brands among Millennials, four are financial institutions you know well – Bank of America, Chase, Citi and Wells Fargo. They’re moving away from bank branches and want to manage everything in their lives on their phone, including their finances.
A folk hero in the making!
The result: At least for the moment, the contents of Wells Fargo Home Mortgage, 1341 N. Delaware Ave., are scheduled for sheriff’s sale on March 4 to satisfy the judgment and pay about $200 for court and sheriff’s costs.
Our friend Marty Gronewald just forwarded us Well Fargo’s ARC loan application. He said none of the local branches had a clue about it but he was able to ferret out the information for us.
It is encouraging the have an application, but in the early paragraphs it says that the program is subject to the banks underwriting rules which would mean that they would never actually loan the money.
If you’d like to brave this adventure, click here to view the application. Right click on the ‘click here’ to save it to your computer. It’s a standard package, so you could send it to multiple lenders.
If anyone gets funded with this program, please let us know. We would love to spread the good news!