In December, Wells Fargo (NYSE: WFC) agreed to a $3.7 billion settlement with the federal Consumer Financial Protection Bureau (CFPB) for widespread violations in the way it managed auto and mortgage loans. The settlement included a $1.7 billion civil penalty, the largest ever doled out by the consumer watchdog.
Although the number is certainly enormous and put a big dent in Wells Fargo's fourth-quarter earnings results, I do see it as an important step for the bank in getting past its regulatory troubles. In fact, the bulk of Wells Fargo's regulatory fines may now be in its rearview mirror. Here's why.
Ever since Wells Fargo's phony-accounts scandal came to light in 2016, in which bank employees opened millions of credit-card and bank accounts without consent from its customers, the bank has faced endless regulatory issues. While many of these issues relate to the phony-accounts scandal, regulators over the years have also uncovered numerous infractions that were a result of the bank's insufficient regulatory infrastructure and internal controls. Wells Fargo at one point a few years ago had at least 12 consent orders outstanding.
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The Bulk of Wells Fargo's Regulatory Fines Might Now Be in the Past