Wells Fargo Regulator Unsatisfied With Its Auto-Lending Response
(Bloomberg) -- Wells Fargo & Co. hasn’t yet satisfied one of the regulators responsible for deciding whether the bank is properly reimbursing customers who might have been harmed by recent scandals involving its auto-lending and mortgage businesses.
“We are not comfortable where we are with them,” Joseph Otting, chief of the Office of the Comptroller of the Currency, told senators at a Tuesday hearing.
In April, the third-largest U.S. bank was hit with a massive enforcement action that included $1 billion in fines from the OCC and Consumer Financial Protection Bureau for forcing unwanted auto insurance on customers and allegedly imposing inappropriate charges on home buyers. The case included an unprecedented order that gave the OCC power to remove Wells Fargo executives and board members.
When Otting was asked at Tuesday’s Senate Banking Committee hearing about Wells Fargo’s progress in paying back consumers, he said the lender is still working on “framing up” its analysis of the financial harm for people affected.
Otting didn’t provide a date for when Wells Fargo may start compensating customers, though he assured lawmakers that the OCC has “hundreds” of examiners working on the issue.
At the hearing, Senate Democrats homed in on Wells Fargo’s missteps, which first came to light two years ago when regulators accused the bank of opening up millions of accounts without customer approval. If Democrats take back the House or Senate in the upcoming election, they could have the power to turn the heat up even more.
Even before the April sanctions from from the OCC and CFPB, the Federal Reserve had imposed another unprecedented punishment on Wells Fargo: a ban on the lender’s ability to grow until it fixes internal problems.
Senator Brian Schatz, a Democrat from Hawaii, asked Otting whether Wells Fargo’s misconduct shows that giant banks “can’t supervise themselves.”
Otting, a former banker, argued that size isn’t necessarily a problem, stating that other large institutions have proven they can be regulated and serve their customers in ways that satisfy government overseers.
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