WASHINGTON -- Wells Fargo & Co. will pay a $1 billion fine imposed by two U.S. regulators for auto lending and mortgage abuses, government officials said Friday.
Regulators have been investigating Wells Fargo for months after it acknowledged charging thousands of borrowers for auto insurance they didn’t need, driving some to default on their auto loans and lose their vehicles through repossession.
In a consent order released Friday, regulators said Wells Fargo forced consumers to obtain protection for vehicles for auto loans that the bank "originated or acquired."
The Consumer Financial Protection Bureau, which issued the fine, said Wells Fargo, a leading auto lender in the U.S., also will "remediate harmed consumers."
Within 120 days, Wells Fargo must submit a remediation program to the CFPB outlining how the bank plans to compensate consumers that incurred "an economic or other cognizable harm."
As part of the remediation plan, Wells Fargo is expected to pay upward of $10 million, or compensate more than 50,000 customers or customer accounts that require remediation, the order says.
The bureau said it assessed a $1 billion penalty against the bank and credited a $500 million penalty collected by the Office of the Comptroller of the Currency toward the satisfaction of the fine.
Wells Fargo also admitted that it had charged some customers improper fees to lock in an interest rate for a mortgage. The combined $1 billion fine is among the largest ever levied by either regulator.
The settlement is one of the most aggressive moves by federal regulators under the Trump administration to penalize a large bank.
The CFPB’s interim director, Mick Mulvaney, lobbied hard for the penalty, The New York Times reported. The consumer bureau’s portion of the penalty represents the largest fine in its history, the paper said.
"We have said all along that we will enforce the law," Mulvaney said in a statement Friday. "That is what we did here.”
Last week, the CFPB and the Office of the Comptroller of the Currency proposed Wells Fargo to pay the penalty to resolve probes into auto insurance and mortgage lending abuses at the third largest U.S. bank.
"While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency," Wells Fargo CEO Tim Sloan said in a statement.
The CFPB had been readying sanctions alongside the comptroller's office, Wells Fargo's day-to-day regulator.
The bank, still smarting from a prolonged sales scandal in its retail banking business, found inconsistencies at its auto lending and mortgage business last summer, leading to further probes by regulators.
To appease investors and regulators, the bank has overhauled operations, revamped its board and hired a new compliance officer.