Last Wednesday, the Federal Reserve issued a consent cease and desist order and assessed an $85 million civil money penalty against Wells Fargo & Company of San Francisco, a registered bank holding company, and Wells Fargo Financial, Inc., of Des Moines. This has been a long-time coming since the Federal Reserve began its investigation into one Wells Fargo for fraudulent and neglectful lending practices, such as steering prime-eligible buyers into subprime mortgages and falsifying borrowers’ financial information.
While Wells Fargo has yet to admit to any serious malfeasance, the company entered into the agreement with the Federal Reserve to overhaul its mortgage practices. As John Stumpf, chairman and CEO of Wells Fargo, put it, “The alleged actions committed by a relatively small group of team members are not what we stand for at Wells Fargo. Fair and responsible lending practices have been at the core of our culture, and they will continue to guide us as we work closely with the Federal Reserve to provide restitution to customers who may have been harmed, and to reinforce internal controls so they further reflect Wells Fargo’s commitment to helping customers succeed financially.”