Wells Fargo has been in the eye of storm when the investigations revealed the bank was involved in numerous malpractices. A list of charges have been hurled at the bank which included customer abuses, creation of fake accounts, crediting unfair mortgage fee and charging car insurance from their clients they didn’t need.
How did it happen?
On 8th of September 2016, a scandal erupted whereby the employee of the bank created an unauthorized bank and credit card accounts with their customers knowing it. The discovery of the scandal led to fine of $185 million. And the banks states that it has fired all the employees who were involved in this incident.
After few week, a further investigation by the authorities reveals that senior executives including the CEO were involved in forfeiting their pay. Further allegation were as follows:
- Illegally possessing service member cars
- Unrealistic targets was one of the motive for fraud. Therefore, the banks has promised to abandon such targets.
- California’s attorney open investigation over possible identity fraud
- SEC investigation reveals that there were as many as 2 million fake accounts
- The city of Sacramento, California, accuses Wells Fargo of a “long-standing pattern and practice” of illegal lending in minority and low-income communities that reduced home values, limited property tax revenue and drove up foreclosures.
The class action suit brought against the bank resulted in the bank acknowledging to pay $110 million for consumers. Due to the egregious act by the bank officials. The Federal Reserve has put halt on the growth of assets unless the bank reforms itself. The also conceded to overhaul its board of directors. The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency announce that they are fining fine Wells Fargo $1 billion for the car insurance and mortgage abuses.
