Federal regulators have imposed a $1 billion fine on Wells Fargo & Co (NYSE:WFC) for several years of selling products that are unnecessary to customers. This is the largest and toughest action taken against a bank by the Trump administration.
The fine will be a settlement between the bank and two federal regulators, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau. The fine has been imposed so as to punish the bank for forcing its customers to purchase auto insurance policies which they did not require in addition to other mischiefs.
This is the latest blow to the company. For many years, the bank has been seen as the best managed bank in the US but has lately been moving from on crisis to another. US president Donald Trump has been especially critical about holding the bank accountable of its actions. Last year, he took to twitter to warn Wells that it would face penalties.
The president has also been vocal about having the bank’s rules dismantled. This will form part of the larger regulatory rollback. Both agendas are being pursued by the consumer bureau. Mick Mulvaney, the interim director of the agency, has been aggressively pushing for the penalties on the bank. The portion of the penalty that will be taken by the consumer bureau will represent the biggest penalty in its history.
Additionally, Mr. Mulvaney is working to defang the bureau, which has been a thorn for many financial institutions. He has accused the bureau for wasteful spending plus overzealous oversight. Many have accused the agency of working to fulfill the promises of Trump at a time when it is supposed to be neutral. This has created a lot of friction and conflict of interest.
Mr. Mulvaney, who also sums up as the director of the White House’s Office of Management and Budget, has spent a lot of time in trying to weaken the bureau. In a message to Congress, he said that the agency is very powerful yet it has very little oversight of its own activities.