The Consumer Financial Protection Bureau (CFPB), in a joint action with the Office of the Comptroller of the Currency (OCC) announced Friday morning that Wells Fargo will be hit with a $1 billion dollar fine.
The penalty was levied in response to the bank’s predatory practices that forced customers into purchasing things they really didn’t need, like car insurance and charging mortgage borrowers unfair fees.
“As described in the consent order, the Bureau found that Wells Fargo violated the Consumer Financial Protection Act (CFPA) in the way it administered a mandatory insurance program related to its auto loans,” the official statement announcing the fine reads. “The Bureau also found that Wells Fargo violated the CFPA in how it charged certain borrowers for mortgage interest rate-lock extensions.”
— Ryan Rainey (@ryan_rainey) April 20, 2018
This is the most strident action taken by the Trump administration’s CFPB, led by Director Mick Mulvaney, against a Major Wall Street bank.
So is this any indication that Mulvaney’s CFPB is going to flip and return to it’s original purpose of protecting consumers from financial institutions?
Not exactly. The CFPB is still a trainwreck under Mulvaney’s leadership.
While it is noteworthy that Wells Fargo will be held accountable for it’s abuses, there also isn’t any indication that that isn’t just a one-off for the CFPB to point to whenever the administration is criticized for being to friendly to Wall Street.
This is, however, an agency run by an individual who doesn’t even believe the agency should exist in the first place. During his first weeks at the CFPB, he directed the Bureau to prioritize easing the rules that banks and other lenders have to follow.
The CFPB under Mulvaney has aggressively sought to rein in the agency.
He hasn’t taken a single enforcement action against financial agencies since taking over. He ended a CFPB probe of World Acceptance Corp., an installment lender accused of unfairly profiting off of repeat borrowers, oftentimes low-income individuals. It was later revealed that the company’s political action committee had donated $4,500 to Muvlaney’s congressional campaign when he was a lawmaker. He also halted a CFPB lawsuit against multiple payday lenders and postponed implementation of a rule that would have curbed payday lending practices industrywide.
Wells Fargo, meanwhile, will likely be just fine. While they do have to shell out $1 billion in fines, banks remain flush with cash thanks to the GOP tax bill and President Donald Trump’s commitment to deregulation. According to the Washington Post, six big banks, including Wells Fargo, have already saved at least $3.59 billion dollars in taxes as a result of the tax bill which, among other things, significantly lowered the corporate tax rate from 35 to 21 percent permanently. In their quarterly report released last week, Wells Fargo reported an net income of $5.9 billion.