• 210 days Could Crypto Overtake Traditional Investment?
  • 215 days Americans Still Quitting Jobs At Record Pace
  • 217 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 220 days Is The Dollar Too Strong?
  • 220 days Big Tech Disappoints Investors on Earnings Calls
  • 221 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 223 days China Is Quietly Trying To Distance Itself From Russia
  • 223 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 227 days Crypto Investors Won Big In 2021
  • 227 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 228 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 230 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 231 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 234 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 235 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 235 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 237 days Are NFTs About To Take Over Gaming?
  • 238 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 241 days What’s Causing Inflation In The United States?
  • 242 days Intel Joins Russian Exodus as Chip Shortage Digs In
VW Stockpiles Cars Over Emissions Testing Bottlenecks

VW Stockpiles Cars Over Emissions Testing Bottlenecks

Germany’s largest automaker, Volkswagen, is…

U.S. Shuts Down Foreign Software Testing

U.S. Shuts Down Foreign Software Testing

In the latest move to…

This E-Commerce Giant Turned Into A Lobbying Powerhouse

This E-Commerce Giant Turned Into A Lobbying Powerhouse

The world’s largest online marketplace…

  1. Home
  2. Markets
  3. Regulation

Wells Fargo Hit By Another Transparency Scandal

Cash

On Monday, Wells Fargo & Co (WFC) shares closed up nearly 3 percent, even though it reported a weak Q2 on July 13 and has been caught doing everything from illegal car repossession and fraudulent credit card cross-selling to—most recently—tricking customers into a slew of services lacking in transparency.

(Click to enlarge)

But the past year has been a bumpy one for share prices:

(Click to enlarge)

We knew about the opaque products last year, when Wells Fargo disclosed it in a regulatory filing. The bank is now reviewing the products and the remediation efforts are so far resulting in some nice refunds.

But while Wells is doing its own review, Federal regulators are reportedly investigating as well in an effort to determine whether customers were deceived into purchasing these add-ons, which include everything from pet insurance to identity theft products.

And refunding hundreds of millions of dollars to add-on customers comes right after Wells Fargo took a $619-million Q2 2018 charge to refund customers over another scandal: overcharging in multiple units: foreign-exchange, wealth management, auto-lending and mortgage-lending.

Tracing it back it further, the bills get even bigger.

In April, the CFPB won a $1-billion settlement from Wells Fargo over its failure to manage risk. Related: Americans Grow Weary Of U.S. Trade Policy

Back in 2013, Wells Fargo launched a new policy for locking in interest rates on mortgage loans, charging fees to customers if it was deemed that a rate-lock extension was necessary due to some vague fault of their own. The fee typically came into play when the bank said borrowers didn’t get them documentation on time, or an appraisal for a new home purchase didn’t come through as expected, causing a deal-closing delay. If the fault was the banks, then no fee would be charged. But the fees got out of hand, according to regulators. As it turns out, bank employees didn’t really know all the rules here, and borrowers were being charged these fees arbitrarily—and extensively all the way up to March 2017. 

As ZeroHedge puts it, the mounting problems for Wells Fargo are an indication that Trump CFPB appointee, Mick Mulvaney, “is keeping the pressure on” the bank.

In the meantime, the bottom line is hurting. Earlier this month, Wells announced that its operating losses had spiked 77 percent last quarter, while profits took a 12-percent dive.

Share prices will likely catch up to this misfortune.

So, Wells Fargo is looking for some good PR right now—in the form of charity. This week, it revealed plans to get more philanthropic with a pledge to give away $400 million to non-profits, schools and other ‘good causes’ this year. That would be a 40-percent uptick in charitable giving for the bank at a time when its bottom line is being questioned.

By Michael Kern for Safehaven.com

More Top Reads From Safehaven.com

Back to homepage

Leave a comment

Leave a comment