Wells Fargo & Co. has agreed to pay $3 billion to settle potential criminal and civil charges stemming from its long-running fake-account scandal, the Justice Department said Friday.
As part of the settlement, Wells Fargo admitted that it collected millions of dollars of fees to which it was not entitled, harmed certain customers’ credit ratings and unlawfully misused customers’ sensitive personal information.
The agreement was struck with the U.S. Attorney’s Offices for the Central District of California and the Western District of North Carolina, the Justice Department’s Civil Division and the Securities and Exchange Commission.
“This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customer’s private information,” said Deputy Assistant Attorney General Michael Granston of the Justice Department’s Civil Division.
Under the agreement, Wells Fargo will enter a deferred prosecution agreement in which the bank will not prosecute during the settlement’s three-year term if it abides by certain conditions.
Last month, the Office of the Comptroller of the Currency announced it banned former Wells Fargo CEO John Stumpf from every working at a bank again and filed him $17.5 million for his role in the scandal.
In addition, the Federal Reserve Bank took the unusual step of capping the bank’s growth
The nation’s fourth-largest bank, Wells Fargo came under regulators’ scrutiny in 2016 after the government fined it after creating millions of fake accounts to meet sales goals.
Wells Fargo at first insisted a few wayward workers were responsible for the phony accounts. However, pressure soon shifted to management for creating an aggressive sales culture that led employees to create the fake accounts.
“This case illustrates a complete failure of leadership at multiple levels within the bank,” said Nick Hanna, U.S. Attorney for the Central District of California. “Simply put, Wells Fargo traded its hard-earned reputation for short-term profits and harmed untold numbers of customers along the way.”
The scandal’s fallout has hurt the bank’s bottom line. Its fourth-quarter earnings in 2019 declined 53 percent from the same period a year ago. And Wells Fargo assumed $1.5 billion in legal costs associated with the fake account scandal.
• Jeff Mordock can be reached at jmordock@washingtontimes.com.
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