Group of professionals discuss finance

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Banking and Finance Law Daily, March 28, 2017

Wells Fargo CRA rating hurt by phony account scandal

By Richard A. Roth, J.D.

The Office of the Comptroller of the Currency penalized Wells Fargo Bank, N.A. for the bank’s problems with customer accounts that never were requested, significantly reducing the bank’s rating in its just-released Community Reinvestment Act evaluation. While the bank achieved either "Outstanding" or "High Satisfactory" ratings in the three separate components, the OCC gave the bank a composite rating of "Needs to Improve" based on "the extent and egregious nature of the evidence of discriminatory and illegal credit practices." The recent scandal was not the bank’s only problem.

According to the OCC’s public disclosure, there was "an extensive and pervasive pattern and practice of violations across multiple lines of business . . . resulting in significant harm to large numbers of consumers." The bank did not have an effective compliance risk management program, the agency said, and bank management policies contributed to at least some of the violations that were found.

The CRA evaluation covered activities between mid-November 2008 and mid-November 2013.

Other problems. The OCC’s rating was not based solely on the phony-account scandal. The CRA report noted that:

  • Wells Fargo had entered into a consent order in July 2012 that settled charges of discriminatory home mortgage lending.
  • A Wells Fargo affiliate had settled Federal Trade Commission charges of steering prime borrowers into more expensive loans and falsifying income information between January 2004 and June 2008.
  • Wells Fargo had settled Department of Justice charges relating to repossessing servicemembers’ vehicles in violation of the Servicemembers Civil Relief Act.
  • The OCC had found that Wells Fargo engaged in unfair practices related to debt cancellation and credit monitoring products between 2006 and 2013.
  • Wells Fargo settled Consumer Financial Protection Bureau charges relating to private student loan partial payments in 2016.
  • Wells Fargo loan officers participated in a referral fee scheme that violated the Real Estate Settlement Procedures Act between 2008 and 2013.
  • Wells Fargo violated the Fair Housing Act by mortgage loan discrimination against women who were pregnant or on maternity leave between August 2011 and August 2012.
  • Wells Fargo violated the FHA by treating "other real estate owned" properties in minority neighborhoods differently than in other neighborhoods.

The report noted that some of these violations were self-reported by the bank.

statement by Wells Fargo emphasized that the bank had been rated highly in the examination’s components, which indicated a strong record of lending to and working in low- and moderate-income communities. The bank also described a number of ongoing programs that enhance their community development services.

Companies: Wells Fargo Bank, N.A.

MainStory: TopStory CommunityDevelopment ConsumerCredit EnforcementActions EqualCreditOpportunity Loans Mortgages RESPA OversightInvestigations UDAAP

Back to Top

Banking and Finance Law Daily

Introducing Wolters Kluwer Banking and Finance Law Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.


A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.