And the hits just keep on coming. The full court press on Wells Fargo continues, on the heels of California's sanctions, Bloomberg reports the bank is now facing a Justice Department sanction over improperly repossessing cars owned by members of the military, according to two people with knowledge of the investigation.
As Bloomberg details, Federal prosecutors and the bank’s regulator, the Office of the Comptroller of the Currency, are planning to punish the San Francisco-based lender for alleged violations of the Servicemembers Civil Relief Act, said the people, who asked not to be named because the investigation isn’t public.
A penalty of as much as $20 million is expected from the OCC, one of the people said. That’s an unusually large fine for abuse of this law, which in most cases requires that firms obtain court orders before seizing vehicles from soldiers, sailors, airmen and Marines who are delinquent on their loans.
These enforcement actions against the bank follow a $185 million settlement in which employees of the firm opened more than two million accounts that customers may not have been aware of with the aim of meeting internal sales targets. The matter has sparked weeks of sharp criticism, congressional hearings and the forfeit of tens of millions in bonuses for top executives.
Shielding soldiers from financial stress has been a priority for lawmakers, and the Justice Department has recently stepped up enforcement actions against banks for taking assets illegally. Banco Santander SA’s U.S. unit agreed to pay $9 million last year over allegations that it improperly confiscated more than 1,000 vehicles from military members, the largest settlement ever obtained in a case involving repossessions of automobiles with delinquent loans.
Wells Fargo -- which was the world’s most valuable bank before the account scandal hurt its stock price -- has branches on eight U.S. military bases, include Fort Bliss in Texas, Georgia’s Fort Benning, Fort Dix in New Jersey and Hill Air Force Base in Utah. On its website, the bank says it has “a history of making banking easier for our servicemen and servicewomen.”
The bank has previously been accused of not adhering to the military lending law, which Congress approved decades ago to protect soldiers from legal hassles while they’re on active duty. Wells Fargo agreed to pay $28 million along with four other mortgage servicers that were fined for improper home foreclosures, according to a statement issued by the Justice Department last year. It didn’t admit or deny the allegations.
Wells Fargo 0 - 3 Elizabeth Warren.