Just over a week after Wells Fargo agreed to pay $480 million to settle a class-action lawsuit brought on by the many dishonest (and in some cases outright fraudulent) customer abuses that have come to light in the wake of the now-infamous cross selling scandal, Wells has agreed to shell out another $575 million to settle charge charges brought by attorneys general from all 50 states (and Washington DC) over its cross-selling scandal, what appears to be a final chapter in a saga that has already cost the bank hundreds of millions of dollars in fines.
For those who need a reminder, the bank was exposed in 2016 after regional branch managers opened millions of fraudulent credit-card and checking accounts for customers to help meet strict sales quota.
Despite the hefty price tag, Wells shares climbed on the news as investors hoped that the bank might finally be able to put the scandal - which tarnished its reputation as the most honest bank on Wall Street - behind it.
Here's more on the settlement from the New York Times:
The deal ends investigations that began after federal regulators revealed in September 2016 that Wells Fargo employees had for years opened millions of unauthorized bank accounts in customers’ names. The employees said they had done so because they feared losing their jobs if they could not meet the bank’s aggressive sales goals.
The agreement comes after New York reached a separate, $65 million settlement with Wells Fargo in October over the sham accounts, and after the bank paid $1 billion in April to settle federal charges related to its handling of mortgages and auto loans.
Wells Fargo admitted what it had done and paid fines of $185 million, but the company’s scandals kept multiplying. The bank was accused of forcing unwanted auto insurance on some customers who took out car loans, enrolling more than 500,000 people in a bill-paying service they might not have sought, overcharging some mortgage customers and charging customers for life-insurance policies they did not purchase.
In February, it will have been a year since the Federal Reserve applied a cap to Wells's balance sheet, effectively preventing the bank from growing until it could show marked improvement in its compliance controls. The Fed recently rejected the bank's oversight planning, meaning the cap will likely remain in place for the time being.