Wells Fargo & Co (NYSE: WFC) is in focus on Monday after the Wall Street bank settled with the Consumer Financial Protection Bureau over “widespread mismanagement” of auto loans, mortgages and deposit accounts”.
Wells Fargo to pay up $3.70 billion in total
CFPB has ordered Wells Fargo to pay over $2.0 billion in remedy to consumers and another $1.70 billion in civil penalty – the largest this government agency has ever imposed.
The bank’s “illegal activity” over several years, as per the regulator, affected more than 16 million consumer accounts. The financial damage in total was worth billions of dollars, it added.
Consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank.
Versus its year-to-date high, the Wells Fargo stock is now down roughly 30%.
Jim Cramer reacts to the settlement news
The settlement does remove one overhang but is still not an all clear.
In its fourth financial quarter, Wells Fargo expects an operating loss of $3.50 billion attributed primarily to incremental costs related to this resolution and other legal matters. But reacting to the news, Jim Cramer said on CNBC’s “Squawk Box”:
I’m not saying this is the last one, but this is probably the last big one. I understand now why they weren’t buying back stock. But if it’s over, then maybe WFC can join other big banks. It was $60 in February of 2018. Others are well in excess.
According to the California-based financial behemoth, it has already completed a list of “required actions” associated with this settlement. Consensus on Wall Street is to buy Wells Fargo stock on the weakness.
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