In a recent tweet, President Donald Trump disputed reports that his administration is considering backtracking on fines against Wells Fargo:
“Fines and penalties against Wells Fargo bank for their bad acts against their customers and others will not be dropped, as has been incorrectly reported, but will be pursued and, if anything, substantially increased,” the president said. “I will cut Regs, but make penalties severe when caught cheating.”
This statement came after Reuters reported that Consumer Financial Protection Bureau, (CFPB) acting director Mick Mulvaney was weighing whether the bank should have to pay the significant fines levied against them for abusive mortgage lending activities.
According to Reuters’ three anonymous sources, the former CFPB director, Richard Cordray had agreed to settlement terms with the nation’s largest mortgage lender before he resigned to run for Ohio governor last month. But, Reuters added the ‘Wells Fargo sanctions are on ice’ under Mulvaney, whom Trump chose to head the agency.
John Czwartacki, senior advisor at CFPB said the regulator couldn’t comment on pending enforcement matters, adding, “As a matter of principle, Acting Director Mulvaney shares the President’s firm commitment to punishing bad actors and protecting American consumers.”
Trumps tweet dispelled any notion that the bank might be let off the hook.
The latest scandal to rock the nation’s third largest bank impacted about 100,000 customers, substantially less than the 3 million customers who had fake accounts opened to meet quotas or were sold unneeded auto loan insurance as earlier discovered. The bank paid nearly $200 million in fines to the CFPB over the fake account scandal. Wells Fargo has acknowledged that its mortgage bankers unfairly charged customers fees to secure low interest rates on mortgages, and has pledged to reimburse customers for wrongful charges.
As is typical, the president’s tweet generated the usual ‘pile on’ of criticisms and opinions.
Amanda Werner, with the left-leaning Americans for Financial Reform said, “This tweet is nothing more than an empty promise.”
Lisa Donner, executive director of the same consumer advocacy group said, “The notion that this administration is or will be tough on Wall Street doesn’t pass the laugh test and that fact is evident in deeds, not tweets.”
Lauren Saunders, associate director of National Consumer Law Center stated, “The president should not be commenting on what will happen in an ongoing investigation, especially at an independent agency that should not be reporting to him…I appreciate his recognition that severe penalties are warranted when companies are caught cheating, but rules to outlaw unfair practices are also important in industries where abuses are rampant.”
Earlier this year, the president signed a bill to overrule new regulations written by the CFPB that would have permitted customers to band together and sue their banks. This bans mandatory arbitration agreements. Right now, there is a push for Congress to veto a set of new regulations proposed by the CFPB that would regulate the Payday lending industry.
The fact that the CFPB leadership fully expected Leandra English, chief of staff under Richard Cordray to become acting director at his resignation, is cause for increased polarization as well. President Trump appointed Mulvaney to the post just hours after Cordray resigned. Now both Mulvaney and English are claiming the acting director position with a federal judge scheduled to hear the issue on December 22.
Some legal experts are alarmed that Mulvaney is essentially wearing two hats at this time. As the director of the Office of Management and Budget, he is a political appointee, subject to being fired at anytime by President Trump. However, as acting director of the CFPB, he is independent and has the ability to make decisions affecting credit cards, bank accounts, mortgages and other financial products. Add to this the fact that Mulvaney himself is a long time critic of the CFPB, and the result is wary consumer groups and edgy legal experts.
President Trump campaigned on strong economic growth promises, and rolling back bank regulations is a strong focus of his administration and this tweet just showcases his intention to follow through. In any event, Wells Fargo will likely be paying another hefty fine to CFPB, at least if the president’s tweet is anything to go by.
Well Fargo spokesman Mark Folk declined to comment on Trump’s tweet.
Regards,
Ethan Warrick
Editor
Wealth Authority
