CFPB Crafts New-Style, High-Impact Enforcement Construct

In this report, we provide an in-depth assessment of the CFPB’s unprecedented $3.7 billion settlement earlier today with Wells Fargo (WFC).  In its release, the Bureau notes that it worked with the FRB and OCC to craft this consent agreement; in his remarks, Director Chopra makes it clear that, settled or not, he wants to penalize a “corporate recidivist” by retaining or even tightening the Fed’s 2018 asset-cap (see Client Report CORPGOV26) and doing the same with the OCC’s 2021 mortgage-servicing settlement.  The case has also reopened calls to revoke WFC’s status as a financial holding company, action authorized in Dodd-Frank (see FSM Report FHC19) that would sharply constrain the company’s non-traditional securities and insurance activities and establish precedent for this penalty in other large-BHC consumer actions. Although WFC does not admit or deny the Bureau’s charges beyond accepting those specific to its jurisdiction, the Bureau has mandated agreement to several provisions that heighten the settlement’s cost to the bank.