Saturday, October 23, 2021

Wells Fargo agrees to pay $37m to settle mismanagement of small business loans

Wells Fargo announced on Thursday it would pay $37m to settle federal and state charges related to its closing of small and medium-sized business loans between 2007 and 2014.

ProPublica has been reporting on the bank’s activities relating to small businesses since 2012, revealing that the bank neglected to assess the stability of thousands of businesses before deciding whether to issue a loan. It has now admitted to processing thousands of closing notices for small businesses before alerting them to the existence of the paperwork behind the loan. These notices of “significance” failed to specify the amount of interest due, which some businesses still owed to Wells Fargo a year later, or the length of the loan. Other lawsuits were pending, at the time of the announcement.

Wells Fargo announces $4bn charge as scandal deepens Read more

This was a critical first step in the penalty, but Wells Fargo lawyers will be working closely with state regulators on separate investigations by California and Massachusetts into the bank’s handling of small business loans. An investigation by the District of Columbia attorney general found that hundreds of small businesses had been harmed by Wells Fargo closing their loans without proper documentation.

“I am glad Wells Fargo has agreed to this settlement,” California state attorney general Xavier Becerra said in a statement. “We will continue to take action against any institution that inappropriately closes small business loans. I look forward to working with our fellow state AGs to uncover any violations of Washington state law that may have occurred in the past.”

The US Small Business Administration and bank regulators, including the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, confirmed the settlement with Wells Fargo. An online settlement agreement describes the bank as “substantially cooperating” in these investigations.

The final bill will not be fully known until the state and federal investigators reach a settlement.

Latest article