Wells Fargo to pay $1 billion fine, pledges $200 billion for low-carbon economy projects
Federal regulators announce a $1 billion fine for federal rule violations, a day after Wells Fargo pledged to double down on cleantech investment and finance.
Wells Fargo will pay $1 billion in fines for violating federal rules and unfairly charging consumers inappropriate fees as part of its mortgage lending operation, according to a settlement the company reached with federal regulators.
The federal Bureau of Consumer Financial Protection and the U.S. Treasury Department's Office of the Comptroller of the Currency announced the $1 billion fine and settlement Friday, a day after the bank pledged to put $200 billion into new renewable-energy and clean-technology investments and financing, by 2030.
The two agencies will split the $1 billion.
Wells Fargo will have to make restitution to customers harmed by what the OCC called "unsafe or unsound practices," and will have to develop and implement a company-wide compliance risk management program.
The BCFP ordered Wells Fargo's board to appoint a "compliance committee," that will be made up of at least three board members who are not employees of the company. The committee will be responsible for ensuring that the company complies with all the directives of the consent order, which include developing and executing a consumer remediation plan.
The agency said Wells Fargo inappropriately and unfairly charged mortgage borrows fees related to paperwork delays that the bank should have absorbed, causing injury to customers.
Wells Fargo Chief Executive Timothy Sloan pledged Friday to "make things right for our customers," and said the bank will work with the regulators to overhaul its practices.
Investors poured $334 billion into global clean energy companies and projects in 2017, up 3 percent from the previous year, according to Bloomberg New Energy Finance (PDF). About 80 percent was invested in solar and wind power ventures, 15 percent in energy-smart technologies and the rest in bioenergy and other low-carbon products and services.
Several Wells Fargo rivals also have made substantial commitments to finance projects aimed at accelerating the transition to a low-carbon economy. In July, JPMorgan Chase pledged to facilitate at least $200 billion in clean financing by 2025, and back in November 2015, Goldman Sachs promised $150 billion for clean energy projects by 2025, which extended a previous pledge of $40 billion. Citi is deploying $100 billion.
To date, Wells Fargo has invested $6 billion in solar and wind farms across the United States, and it recently tripled its investment, to $30 million, in an incubator for clean-technology startups that it runs with the National Renewable Energy Lab.
Among its renewable energy investments, Wells Fargo financed and recently identified itself as a co-owner of a 150-megawatt solar farm in Texas, with NRG Yield. The plant, which is under construction, will sell its power to the town of Georgetown, Texas, under a long-term contract.
The bank is likely to do more deals such as this, as well as expand its footprint in green bonds, green-building underwriting and other environmentally sustainable sectors of the economy, said Mary Wenzel, the company’s head of sustainability and environmental affairs.
"We looked at where we think the markets are going, where we currently have participation in different components of sustainable finance, and tried to be ambitious," Wenzel said, during a phone call with journalists. "We want this commitment to be that, plus how are we going to stretch and be ambitious as a company? We looked across our businesses to where we can have a focus, enhance our focus and have an impact as a company."
Wells Fargo has created a rigorous due diligence process for identifying these risks, and on the flip side, identifying benefits for investing in, or providing financing for, innovative technologies and best practices, Wenzel said.
In the future, the bank plans to provide more detailed information to investors and the public about its sustainability-focused investments and financial activities. The new format will appear in reports that will be forthcoming after the bank’s upcoming corporate social responsibility report, which the company said it plans to release soon.
This article was updated Friday, April 20, to include information about Wells Fargo's settlement with federal regulators.