Wells Fargo may have auto loan problem as CEO rakes in $17M

By The FedFOXBusiness

Wells Fargo CEO on Fed penalties: No doubt they were a disappointment

Wells Fargo CEO Tim Sloan on the penalties the Federal Reserve imposed on the bank.

Wells Fargo faces another round of penalties related to its auto insurance practices, according to a report on Thursday, one day after the embattled bank disclosed CEO Tim Sloan would receive a $4.6 million raise.

Continue Reading Below

U.S. regulators are preparing sanctions against Wells Fargo after learning the bank received commissions on auto insurance policies that were fraudulently applied to drivers when they took out car loans, Reuters reported. Wells Fargo did not disclose the commissions last July when it said a third-party vendor was responsible for the unnecessary policies, and will be penalized because it stood to profit from the practice.

Wells Fargo will be asked to explain which of its executives knew about the payouts and whether they were stopped as soon as possible. Wells Fargo estimates it will need to refund $145 million to customers and adjust account balances by $37 million.

“We are sorry for any harm caused and are focused on the important work to complete our remediation process,” Wells Fargo spokeswoman Catherine Pulley told Reuters.

The auto insurance scandal is one of several public embarrassments Wells Fargo has suffered in recent months. The Federal Reserve placed a growth cap on the banks and mandated that it overhaul its governance practices after the Consumer Financial Protection Bureau learned Wells Fargo employees opened millions of credit card and deposit accounts without customer consent.

Despite the scandals, Sloan’s pay rose $4.6 million to $17.6 million in 2017, according to a proxy filing. The Wells Fargo CEO did not receive a bonus, but earned about $15 million through stock awards.

Wells Fargo’s board of directors said the bank achieved “solid financial performance” under Sloan in 2017. Sloan took over as CEO in late 2016.

What do you think?

Click the button below to comment on this article.