Wells Fargo & Co. confirmed speculation from industry and analysts on Friday that its two federal regulators want the bank to pay up to $ 1 billion in civil penalties to solve problems of several customer accounts.
The bank said those problems include "our compliance risk management program and our past practices that involve certain auto protection insurance policies and certain extensions of mortgage rate blocking."
The Office of Consumer Financial Protection and the Office of the Comptroller of the Currency oversee Wells Fargo.
The increasingly obscure shadow of the customer account scandal, which emerged in September 2016, prompted Wells Fargo to take the unusual step of presenting a preliminary performance report for the first quarter.
The potential size of the fines has been speculated for several weeks.  With $ 1 billion, it is likely to be among the largest fines in the history of financial services and is already being considered at a historical level by analysts Friday
"Although the fine would be huge by standards of the regulator, it would not be that big compared to Wells Fargo's overall earnings capacity even with the recent turmoil, "said Seeking Alpha analyst Erich Reimer.
the bank reported Friday an increase of 5.3 percent in first quarter net revenues to $ 5.9 billion. Wells Fargo returned $ 4 billion to shareholders through ordinary share dividends and repurchases of net shares during the quarter, 30 percent more than a year ago.
"Market concerns about how long it will take to clean up Wells Fargo, and if it has been chosen as a long-term goal to be an example of policymakers," said Reimer.
3.53 million affected customer accounts
Employees of retail banks opened accounts for customers who did not request them or added unsolicited insurance and residential mortgage services. Those moves earned Wells Fargo tens of millions of dollars.
The majority of victims of fraud in customer accounts were in Arizona and California.
However, Wells Fargo has said that it can not be ruled out that at least 38,722 unauthorized customer accounts established in North Carolina and 23,327 in South Carolina.
Depending on which topic is discussed, the scandal period could be traced back to May 2002, with some customers potentially affected until mid-2017. The most common time frame used by regulators and the bank for the scandal period is from January 2009 to September 2016.
The bank agreed in July to a $ 142 million agreement for customer accounts. The agreement adds to the $ 185 million that the bank agreed to pay in September 2016 to resolve the regulatory complaints about fraudulent accounts and an additional $ 80 million in July to resolve the five-year excess billing to approximately 570,000 loan customers. automobiles  The bank hired an external group to review 165 million current and former accounts of retail banking customers.
The review analyzed data on current, savings, unsecured credit, line of credit and identity accounts of consumers and small businesses. Theft protection services of Wells Fargo.
Wells Fargo has already agreed to provide $ 2.8 million in reimbursements and additional credits in addition to the $ 3.3 million initially committed to the affected people.
Wells Fargo acknowledged that "these preliminary results are subject to change" when negotiating with federal regulators.
"At this time, we can not predict the final resolution of t The CFPB / OCC matters and can not reasonably estimate our related loss contingency," the bank said.
"Accordingly," he continued, "the preliminary financial results we report today may need to be revised to reflect additional accruals for the CFPB / OCC imports" when the bank submits its first quarter report to the Exchange Commission and Values of the United States.
Wells Fargo said previously that it could experience total losses ranging between $ 2.7 billion and $ 3.3 billion in its attempt to resolve its scandals. That number has more than tripled since October 2016.
"These are the costs that we have cited to solve the sales problems," said bank spokesperson Ancel Martinez on Friday. "However, there are many disputes in this issue, and we have never evaluated specific issues."
On February 3, the Federal Reserve, in the last action of then-President Janet Yellen, said that Wells Fargo will not be allowed to grow its total assets beyond the $ 1.93 billion it had on December 31, 2017
The bank said those restrictions could reduce the 2018 earnings by $ 300 million to $ 400 million. To put that in context, Wells Fargo had $ 22.2 billion in profits in fiscal year 2017.
Mike Mulvaney, Trump's interim nominee as chief of CFPB, is reviewing at least 14 investigations opened at the bank, according to multiple press reports in December.
Trump said in the December 8 tweet that "the fines and sanctions against Wells Fargo Bank for their bad acts against their clients and others will not be eliminated, as was incorrectly reported."
"But it will be persecuted, and in any case, it will increase substantially," he continued. "I will cut the rules, but I will seriously penalize the traps when they are caught!"
Reimer, the analyst, said that "it is increasingly evident, whether with public statements or real acts such as the recent Federal Reserve sanction, that Wells Fargo is the only exception that the administration seems to be giving an example of "in the financial services sector.
Tony Plath, finance professor at UNC Charlotte, said Trump's tweet "has legs because Trump only reflects popular opinion here regarding the atrocity of the Wells Fargo crime series for the last year or so "
Plath said that "the question of the magnitude of the fines that Wells Fargo faces will not be resolved until the CFPB has a new permanent director."
CEO: We are
Timothy Sloan, the bank's executive director, did not specifically address the possible regulatory fines in his prepared statement.  Instead, Sloan focused on another reminder of the bank's efforts to rehabilitate its reputation and restore public trust in Wells Fargo and its management team. He made a similar effort when he visited the bank's Winston-Salem operations on March 28.
"I am confident that our outstanding team will continue to transform Wells Fargo into a better and stronger company," Sloan said.
"However, we recognize that it will take time to put aside all of our challenges," he said. "We move forward in our priority to rebuild trust with our customers, team members, communities, regulators and shareholders."
Reimer said that "although the exact nature of the scandal is not completely clear at this time, much less the consequences, it is clear that this is a more negative attention that does not benefit Wells Fargo in the least."  / * .