Wells Fargo isn't admitting it did anything wrong in the mortgage mess. The company is just going to try and fix the problem it's not claiming responsibility for.
The bank will pay an $85 million fine to compensate borrowers for allegedly falsifying loan documents and pushing some borrowers to higher-interest subprime mortgages during the housing bubble, according to The Associated Press. Also, Wells Fargo has issued a statement on its Web site saying the company will "reinforce oversight of mortgage lending practices" while trying to compensate customers harmed by alleged abuses.
Wells Fargo did not, however, admit to the abuses. The company stated it was merely trying to work in the best interests of a "small group" of customers who claim they were hurt by the allegedly damaging mortgage practices during the real estate bubble.
"The alleged actions committed by a relatively small group of team members are not what we stand for at Wells Fargo," bank chairman and CEO John Stumpf says in a statement. "Fair and responsible lending practices have been at the core of our culture, and they will continue to guide us as we work closely with the Federal Reserve to provide restitution to customers who may have been harmed, and to reinforce our internal controls so they further reflect Wells Fargo's commitment to helping customers succeed financially."
Wells Fargo noted that the company voluntarily provided restitution to about 600 customers who made the claim of improper treatment regarding their mortgages in the form of cash refunds, reduced interest rates and other compensation.
The Federal Reserve says in a news release the fine against Wells Fargo is the largest consumer-enforcement fine the agency has ever levied and "the first formal enforcement action taken by a federal bank regulatory agency to address alleged steering of borrowers into high-cost, subprime loans."
Wells Fargo sales agents allegedly "steered borrowers who were potentially eligible for prime interest rate loans into loans at higher, subprime interest rates, resulting in greater costs to borrowers," the Fed said.
The Fed said the leading factor the the alleged actions were Wells Fargo's "incentive compensation and sales quota programs and the lack of adequate controls to manage the risks resulting from these programs."
Sixteen former Wells Fargo sales employees have been barred from working in the banking industry.