Federal regulators are expected to slap Wells Fargo with a $1 billion fine as early as Friday for overcharging customers for auto insurance and home loans.

The penalty by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency represents the largest fine to date for the San Francisco bank, and comes less than two years after Wells was rocked by its phony-accounts scandal.

A man uses a Wells Fargo ATM inside a branch in New York.
Bloomberg News

In September 2016, Wells paid $190 million in fines and restitution for opening as many as 2.1 million accounts without customers' knowledge or consent. An additional 1.4 million unauthorized accounts were later discovered.

The size of the penalty may not put Wells' past bad behavior to rest and could result in even more political pressure on the bank, analysts have said.

It likely puts additional stress on Wells CEO Tim Sloan, who rose through the ranks at Wells and succeeded John Stumpf, who was forced to resign as a result of the cross-selling scandal. Some critics argue that Sloan represents the same internal culture at Wells that caused so many scandals, and that the bank needs new blood.

Even as Wells was struggling with its bogus-accounts scandal, regulators further alleged it was overcharging nearly 1 million auto loan borrowers for insurance they did not need, pushing a quarter of them into delinquency. Roughly 20,000 customers had their vehicles wrongfully repossessed, including some military service members who were on active duty.

Wells also allegedly made unauthorized charges to mortgage borrowers who were in bankruptcy, putting them at risk of default and foreclosure.

Last fall, Wells announced plans to provide refunds to all mortgage customers who wrongly paid for rate-lock extensions between September 2013 and February 2017.

A Wells spokesman declined to comment.

Though large, the penalty is not a surprise. Reuters first reported last week that the CFPB and OCC were contemplating a fine as large as $1 billion, and Wells confirmed last week that its regulators had proposed a 10-digit penalty.

Wells is not yet out of the woods. The bank’s wealth management unit is reportedly under investigation by the Securities and Exchange Commission and the Department of Justice.

In addition, the bank is conducting internal reviews in connection with its foreign exchange business, its wealth management business and identity theft protection products that were subject to a 2015 consent order with the OCC.

Kevin Wack

Kevin Wack

Kevin Wack is a California-based reporter for American Banker who covers the U.S. consumer finance industry.