Wells, OCC ‘on path to resolution’ for auto borrowers: CFO
Wells Fargo and federal regulators are “on path to resolution” in finalizing the terms of the San Francisco company’s plan to repay auto borrowers who were overcharged, its chief financial officer said Friday.
Speaking at an investor conference in New York, CFO John Shrewsberry was asked by a shareholder about a Reuters report from earlier this week that said the Office of the Comptroller of the Currency had rejected the company’s plan to reimburse customers who had been overbilled for auto insurance.
According to the report, which cited anonymous sources, Wells provided the OCC with its plan in June, as required under its April settlement with both the OCC and the Consumer Financial Protection Bureau. Regulators told Wells that it must do more to ensure that all affected auto customers are compensated, the report said.
At the conference Friday, Shrewsberry downplayed — but did not deny — the report.
“There was an article last week that cited an interaction at the beginning of the summer that was one of those iterative back and forths with the regulator on solving a complex issue, a very subjective issue,” he said. “I would say that reflected a previous point in time.”
Shrewsberry continued: “My own observation is it seems like there’s a much closer meeting of the minds today that also feels constructive and on path to resolution.”
The restitution plan is required under Wells’ $1 billion settlement with the OCC and CFPB over faulty risk management processes and abuses in the company’s auto and mortgage businesses.
The repayments will go to customers whom Wells improperly charged for auto insurance after they demonstrated that they had already obtained coverage. Wells has estimated that 570,000 customers were affected by the faulty charges, and 20,000 of those customers defaulted on their loan or had their car repossessed as a result.
During the conference Friday, Shrewsberry also discussed the asset cap imposed on the company by the Federal Reserve, reiterating the company’s expectation that the cap will be lifted in the first half of next year.
“It’s an iterative process. It’s a maturing process,” Shrewsberry said.
He also said the cap, which was imposed in February, has not had a big impact on loan growth. During the second quarter, average loans declined 1% to $944.1 billion as the company has pulled back in areas such as auto lending and commercial real estate.
Shrewsberry was further asked when, exactly, the negative headlines about Wells will come to an end. The company has been fighting a bruising reputational battle since its September 2016 settlement with regulators over the creation of phony customer accounts.
Shrewsberry said that the company needs to make sure that it “strives for operational excellence,” remains transparent and avoids big mistakes.
In answering the question, he also took a dig at the press, saying that publishing negative headlines about Wells has helped news outlets boost their revenue.
“I don’t know when it’s going to stop being a reliable ad seller or business model for certain outlets or journalists,” Shrewsberry said.