A report this week from the House Financial Services Committee revealed that the Consumer Financial Protection Bureau ended its investigation of Wells Fargo & Co.’s fake checking accounts scandal early, thus halting an opportunity to uncover the auto division’s force-placed insurance scandal.
“The outcome would have been different and consumer harm could have been mitigated if the CFPB hadn’t ended its investigation when it did,” a lawyer who wished to remain anonymous told Auto Finance News. “Candidly, the people at the CFPB who were investigating Wells Fargo probably had no idea what collateral protection insurance (CPI) was.”
Many of the best auto finance experts at the bureau had left for other positions by the time the Wells Fargo investigation started, the lawyer said.
The committee’s report revealed that under private litigation, the CFPB could have pursued a $10 billion fine of the bank, rather than the record-setting $100 million fine the bureau settled for.
“By pausing our investigation to attempt to resolve this matter, we risk failing to identify similar sales-integrity issues involving other products,” the CFPB’s office of enforcement wrote to Director Richard Cordray in July 2016. “We and the legal division believe those risks are outweighed here by the benefits of proceeding quickly.”
In July 2016, Wells Fargo Dealer Services began investigating its CPI practice, and in late September of that year decided to stop placing policies. Wells Fargo reported the CPI issue to regulators, but a company spokeswoman declined to comment on whether the disclosure was made before or after the Sept. 8 checking accounts settlement.
The CFPB is currently investigating CPI at Wells Fargo and did not respond to a request for comment by press time.
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