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All is Not Well at Wells Fargo: Bank Pays $575 Million to Settle Claims Over Opening Fake Accounts — 5 Points

1. The United States claimed that Wells Fargo, an American multinational financial services company, “created phony accounts and committed other customer abuses.” Essentially, the bank allegedly opened fake accounts without the knowledge of customers. On Friday, Wells Fargo agreed to pay $575 million to settle those claims. 

2. This settlement is between Wells Fargo and attorneys general from all 60 states and the District of Columbia. In response, Wells Fargo CEO said, “This agreement underscores our serious commitment to making things right in regard to past issues as we work to build a better bank.”

3. The bank has been under investigation since 2015, when the company “acknowledged that employees had opened millions of fake bank accounts for customers in order to meet sales goals.” Wells Fargo also stated that it sold auto insurance and other product to customers who did not need them. 

4. The bank will now face stricter regulations and pay over $1.2 billion in penalties. Additionally, as part of the settlement, “Wells Fargo will create a customer restitution review program to refund customers who have not gotten compensation from remediation efforts already in place.” Over the next three years, Wells Fargo plans to lay off over 10 percent of its workforce to cut costs. 

5. California Attorney General Xavier Becerra said, “Wells Fargo customers entrusted their bank with their livelihood, their dreams, and their savings for the future. “Instead of safeguarding its customers, Wells Fargo exploited them, signing them up for products – from bank accounts to insurance – that they never wanted. This is an incredible breach of trust that threatens not only the customers who depended on Wells Fargo, but confidence in our banking system.”

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