Wells Fargo case is a loud, serious warning to banks, CFPB says

Aftermath of Wells Fargo's unethical conduct

The penalties imposed by Wells Fargo are a "loud and serious warning" to anyone who may think about gaming a bank's incentive program, Consumer Financial Protection Bureau Director Richard Cordray told CNBC on Monday.

Wells Fargo is accused of creating accounts for customers across multiple product lines without telling them.

While the bank agreed to pay $185 million in penalties and $5 million to customers, it did not admit or deny wrongdoing in a civil settlement with the U.S. Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau and the Los Angeles City Attorney's office.

Customers wait in line for an ATM outside of a Wells Fargo bank branch in Los Angeles.
Patrick T. Fallon | Bloomberg | Getty Images

It was the largest penalty the CFPB ever levied against a bank, Cordray said.

"This was outrageous conduct. It was a violation of trust and an abuse of trust. It should not have happened, and I guarantee you that we will be seeing that it does not happen again at any bank," he said in an interview with CNBC's "Closing Bell."

He said that there is no indication that the conduct is happening on any kind of systematic basis at other banks, but urged the institutions to carefully monitor their incentive programs "or they can go off the rails."

"We put industry clearly on notice. We will be looking for these types of problems," said Cordray.

Over a five-year period, 5,300 Wells Fargo employees were fired. But while there may be frustration that in yet another banking scandal no executives have been charged, Cordray noted that this is a civil case. However, he said his agency is willing to share the results of its investigation with authorities if requested.

The bottom line is that several years after the financial crisis, "the banks have not completely cleaned up their act," he said.

"We are going to make sure that these banks raise their standard of conduct to what we expect and what the consumers deserve," he said.

— CNBC's Jeff Cox contributed to this story.