DOJ Hits Wells Fargo with $2.09 Billion Penalty
This week, the U.S. Department of Justice (DOJ) announced “that Wells Fargo Bank, N.A. and several of its affiliates (Wells Fargo) will pay a civil penalty of $2.09 billion under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) based on the bank’s alleged origination and sale of residential mortgage loans that it knew contained misstated income information and did not meet the quality that Wells Fargo represented.”
The transactions ultimately caused investors to lose billions of dollars. Wells Fargo will pay the civil penalty, but will not officially admit liability, with Wells Fargo suggesting the story is a matter of the past.
"We are pleased to put behind us these legacy issues regarding claims related to residential mortgage-backed securities activities that occurred more than a decade ago," said Wells Fargo CEO Tim Sloan.
DOJ has for years been investigating bank activities that it says helped cause 2008’s financial crisis.
"Abuses in the mortgage-backed securities industry led to a financial crisis that devastated millions of Americans," said Alex G. Tse, acting U.S. attorney for the Northern District of California, which handled the suit.
Wells Fargo has faced a series of challenges in recent years, aside from DOJ’s announced penalty, with the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency fining the bank more than $1 billion earlier this year over similar claims. In 2016, the bank was also at the center of a “scandal involving fake customer accounts,” which is yet-unresolved, according to Fox Business.
Posted in The Takedown