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CRMINAL BANK: Wells Fargo “Admits Deceiving” U.S. Government, Pays Record $1.2 Billion Settlement

from Zero Hedge.com:

Nearly a decade since the housing bubble burst the dirty skeletons still emerge from the closet, and still nobody goes to jail. In the latest example of how criminal Wall Street behavior leads to zero prison time and just more slaps on the wrist, overnight Warren Buffett’s favorite bank, Wells Fargo, admitted to “deceiving” the U.S. government into insuring thousands of risky mortgages. Its “punishment” – a $1.2 billion settlement of a U.S. Department of Justice lawsuit, the highest ever levied in a housing-related matter.

Nearly a decade since the housing bubble burst the dirty skeletons still emerge from the closet, and still nobody goes to jail.

In the latest example of how criminal Wall Street behavior leads to zero prison time and just more slaps on the wrist, overnight Warren Buffett’s favorite bank, Wells Fargo, admitted to “deceiving” the U.S. government into insuring thousands of risky mortgages. Its “punishment” – a $1.2 billion settlement of a U.S. Department of Justice lawsuit, the highest ever levied in a housing-related matter.

The settlement with Wells Fargo, the largest U.S. mortgage lender and third-largest U.S. bank by assets, was filed on Friday in Manhattan federal court. It also resolves claims against Kurt Lofrano, a former Wells Fargo vice president.

According to the settlement, Wells Fargo “admits, acknowledges, and accepts responsibility” for having from 2001 to 2008 falsely certified that many of its home loans qualified for Federal Housing Administration insurance.

According to Reuters, the San Francisco-based lender also admitted to having from 2002 to 2010 failed to file timely reports on several thousand loans that had material defects or were badly underwritten, a process that Lofrano was responsible for supervising.

According to the Justice Department, the shortfalls led to substantial losses for taxpayers when the FHA was forced to pay insurance claims as defective loans soured.

Wells Fargo is the latest bank in a long series of settlements which absolve banks of all their past bubble transgressions: numerous other lenders, including Bank of America Corp, Citigroup Inc, Deutsche Bank AG and JPMorgan Chase & Co, previously settled similar federal lawsuits.

Wells Fargo, however,  held out – perhaps due to concerns how such a settlement would impact its core mortgage origination business (recall it is the biggest mortgage lender in the US) – until yesterday. Its payment is the largest in FHA history over loan origination violations.

Taking credit for this record wristslap was U.S. Attorney Preet Bharara in Manhattan who said in a statement that Friday’s settlement is a reproach for “years of reckless underwriting” at Wells Fargo. “While Wells Fargo enjoyed huge profits from its FHA loan business, the government was left holding the bag when the bad loans went bust,” Bharara added.

That, and also the record bailout of course.

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2 comments to CRMINAL BANK: Wells Fargo “Admits Deceiving” U.S. Government, Pays Record $1.2 Billion Settlement

  • Trespass Unwanted

    “admits, acknowledges, and accepts responsibility”
    is much better than the neither admits nor denies wrongdoing that was the norm.

    The $1.2 billion dollars probably needed to have some accounting work to see how many homes they got from their illegal activity. The goal was not just the bad loans, it was to use the bad loans to get the people to purchase property that could later be stolen and held as asset.

    So now they have how many homes for the measly price of $1.2 billion.

    Remember they are the largest mortgage dealer, so that’s a lot of land they have possession of and the air rights above and the mineral rights beneath it.

    $1.2 billion. Where’s the fire?

  • tomche

    What a complete, sad joke. 1.2 Billion. Um, yea, right. Says you. Prove it.
    They lie about EVERYTHING. It is completely made up garbage…created, crafted and fed to the remaining weak, soft, fluoridated brains left on Earth…to believe.
    Pardon me while I puke

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