VOL. 125 | NO. 96 | Tuesday, May 18, 2010
Wells Fargo Acknowledges Gov't Investigation
By Andy Meek
The San Francisco bank Memphis and Shelby County governments sued in December over its lending practices has acknowledged it’s the subject of a probe by “certain government entities” over the same thing.
In a quarterly report filed Friday with the U.S. Securities and Exchange Commission, Wells Fargo & Co. gave a two-sentence disclosure about the investigations near the end of the report.
“Certain government entities are conducting investigations into the mortgage lending practices of various Wells Fargo-affiliated entities, including whether borrowers were steered to more costly mortgage products,” the bank noted. “Wells Fargo intends to cooperate fully with these investigations.”
A Wells Fargo spokesman said the company would not comment beyond those details. Left unsaid is what entities – state, federal or both – are looking into Wells’ mortgage lending.
Memphis and Shelby County filed a federal lawsuit against the bank over the way Wells’ mortgage lending practices allegedly worsened the local foreclosure problem.
The lender was accused of zeroing in on black homeowners in the city and county and prodding them into expensive, predatory mortgages. Last month, both governments amended their case to add testimony from four ex-employees of local Wells offices, all of whom claim the bank targeted black borrowers for less-than-desirable home loans.
Memphis attorney Webb Brewer, one of the local attorneys representing the city and county, earlier this year said the legal team behind the suit is expecting an arduous battle with Wells. And there’s good reason to expect that.
The bank, one of the largest in the nation, has $1.2 trillion in assets, more than 70 million customers and stock that had a market value of $132 billion toward the end of 2009. Wells Fargo’s mortgage division serves all 50 states with more than 2,200 mortgage and Wells Fargo bank stores.
The bank had mortgage originations by the end of 2008 of $288.47 billion, according to the company.
Local attorneys representing Wells include Jennifer Hagerman, an attorney at Burch Porter & Johnson PLLC. She’s also the chairwoman of the Center City Commission board of directors.
Fellow Burch Porter attorney Jef Feibelman also represents Wells Fargo, along with four attorneys from Washington, according to the case docket.
Feibelman was one of three finalists the Tennessee Supreme Court considered in 2006 for the post of state attorney general. He also was on the short list of candidates for the vacant position of U.S. attorney for the Western District of Tennessee, a job President Barack Obama recently gave to Ed Stanton.
Memphis Mayor A C Wharton Jr. laid out the city’s case against Wells in testimony he gave in Washington last month to a judiciary subcommittee of the U.S. House of Representatives. And earlier this year, he paid a visit to Tom Perez, the assistant U.S. attorney general who heads the U.S. Justice Department’s civil rights division, to personally lay the case out for him.
That visit with Perez also was meant to encourage the Justice Department to get involved in the case.
“With the unfair practices Wells Fargo and certain other mortgage lenders have promoted, the American dream has effectively not only been transformed into a temporary pipe dream, but a ticking time bomb,” Wharton said in his House testimony.