Wednesday, October 17, 2012

US sues Wells Fargo

The government sued Wells Fargo WFC +2.39% & Co., accusing the biggest U.S. mortgage lender of "reckless" lending and leaving a federal insurance program to pick up the tab.
 
Wells Fargo was sued by the government, which accused the nation's biggest mortgage lender of "reckless" lending and leaving a federal insurance program to pick up the tab.

The action, filed in federal court in Manhattan, is the latest use of the Federal False Claims Act against a lender accused of bilking the Federal Housing Administration, which has historically backed loans to first-time buyers and those with low incomes. The act has often been an effective legal tool because the government can collect treble damages if violations are proven.

Bank of America Corp. BAC +0.42% in February agreed to a $1 billion settlement of False Claims Act fraud allegations involving FHA-backed loans without admitting wrongdoing, and three other large banks have agreed to pay more than $490 million total in similar cases, each accepting responsibility for "certain conduct."

In the suit against Wells Fargo, prosecutors said they were seeking "hundreds of millions of dollars" in damages on behalf of the FHA, a government agency that doesn't make loans but insures those made by lenders that meet its standards.

All this money going back to the government and there is still no help for the average American.  Somehow the two entities that created this mess, Wall Street and our government just keep rolling in our blood.

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