Posts Tagged ‘ Wells Fargo ’
Wells Fargo Mortgage Fine: Largest Ever & No Wrongdoing
July 29th, 2011. By Hunter West
Well, it’s a big one.
Wells Fargo—the fourth largest bank in the country in terms of assets—was assessed the largest fine ever issued by the US Federal Reserve (The Fed) for allegedly pushing borrowers into more expensive mortgages, and in so doing helping to foster the sub-prime mortgage mess.
These were borrowers with good credit and cash flow, and could have easily qualified for conventional mortgages at prime, according to a report yesterday in CNN Money.
Instead, they were allegedly nudged into mortgage products that would have proved more expensive in the end. Wells Fargo Financial, a subsidiary that closed last year, was also accused of pushing through loan applications that would otherwise not have qualified due to income restrictions. It is alleged that the income information was ‘doctored.’
We say ‘alleged,’ because even though Wells Fargo agreed to pay the largest fine ever handed out by The Fed—$85 million—the banking juggernaut was not required to admit to any wrongdoing.
In fact, Wells Fargo explained in a statement that the alleged wrongdoing occurred at the hands of a few ne’er do well former employees, and that such conduct is not within the mandate or policy of Wells Fargo.
That’s like parents claiming they are not responsible for the actions of their children.
Come on…
And what does that say about ethics in the banking industry?
I was doing a story on personal finance some years ago and a banking executive was very frank in her assessment of the lengths some banks will go to get loans on the books—in other words, generate business for the bank.
To paraphrase:
“If you come in looking to borrow, say, $15,000 to buy a new truck and the loans officer realizes that you have the cash flow that would accommodate $25,000—you’re going to be pushed to borrow that $25,000. It will be a polite push. But it will be a firm push, and a push just the same. All you want is fifteen grand.
“But the bank seems to know what’s better for you, than you do.”
That interview took place around 1991 or so—20 years ago.
So look what that policy got us into (and I’m not picking on Wells Fargo here, this applies to everyone…)
It was the banks that helped fuel the sub-prime mortgage meltdown by pushing people into more expensive mortgages beyond their comfort zones (or their financial contingencies). It was the banks or their agents that allegedly doctored income statements. The stories of individuals who qualified for a mortgage without the capacity to confirm their income at all are legend, and the stuff of modern financial folklore.
The bank is supposed to say, ‘whoa…wait a minute…you may not be in a position to afford that truck, or that big house. C’mon now, take a good hard look at your finances. You have to dial your expectations back a notch.’
But no. The opposite proved true. Or, at least in one case, the opposite is alleged to have proven true. Wells Fargo will pay $85 million in fines, plus compensate up to 10,000 borrowers to the tune of between $1,000 and $20,000 apiece.
They can afford it. Earlier this week Wells Fargo reported $3.9 billion in net income for Q2 from revenues totaling in excess of $20 billion.
An $85 million fine? Millions more to compensate victims?
That’s nuthin’…
What’s something, is that they didn’t have to admit they (allegedly) screwed up…
Week Adjourned: 6.11.11
June 13th, 2011. By LucyC
Top Class Actions
Never mind what’s in your wallet…Capital One could be more concerned with what’s left in theirs soon, as it seems they may have been doing a little corporate pick pocketing… it’s very popular these days. A lawsuit seeking class action status was just filed alleging Capital One (NYSE:COF) misrepresented its “Transfer Balance Program” program, resulting in higher-than-expected interest rates for consumers.
The case, filed June 9, 2011, in the United States District Court for the Eastern District of Michigan, alleges that Capital One deceived cardholders by claiming that a cash advance obtained through the company’s transfer balance program would include a 0 percent Annual Percentage Rate (“APR”) for one year. The company also allegedly promised that credit balances on regular monthly purchases (“purchase balances”) would incur no interest as long as the balance was paid within 25 days.
However, according to the complaint, cardholders who took advantage of the transfer balance program were charged interest rates exceeding 13 percent on their purchase balances, even if the balance was paid on time, because payments were applied to the transfer balance rather than to the purchase balance.
The lawsuit alleges that Capital One’s actions constitute a breach of contract and the duty of good faith and fair dealing, in addition to violations of the Virginia Consumer Protection Act and the Michigan Consumer Protection Act. The case also argues that Capital One received unjust enrichment through the alleged scheme.
Ah yes, unjust enrichment…that old chestnut. Seems it never grows old.
Top Settlements
One for the Madoff Meter… While we’re on the subject of things financial—a settlement was recently reached between a group of investors and HSBC Holdings PLC, with Europe’s largest bank agreeing to pay $62.5 million to the investors, who allegedly lost money in association with a Madoff securities fraud.
It seems that the investors had placed funds with Ireland-based Thema International Fund Plc, the assets of which were held with Bernard L. Madoff LLC, according to a statement by HSBC. Bloomberg reports “Thema Fund, a so-called Madoff feeder fund, was controlled by Bank Medici AG. Bank Medici with its founder Sonja Kohn is part of a $59 billion suit by the trustee liquidating Madoff’s firm.” This has to be one of the worst trustee jobs in history, I would think.
Reportedly, Thema was one of several funds placed in the custodianship of HSBC units, which subsequently funnelled monies to Madoff. The settlement is pending court approval.
A statement issued by HSBC stated that the settlement “shall in no way be construed” as an admission of fault. HSBC still faces other Madoff-related lawsuits in other countries including Germany, and Luxembourg. It’s the never ending story.
And it’s a victory for the Ladies. A federal judge in Washington has approved a $32 million settlement of a class action brought against Wells Fargo Advisors by a group of women who alleged gender discrimination.
Reportedly, some 3000 female financial advisors make up the class. The suit was filed in 2009 by three female financial advisors who worked at Wachovia Securities. According to a report in the Wall Street Journal the women claimed that compared with their male counterparts, female advisors were provided fewer business opportunities by the company. The women also claimed that female advisors were at a disadvantage in other ways, specifically with respect to career advancement, work assignments and distribution of accounts.
The class covers all women who were employed as financial advisors by Wachovia or Wells Fargo at any time between March 17, 2003, and January 25, 2011, which is the date a preliminary approval was reached. The class also covers women who were employed by Wells Fargo Investments LLC and women who were employed as advisors by Prudential Securities Inc. or A.G. Edwards & Sons Inc. as of the dates those companies merged with Wachovia. I wonder who’s next?
OK. That’s it for this week. See you at the Bar.
AG Edwards Settlement has Plaintiffs Ticked Off
March 29th, 2010. By AbiK
And I have to say, I’d be ticked too.
Plaintiffs got a little gift in their mailboxes last week: they received notice of the proposed settlement from the AG Edwards class action. Guess how much some plaintiffs are receiving? The initial report of the proposed settlement put the average payout at $20-25 customer. One commenter at LawyersAndSettlements.com quotes his notice as saying he’ll receive $20.42. You can read the notice yourself at agedwardsclassactionsettlement.com. (Note the name change of the website—prior to the proposed settlement, the site was agedwardsclassaction.com; the URL has been updated to reflect that the case now has a propsed settlement.)
Keep in mind, if you’ve read the comments that came flowing in from our post on where the AG Edwards class action suit was heading, many of the Class Members claim they lost their “life savings” compliments of AG Edwards. And remember, this was back during a class period of 2000 – 2005—not post-2008 when we all saw our savings take a dive.
The AG Edwards class action had been brought against the brokerage firm in 2005 claiming that AG Edwards breached its fiduciary duties to the Plaintiffs (folks who owned AG Edwards accounts) and that AG Edwards was “unjustly enriched by receiving millions of dollars in improper payments from mutual fund companies whose funds were held by Plaintiffs“. The Class Period had covered five years—and getting to a proposed settlement then took five years.
That’s a long time to wait for some resolution and ideally, restitution.
Another aspect of the proposed settlement is what the lawyers’ take will be. Apparently it’s $21 million—plus $600,000 in expenses. That’s 35% of the total proposed settlement of $60 million—and Read the rest of this entry »
Week Adjourned: 10.30.09
October 30th, 2009. By LucyC
The Age of the Overtime Class Action…
Top Class Actions
Wells, It’s Official… Wells Fargo is now facing a wages and overtime class action filed by technical support staff who allege that they were not paid for time worked in excess of 40 hours per week.
The suit covers all network engineers, operating systems engineers, information security analysts, technical service specialists, systems support analysts, web engineers, web support engineers, web systems engineers, operating systems analysts (level 2), systems QA analysts (levels 2 or 3), computer operations analysts (levels 3 or 4), database administrators (levels 2 or 3), and applications systems engineers (level 3) who worked for Wells Fargo as exempt employees at any time during the past three years anywhere in the United States. It is estimated that about 3,000 employees are eligible to participate in the unpaid overtime class action.
Eligible employees have 75 days to join the lawsuit.
BOA Constricting Overtime Pay? And then there’s Bank of America: A lawsuit was filed this week on behalf of telephone-dedicated employees for unpaid wages and overtime worked at company call centers across the country. The lawsuit was filed as a collective action, which Read the rest of this entry »
Week Adjourned: 9.4.09
September 4th, 2009. By LucyC
It was a big class action week on the home front…
Top Class Actions
Sun Trust HELOC: Now you see it, now you don’t? A potential class action suit was filed this week against Sun Trust Bank over allegations that the financial company decreased, froze or terminated thousands of Home Equity Lines of Credit (HELOC) in ways that may have violated its contractual obligations to its clients.
In a nutshell, HELOC loans provides credit up to a stated maximum amount within a certain term, the loan collateral being the borrower’s equity in his or her home.
One 82-year old lady had secured a HELOC of $500,000 against her home, only to have it Read the rest of this entry »
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