Can’t wait for another Lemon Award to DOJ in the recent $1.2 billion settlement with Wells Fargo in defrauding the government in underwriting in a mortgage case. No criminal indictments but a settlement!
By William K. Black
We could, of course, retire the Bank Whistleblowers United’s Lemons title – for ignoring or trivializing elite fraud – by awarding it permanently to the Department of Justice (DOJ). The current award is particularly close to our hearts because it involves DOJ ignoring the sworn testimony of one our founders, Richard Bowen. DOJ did not ignore Bowen’s testimony because it was discredited, but because it was proven accurate – and should have led to the indictment of Citigroup’s top leadership team.
Two recent revelations prompt the timing our Lemon award to DOJ. First, it is five years since the release of the Financial Crisis Inquiry Commission (FCIC) report, so the criminal referrals that FCIC made were revealed. Citigroup’s senior managers were the subject of two, separate criminal referrals by FCIC. One of those two referrals was based on Bowen’s testimony. (Bowen’s explosive interview by FCIC’s staff was also made public.) The mainstream press has ignored the referral based on Bowen’s testimony.
Professor Bill Black is now Sen. Bernie Sanders’ economic adviser. Bravo!
By William K. Black
April 7, 2016 Bloomington, MN
I am now officially an economic advisor to Senator Sanders, and this column reflects some of that advice. Part of my advice is not to take money from Wall Street felons. (I am not taking credit for Bernie’s decision — at most I supported a decision he had already made over a year ago.) One of the reasons I reinforced Bernie’s decision was witnessing the problems President Obama experienced given his taking very large contributions from Wall Street. I channeled the prescient warning that Professor Thomas Ferguson (U. Mass, Boston) gave a group of us in 2008. He predicted, accurately, that Obama would not lead an effective crackdown on the endemic fraud by Wall Street elites that caused the financial crisis. Tom (he is a personal friend) is the expert on campaign finance. He authored the classic book on campaign finance entitled Golden Rule (as in the observation that he that has the gold makes the rules.).
Yet, no one is criminally charged despite the bank admitting wrongdoing..
April 8 – Wells Fargo & Co admitted to deceiving the U.S. government into insuring thousands of risky mortgages, as it formally reached a record $1.2 billion settlement of a U.S. Department of Justice lawsuit.
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.
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.