A never ending problem for Wells Fargo..
Robert Trojan was the chief executive at a banking trade group when he found something concerning: The organization’s accounting firm had an undisclosed conflict of interest, according to a lawsuit he filed against his former employer and Wells Fargo last month in New York’s Southern District.
A day after he formally raised his concerns, he was fired.
The lawsuit says that while he was running the Commercial Finance Association, which represents lenders who make loans on companies’ assets and invoices, Trojan found that the group’s auditor, Freed Maxick, wasn’t fully independent. The suit details how Trojan raised the issue of Freed Maxick’s undisclosed business with CFA members to three of the organization’s former finance staffers. If an auditor was also working for one of the group’s members, it would effectively be working to audit itself. One of the people Trojan said he raised the issue with was CFA’s current president Andrea Petro. Petro’s full-time job is an executive vice president at Wells Fargo, where she runs the bank’s asset financing group. (Wells Fargo is one of the CFA’s biggest and most influential members.)
After raising the issue of its auditor’s lack of independence for three years with no results, Trojan complained in writing on Jan. 19. The next day, Petro called Trojan and fired him “effective immediately”, the lawsuit says, but not for cause.
A federal judge on Thursday said Wells Fargo & Co (WFC.N) must face litigation seeking to hold it responsible for billions of dollars of claimed investor losses stemming from its alleged failures as a trustee overseeing risky residential mortgage-backed securities.
U.S. District Judge Katherine Polk Failla in Manhattan said the plaintiffs, including a few dozen funds from BlackRock Inc (BLK.N), Pacific Investment Management Co (ALVG.DE), Prudential Financial Inc (PRU.N) and TIAA-CREF, may pursue breach of contract and conflict of interest claims related to 53 trusts.
Failla also said the investors may pursue some claims alleging breaches of fiduciary duty and due care, but she dismissed claims alleging general negligence and the violation of a New York law governing mortgage trusts. Failla also denied Wells Fargo’s bid to dismiss claims by Germany’s Commerzbank AG (CBKG.DE).
Summers,who worked under the Obama Adminstration and is same the guy who repealed Glass Steagall and prevented the detivatives market from going under CFTC rules that contributed to the mess.
AS HEAD OF BARACK OBAMA’S National Economic Council during 2009 and 2010 at the height of the foreclosure crisis, Larry Summers broke many promises to help homeowners while simultaneously dismissing Wall Street’s criminality. Now, after the Obama administration has left power and Summers has no ability to influence anything, he finds himself “disturbed” that settlements for mortgage misconduct are full of lies. Those of us who screamed exactly this for years, when Summers might have been able to do something about it, are less than amused.
In Wednesday’s Washington Post, Summers writes about a “large systematic overstatement” of the burden actually felt by banks in various mortgage settlements. Typically with these settlements, the Justice Department announces a headline dollar amount that the media uncritically prints in their headlines. But that number bears no relation to reality.
Indeed, large amounts of the settlements are directed for “consumer relief,” which banks have been from the beginning adept at gaming. Financial writer Yves Smith coined the phrase “bullshit to cash ratio” to describe the relationship between actual hard-dollar fines for banks and these noncash consumer relief measures.
Biz Journals (sub. req.):
Wells Fargo said it issued Washington state refunds averaging $19.88 per account in cases where it may have charged fees without the permission of customers.
Bank of America must pay $46 million for improperly foreclosing on a California couple’s home in 2010.
U.S. Bankruptcy Court Judge Christopher Klein levied [PDF] the judgement against the bank this week, calling Bank of America’s actions in foreclosing on the couple’s home “heartless” and “brazen.”
In all, Klein ordered the bank to pay $46 million, most of which will be divvied up by law schools and consumer advocate agencies, with the couple receiving about $1 million.
Klein noted in the 107-page ruling that the fine should be enough to spur change with the bank’s mortgage practices, and not be seen as “petty cash or chump change.”
Which is peanuts..
Earlier Tuesday, Wells Fargo announced that its Community Reinvestment Act rating is being downgraded by the Office of the Comptroller of the Currency, due in part to the bank’s fake account scandal that led to a $185 million fine from the Consumer Financial Protection Bureau, the OCC, and the city and county of Los Angeles.
But the fallout from the fake account fiasco, which stemmed from more than 5,000 of the bank’s former employees opening more than 2 million fake accounts to get sales bonuses, is far from over.
ASHEVILLE, NC — The Dakota Access Pipeline has the City of Asheville rethinking which bank it uses.
Asheville City Council’s three-member finance committee will hear from city staff at 1: 30 p.m. Tuesday on a proposal to divest the city’s $150 million budget account from Wells Fargo because the bank has played a role in financing the DAPL.