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Summers,who worked under the Obama Adminstration and is same the guy who repealed Glass Steagall and prevented the detivatives market from going under CFTC rules that contributed to the mess.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.