LAS CRUCES — Community members are planning to gather Tuesday, May 2, to call for residents and public institutions to divest of Wells Fargo.
In a news release issued by NM Comunidades en Acción y de Fé, or NM CAFé, the organization said local faith, business and community leaders will be joining in the national day of action.
The release states Wells Fargo invests in private prison corporations, such as GEO Group and Core Civic, that lobby for and profit from immigration enforcement and detention.
President Donald Trump said he is considering breaking up big banks, but former Wells Fargo chairman and CEO Richard Kovacevich thinks “it would be a mistake.”
Kovacevich said during CNBC’s “Closing Bell” on Monday that history and, more recently, the latest financial crisis, show that adding regulations on banks and limiting their lending ability has not helped the U.S. economy and the average American.
“The key to safe and sound banking is diversity,” Kovacevich added. “You can’t depend on any one sector, and when you become concentrated you have a very high possibility of failing sometime in the future.”
He added that “it’s the worst thing [Trump] can do,” and he hopes the president will reconsider.
The Securities and Exchange Commission calls itself the whistle-blower’s advocate. But one participant in the agency’s lauded whistle-blower program isn’t so sure.
He is Michael J. Lutz, an accounting specialist who raised his hand in early 2013 when he was at Radian Group, the giant mortgage insurer. At the time, Radian was still weathering the subprime crisis; it had insured loads of soured mortgages, and Mr. Lutz believed the company was lowballing the amount it might have to pay in claims on the loans.
Mr. Lutz, 31, worked at Radian’s headquarters in Philadelphia verifying that the company’s internal accounting controls were effective. This task is also known as Sarbanes-Oxley testing, named for the Enron-era legislation that bolstered the penalties for accounting fraud.
Radian was required to set aside reserves against potential losses on bad loans, and Mr. Lutz reckoned that his employer was materially understating those amounts. The company was looking to raise capital through a stock offering, and the lower the reserves, the better the company’s earnings would appear.
When Mr. Lutz voiced his concerns to his superiors, he said he was told to stand down.
“I felt like I was on an island,” Mr. Lutz told me in a phone interview. “This big-insurance-company-versus-this-little-guy is a very lonely and difficult situation to be in. But I felt I had no other choice. I was doing my job and doing what was right.”
After an investigation of Mr. Lutz’s allegations, Radian concluded that he was wrong: Its reserves had been appropriate.
U.S. federal prosecutors subpoenaed several banks last month as part of a criminal investigation into possible manipulation of the U.S. Treasuries market, Bloomberg reported on Monday.
The banks include UBS Group AG (>> UBS Group AG), BNP Paribas SA (>> BNP Paribas) and Royal Bank of Scotland Plc (>> Royal Bank of Scotland Group plc), Bloomberg reported, citing people familiar with the matter.
A series of class action lawsuits have accused various banks and brokerages of conspiring to manipulate U.S. Treasury auctions.
The lawsuits have alleged that the banks colluded to manipulate Treasury Department auctions and the pricing of Treasury securities, as well as derivative products such as futures, whose value is pegged to the Treasury.
WASHINGTON — The Supreme Court handed a partial victory to the city of Miami Monday, ruling it was authorized to bring lawsuits alleging Bank of America Corp. and Wells Fargo & Co. engaged in financial-crisis-era discriminatory lending that led to urban blight and falling property values.
The court said in its 5-3 ruling, however, that Miami in future proceedings will have to establish that the banks caused direct harm to the city — not attenuated, downstream effects — a high standard that could prove challenging to meet.
The court’s opinion, written by Justice Stephen Breyer, concluded that Miami had legal standing to bring the lawsuits under the Fair Housing Act, which bars discrimination in housing sales and rentals, as well as in related real-estate transactions.
The court rejected the banks’ argument that the city wasn’t an appropriate party to bring a claim under the law. Miami’s alleged economic injuries “fall within the zone of interests that the FHA protects,” Justice Breyer wrote.