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Wells Fargo smacked again over financial-crisis acts

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It was another costly week for Southwest Florida’s second-largest bank.

Scandal-plagued Wells Fargo agreed last week to pay $2.09 billion for actions the federal government says contributed to the 2008 financial crisis

The U.S. Department of Justice claimed Wells Fargo originated residential mortgages that it knew contained misstated income information from the borrowers and that failed to meet the bank’s own internal standards. Investors lost billions of dollars from investing in residential mortgage-backed securities containing those loans.

The nation’s third-largest bank already had paid a $1.2 billion fine in 2016 for risky mortgage actions tied to the financial meltdown. That same year, it  paid $185 million in civil penalties for secretly opening millions of unauthorized deposit and credit card accounts that harmed customers.

And in May it was slapped with a $1 billion fine by the Consumer Financial Protection Bureau over improperly charged fees on auto insurance and mortgage rate lock extension products.

“Abuses in the mortgage-backed securities industry led to a financial crisis that devastated millions of Americans,” said acting U.S. Attorney for the Northern District of California Alex G. Tse, whose office led the latest investigation. “Today’s agreement holds Wells Fargo responsible for originating and selling tens of thousands of loans that were packaged into securities and subsequently defaulted.”

The San Francisco-based bank did not admit any wrongdoing in the settlement.

The DOJ investigation found Wells Fargo sold at least 73,539 stated-income loans between 2005 to 2007, and nearly half of them defaulted and led to billions of dollars in losses to investors.

Wells Fargo — which came to Sarasota-Manatee after buying ailing Wachovia in 2008 — ranks as the second-largest bank with $3.09 billion in local deposits, according to the latest available data. But it grew by just $58 million in the most recent 12-month period measured, likely a result of the scandals.

Consumers’ top complaints

From auto sales and repairs to shoddy construction and false advertising, consumers have plenty to gripe about these days.

The Consumer Federation of America released its annual “Complaint Survey Report” last week, listing familiar problems and adding some new ones that people in Florida and around the country are facing.

Consumer agencies in Florida were among those in 23 states that participated in the CFA study for 2017. Those agencies collectively handled 908,595 complaints last year, and were able to recover or save customers more than $2 billion, according to the report.

“When the car you just bought breaks down or the roofer takes your deposit and disappears, it’s not just an inconvenience, it’s a disaster,” said Susan Grant, director of Consumer Protection and Privacy at the CFA.

The most frequently cited complaint involved autos, ranging from misrepresentations in advertising or sales of new and used cars, lemons, faulty repairs, auto leasing and towing disputes.

Second was home improvement and construction, such as poor work or failure to start or complete the job.

Fraud remained one of the top three worst and fastest-growing complaints.

Other top complaints included retail sales, such as false advertising, defective merchandise or problems with rebates; credit and debt issues, including billing and fee disputes, mortgage-related fraud or credit repair services; and landlord/tenant concerns, with such examples as unhealthy or unsafe conditions, failure to make repairs or provide promised amenities, and deposit and rent disputes.

Contact John Hielscher at 361-4875, fax to 361-4880 or email [email protected]

Source: on 2018-08-06 03:07:30

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