Wells Fargo & Co (NYSE:WFC) Follows Footsteps Of JP Morgan Chase & Co (NYSE:JPM)

Posted by Lynn Eisler November 1, 2013 0 Comment 1127 views

The 4th largest bank in the U.S, Wells Fargo & Co (NYSE:WFC) has finally settled with the FHFA for the alleged misleading disclosures on the mortgage-securities that it sold to Freddie Mac and Fannie Mae. Wells Fargo & Co (NYSE:WFC) joins other banks such as JP Morgan Chase & Co (NYSE:JPM) in settling with the regulatory body that oversees all mortgage-finance biggies.

In 2011, The Federal Housing Finance Agency had filed eighteen lawsuits against the largest banks in the world. They sought unspecified damages on the $200B worth of mortgage securities that had been purchased by Freddie and Fannie but it had not filed any suit against Wells Fargo & Co (NYSE:WFC). Both the parties reached an agreement that gave the FHFA the right to then file a suit once the statute of limitations phased-out in 2011 September. This would allow Wells Fargo & Co (NYSE:WFC) and FHFA to progress with the settlement talks.

The dispute

There is a possibility that Wells Fargo & Co (NYSE:WFC) will disclose details of the settlement in a regulatory filing said people in the know and added that the actual sum of this settlement may not be revealed. Another thing that is not clear is whether the bank will deny or admit to certain behavior. Last month, Wells Fargo & Co (NYSE:WFC) had settled similar claims of $780M, with Freddie Mac.

This was to resolve other disputes over some unstable home loans. In the Q1 of the year, the bank had settled for an undisclosed sum, with Fannie Mae. The bank also said that they have already set aside the money that has to be paid in the settlement. Last week, Wells Fargo & Co (NYSE:WFC) settled for $5.1B with FHFA.

About the company

Wells Fargo & Co (NYSE:WFC) is essentially a bank holding company. It is also a diversified financial-services company. It has 3 operating segments: 1) Community Banking, 2) Wholesale Banking and Wealth, 3) Brokerage and Retirement.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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