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Wells Fargo Discloses Government Investigations

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Wells Fargo & Co. has disclosed it is being investigated about the origination and securitization of home loans as it faces more fallout from the fraudulent account scandal.

Federal and state government agencies are continuing to investigate or examine some of the San Francisco-based financial institution’s mortgage-related practices.

In addition, practices of predecessor institutions are also being investigated or examined — likely Wachovia Corp., which Wells Fargo acquired in December 2009.

The actions were disclosed Thursday in Wells Fargo’s third-quarter 10Q filing with the Securities and Exchange Commission.

Among the agencies involved is the U.S. Department of Justice.

At issue are
the origination, underwriting and securitization of residential mortgages, including subprime loans.

“Wells Fargo, for itself and for predecessor institutions, has responded, and continues to respond, to requests from these agencies,” the filing stated.

Wells Fargo is carrying on discussions with
various government agencies that are part of the RMBS Working Group of the Financial Fraud Enforcement Task Force. The discussions center around potential theories of liability that have been raised. 

“Other financial institutions have entered into settlements with these agencies, the nature of which related to the specific activities of those financial institutions, including the imposition of significant financial penalties and remedial actions,” the financial services firm stated in the filing.

Wells Fargo additionally disclosed that state and local government agencies — including the Justice Department, SEC, congressional committees as well as state attorneys general and prosecutors offices
— have undertaken formal or informal inquiries, investigations or examinations tied to the fraudulent creation of accounts by former Wells Fargo Bank, N.A., employees.

A settlement over the alleged actions was announced on Sept. 28 with the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency and Los Angeles City Attorney.

The notice indicated that multiple lawsuit have been filed by
non-governmental parties seeking damages or other remedies related to the sales practices that led to the scandal.

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