Wells Fargo Agrees to Pay $2.09 Billion Penalty for Allegedly Misrepresenting Quality of Loans Used in Residential Mortgage-Backed Securities

The only thing I would add to what Dan Edstrom says below is that the courts are still treating WFB as a credible source and applying legal presumptions to its fabricated documents. This enables WFB and the other banks that committed the same atrocities to “skip” actual proof of an unprovable case. WFB has admitted to lying, cheating and outright fraud on a system wide basis. Why would you “trust” any company with that track record and give them the benefit of the doubt (a legal presumption) on paper isntruments that are challenged by a homeowner?

Fraud, falsification, mail fraud, wire fraud, financial services fraud, financial institution fraud, violations of SOX requirements, violating the requirements for complying with SOX and providing false or misleading information to investors, etc.  And note that the CEO and Chief Financial Officers probably signed documents every single year stating they had adequate internal controls in place and they were required to disclose any material exceptions uncovered by their internal controls. These SOX violations are both criminal and civil in nature.   Note that half of the 73,000 or so loans had defaulted.

Note that this ties in closely with the other damages Wells Fargo was ordered to pay borrowers for. In that case the conduct was Wells Fargo Bank taking mortgage applications over the telephone and entering in completely false income information. This press release does not list the details of who took the mortgage applications. There is a very good chance that Wells Fargo falsified this information themselves.  And their supposed “internal controls” uncovered the problem, but they apparently have no internal controls to “control” what happens when their internal controls identify a problem.

And where are the big accounting firms that are auditing Wells Fargo and these types of companies? Don’t they review the internal controls and the issues that arise from these controls?

And notice that their conduct was completely intentional and they had full knowledge, as they did not hold these loans on their balance sheet. They off-loaded them to others while knowingly misrepresenting the loan to debt ratios.

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