Federal appeals court rules against Wells Fargo in loan case

[JURIST] The US Court of Appeals for the District of Columbia Circuit [official website] on Tuesday rejected [opinion, PDF] Wells Fargo & Co's [corporate website] contention that the bank's participation, along with other national banks, in a $25 billion settlement with the US government over foreclosure abuses [JURIST report] should bar claims bring in a separate civil case. In an unsigned opinion, a unanimous three judge panel found [Reuters report] that the settlement deal involving a number of major banks including: Bank of America Corporation, Wells Fargo, JP Morgan Chase & Co., Citigroup Inc., and Ally Financial Inc. [corporate websites] did not answer allegations in a separate civil case brought by the US Attorney's office for the Southern District of New York [official website] concerning the origination and underwriting of loans.

US banking companies [JURIST backgrounder] have been under intense scrutiny in the wake of the 2008 financial crisis. In April the Consumer Financial Protection Bureau (CFPB) [official website] ordered [JURIST report] Bank of America to pay $727 million for its illegal credit card practices. In January a New York state judge approved an $8.5 billion settlement between Bank of America and almost two dozen mortgage securities investors, holding that the 2011 agreement was reached in good faith. Also in January the US Attorney's Office for the Southern District of New York entered into a deferred prosecution agreement [JURIST report] with JP Morgan Chase & Co. which stipulates the bank will pay $1.7 billion to the US government for its role in the Bernard Madoff Ponzi scheme.

 

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