Wells Fargo will be forced to pay out a $6.6 million settlement after the bank fell under scrutiny for some of its actions following the mortgage crisis — this after a settlement totaling $175 million due to allegations the bank discriminated against minority homebuyers during the same period.
The Wells Fargo settlement of $6.6 million seems like a drop in the bucket considering some of the massive losses during the financial crisis, and the bank — one of the more frequently criticized for its actions when it comes to mortgage practices — did not admit any wrongdoing in the case.
The Wells Fargo Settlement comes after a years-long Securities and Exchange Commission investigation into lenders that, in addition to Wells Fargo, included Citigroup, JP Morgan Chase, and Goldman Sachs.
The New York Times describes how high-risk, low-disclosure investments prompted the Wells Fargo settlement:
“In an order against Wells Fargo and one of its former brokers, the Securities and Exchange Commission charged that the bank had failed to study or even understand the complexity of the high-risk investments it sold.”
“In the period leading up to the bursting of the housing bubble, the S.E.C. said, Wells Fargo sold so-called asset-backed commercial paper to nonprofit groups, local governments and other investors with ‘generally conservative investment objectives.’”
The Wells Fargo settlement includes in the $6.6 million price tag damages of more than $80,000 and the balance of the settlement will be placed in a fund for “aggrieved investors.” Wells Fargo claims the part of the bank that engaged in the risky investments was done away with as part of its merger with Wachovia in 2008.