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photo: Steve Rhodes via Flickr
Many observers have noted that one of the few bright spots in the Justice Department under Barack Obama has been the Civil Rights division, under the direction of Thomas Perez. They have restored that division to its core mission of protecting minorities. So it’s no surprise that they, not the new financial fraud task force, not any of the other enforcement and regulatory bodies, would be the ones to pursue an investigation into the banksters:
The Department of Justice is preparing a lawsuit against Wells Fargo, the nation’s largest home mortgage lender, for allegedly preying upon African American borrowers during the housing bubble and steering them into high-cost subprime loans, according to three people with direct knowledge of the probe.
The company, the fourth-largest U.S. bank by assets, is currently embroiled in pre-lawsuit negotiations with the Justice Department in hopes it will settle the accusations and avoid a public lawsuit, these people said.
The allegations mirror those in public actions taken by the Federal Reserve and a separate lawsuit filed by the city of Baltimore.
While Wells did not admit wrongdoing in the recent Federal Reserve consent decrees, the order is based on Wells making restitution for steering people into riskier subprime mortgage loans. So there’s clearly enough evidence here to warrant an investigation. The Fed gave less than a slap on the wrist for these crimes – $85 million, less than what Wells makes in a week. It’s unclear from this report what the Civil Rights division would ask for.
Thomas Perez previously ran Maryland’s Department of Labor, Licensing and Regulation, which has responsibility for consumer protection and mortgage issues in the state. So he’s probably well-versed in what the city of Baltimore has accused Wells Fargo of doing. They charge that Wells loan officers engaged in “reverse redlining,” by particularly going after borrowers in minority neighborhoods for the risky subprime loans. Wells then sold these loans to investors at a hefty markup and pocketed the profits, unconcerned with how the minority borrowers would pay when the rates recast.
The saddest part of this affair is that it was not limited to Wells Fargo. It was standard practice in the mortgage industry, to target unsophisticated borrowers and rip them off, offloading the risk to investors. Dodd-Frank bans the kind of incentive payments (known as “steering payments”) given by banks to mortgage brokers who engaged in this, so they obviously are aware of the problem. This was the basis of all the mortgage fraud investigations during the bubble years. The Civil Rights division is doing the right thing on Wells, but they shouldn’t stop there.
UPDATE: Now we learn that the Civil Rights division is negotiating a settlement with Wells, because nobody does any criminal prosecution anymore at DoJ.
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“Many observers have noted that one of the few bright spots in the Justice Department under Barack Obama has been the Civil Rights division, under the direction of Thomas Perez. They have restored that division to its core mission of protecting minorities.”
Come on David, you’re much smarter than this. What, 3 years later, after millions of Americans, including minorities, have been evicted illegally from their homes, this DOJ, with all the available evidence, has finally opened up an investigation. You call this protection of minorities.
It took many members of Congress, along with multiple requests of advocacy groups outside of Washington for his civil rights to agree to “look at” the foreclosure crisis and the attacks on voting and women’s rights by these right wing governors.
You can’t be serious this DOJ Civil Rights division is returning to its core mission of protecting minorities. Let me tell you exactly how this “investigation” will end, much like the BofA lawsuit ended. They will pay a fine and will essentially be allowed to return to the criminal policies they got fined for. BofA is now back to robo signatures, and are still illegally evicting homeowners.
My guess is, this DOJ opened up the investigation into Wells Fargo to usurp the lawsuits initiated by State AG’s. It’s more of a protetive measure for Wells Fargo than anything else, as it was for BofA. We on the left need to stop looking at these minimalist attempts by the Obama administration to ameliorate the damage by seemingly doing something good. If we keep falling for these shams, we’ll coninue to give this president a benefit of the doubt he no longer deserves. I would love to be able to praise this president for being bold and taking strong action, but as the ole saying goes, once bitten, twice learned. This nation can no longer afford to operate with blinders on.
OT Paul Krugman editorial in NYT today notes the European bond market after the new bailout is going south and that is very unpleasant news.http://krugman.blogs.nytimes.com/2011/07/28/eurofail/
In short, what the markets seem to be seeing is disaster on the periphery and the Japanification of the core. And I can’t say they’re wrong.
My sense is the global economy is still in shock from the housing bubble assest losses created by the TBTF banks. This has not been resolved and deficit hawk thoughout the global economy are deepening the crisis.
When Obama’s DOJ engages to investigate the wrongdoers, all I can envision is another whitewash and coverup. I felt the same under Bush. Meet the new boss, same as the old boss.
Well the good thing about Japanification at the core is that hopefully soon we will have hit bottom. Then after that we can only improve.
Mark Cuban said on the Bill Maher show that the US needs a new industry, something that hasnt been invented yet that would be able to put people back to work. Hopefully with the new inventions and industry comes better prosperity for all. Right now the Politicians are making it worse by cripling the only programs that work and not fixing the problems.
We have gotten passed bad politicians before . . .
DOJ still “looking forward” sadly where is the accountability except for a few they threw under the bus for cover of the iceberg of corruption that has tanked our economy.
Will DoJ find anything, ya know, criminal? Is it OK if I stop holding my breath now?
Not to say that you are not prolific and on point. You can get more time for pot possesion thank misrepresenting huge financial investments you are marketing. Where is the J in justice… comes after junk bonds.
I paid off my Wells Fargo credit card and cut it up into tiny pieces a couple of months ago.
Wells Fargo is run by immoral thieves.
Well I see in the update I was right. This DOJ did exactly what I expected it to do, and that was to let the crooks off the hook again, while stopping State AG’s from actually holding these criminals accountable and sending them to jail for their crimes. Everytime I hear a politician say this nation is about the rule of law, I want to hurl.
Let me put yet another fly in the ointment as far as Wells Fargo goes. I worked for a company in Alabama that went bankrupt. I had a 401K that I left alone for years. Well, Wachovia bought SouthTrust Bank, the plan holder, Wells Fargo bought Wachovia. When I semi-retired I decided to cash in that 401K. Guess what? Wells Fargo said they had no record of it. I gave them the plan number, my plan account number, and still nothing. I asked their rep did they suppose it just evaporated into smoke?
I can only hope this mortgage con game, and things such as happened to me, opens up this can of worms and they pay dearly. I’m not through with them, I hope the Feds aren’t either.