Wells Fargo in Crosshairs of Next Legal Drama (Bloomberg)
The nation‚??s largest mortgage lender, Wells Fargo, has been under scrutiny by U.S. government attorneys for more than a year now regarding the company‚??s role in mortgage bond sales. Last year, President Obama set up a task force to determine whether banks like Wells Fargo broke the law while underwriting and then selling mortgage bonds. Should the San Francisco-based bank be found to have violated the Financial Institution Reform and Recovery Act (FIRREA), it could be sued for fraud by the U.S. government. Other banks being investigated include Bank of America, Credit Suisse Group AG and JPMorgan Chase & Co. Should any or all of these financial goliaths be found guilty under FIRREA, the penalties and fines could make JPMorgan‚??s current $13.2 billion plea look like spare change. At that point, does anyone want to hold shares of these companies?