The Wall Street Journal, : Wells Fargo reaches $2.09 billion settlement over mortgage-backed securities
Wells Fargo. agreed to pay $2.09 billion to settle with the Justice Department over the sale of toxic mortgage-backed securities during the financial crisis.
The Justice Department said Wednesday it reached a civil settlement with Wells Fargo to end the long-running probe into the matter. Wells Fargo had already set aside funds to cover the settlement. The bank and the Justice Department had negotiated for several months over the amount, which at one point ranged between $2.5 billion and $3 billion, people familiar with the negotiations said.
Representatives for Wells Fargo didn’t immediately comment.
The Justice Department said in a release that the settlement “holds Wells Fargo responsible for originating and selling tens of thousands of loans that were packaged into securities and subsequently defaulted.”
Though the settlement is the latest headache for Wells Fargo, it has been expected for some time, The Wall Street Journal has reported. Wells Fargo is facing a spate of federal and state investigations into its retail bank’s sale-practices scandal and its wealth-management business, among other matters.
In late April, Wells Fargo settled for $1 billion with the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency for its failure to manage risk. The Federal Reserve in February capped the bank’s assets in an unprecedented enforcement action for similar issues.
Wells Fargo is the latest bank to settle mortgage-related claims under the Trump administration. Earlier this year, British bank Barclays PLC agreed to pay $2 billion to settle with the Justice Department over its sale of residential mortgage-backed securities, while Royal Bank of Scotland Group PLC agreed to pay $4.9 billion.
Both were civil penalties and were less than what U.S. authorities had initially asked the banks to pay, the Journal reported.
