“In capital markets news, Wells Fargo was approved as a “primary dealer” for US Treasury debt. Many wonder what the advantages are anymore of being a primary dealer, but it is the first bank to be accepted to bid at US Treasury auctions in more than two years.” Excerpt from April 2016 mortgage industry newsletter, just after Wells admitted in a U.S. Justice Department settlement to having poor FHA mortgage underwriting standards and deliberately causing FHA to insure mortgages that did not meet their standards and resulted in losses to the government’s FHA insurance fund…
…Here are other mortgage industry folks asking the same question I did about Wells Fargo’s settlement in a recent excerpt from an April 23, 2016 industry newsletter:
“There was this regarding Wells Fargo’s $1 billion Department of Justice settlement regarding FHA loans. “If Wells Fargo admitted to deceiving the U.S. government into insuring thousands of risky mortgages and admits, acknowledges, and accepts responsibility for falsely certifying many of its FHA home loans, why does the U.S. government still allow them to participate in the program?
“Further, why are JP Chase, Bank of America, US Bank, and anyone else where the Department of Justice has levied penalties allowed to still participate in the FHA program? If they did what they obviously have admitted to doing – why isn’t the government demanding the CEO’s step down?
“Monetary penalties, even big ones, are mere speed bumps for these firms. The government is concerned about large companies being too big to fail, what about companies too small to pay penalties? If REAL penalties (termination of eligibility from FHA, Fannie, Freddie, Ginnie, or loss of job or even criminal charges) were assessed, we’d quickly find out who did what. Most of the executives who cave to the government will privately tell you that, while their firms made errors, they didn’t commit fraud. But, they settle because it’s easy. If REAL penalties were involved – they wouldn’t settle. They’d fight for the truth. And, if they really did commit fraud against the U.S. government – then a simple monetary penalty isn’t enough.”
“I believe these government settlements are a fraud (designed to cement the false liberal narrative that reckless and greedy bankers and poor regulation caused the crisis) and were coerced out of the Too Big to Fail Banks, because they depend on the government to guarantee most of their liabilities (deposits), mortgages and student loans.”, Mike Perry, former Chairman and CEO, IndyMac Bank