Fed Fines Wells Fargo & Co. $85MM for Subprime Loan Problems
On July 20, 2011 the Federal Reserve Board issued a cease and desist order, including an $85 million fine against Wells Fargo & Co. in connection with its subprime mortgage lending. The Fed's Press Release stated that the action is the largest consumer-protection action of this kind ever by the central bank, and the first major FRB enforcement action related to subprime mortgage lending. The Fed's order addresses allegations that Wells Fargo steered potential prime borrowers into more costly subprime loans. There are also allegations that Wells employees falsified income information in mortgage applications. In addition to the civil money penalty, the order requires that Wells Fargo compensate affected borrowers.
