Compliance News

Read current news from a range of industry related categories.

December 07, 2018

Wells Fargo to pay $17 million to Illinois pension funds over crisis-era mortgage bonds

Housingwire--Ben Lane

Wells Fargo will pay more than $17 million to a series of Illinois pension funds after settling with the state over the bank’s “misconduct in its marketing and sale of risky residential mortgage-backed securities leading up to the 2008 economic collapse,” Illinois Attorney General Lisa Madigan announced this week.

According to Madigan’s office, the settlement resolves an investigation into the bank’s “failure to disclose the true risk of RMBS investments” in the run-up to the housing crisis.

Under the terms of the settlement, Wells Fargo will pay $17.25 million to the state, which will then be distributed to the Teachers Retirement System of the State of Illinois, the State Universities Retirement System of Illinois, and the Illinois State Board of Investment, which oversees the State Employees’ Retirement System.

In a statement provided to HousingWire, Wells Fargo noted that the conduct in question is related to legacy Wells Fargo and Wachovia mortgage bonds from nearly 10 years ago.

“This agreement resolves an investigation by the Illinois Attorney General regarding claims related to Wells Fargo and Wachovia residential mortgage backed securities activities that occurred prior to 2009,” Wells Fargo said via a spokesperson. “While we don’t agree with the state’s view on these matters, we are pleased to be able to put these legacy issues behind us.”

The settlement is ninth such settlement reached by the state of Illinois.

Madigan’s office previously settled with JPMorgan Chase for more than $100 million; Citigroup for $44 million to the state’s pension systems and an additional $40 million in consumer relief; Bank of America for $300 million, including $200 million to Illinois’ pension systems and an additional $100 million in consumer relief; Goldman Sachs for $25 million for the state’s pension systems and $16 million in consumer relief; and Royal Bank of Scotland for $20 million to the state’s pension systems.

“With this settlement, I have recovered over a half a billion dollars for Illinois as a result of misconduct by banks and rating agencies in the mortgage-backed securities market,” Madigan said in a statement. “It has been ten years since the housing crisis, and I am still taking actions to clean up Wall Street’s greed and misconduct on behalf of the state and Illinois homeowners.”

View Article Source →