Reuters is reporting that the federal
government is investigating Wells Fargo & Company for its mortgage-related
practices including the originating and packaging of home loans by its Wachovia
unit. The information comes from the
bank's third quarter securities filing.
According to the bank, it may face
federal enforcement action related to mortgage-backed securities deals leading
up to the financial crisis, specifically whether it properly disclosed the
risks associated with the securities in documents offering them for sale.
Government investigators are also apparently
looking at whether Wells Fargo complied with applicable laws, regulations, and
documentation required for mortgage originations and securitizations including
those originated at Wachovia which Wells Fargo acquired when it became
embroiled in financial difficulties at the peak of the 2008 financial crisis.
Reuters appears to be implying that it
is the administration's Mortgage Fraud Task Force that is investigating Wells
Fargo as it referenced the group's earlier civil suit against JPMorgan Chase in
its press release.