Wells Fargo & Co. is among firms facing federal scrutiny of mortgage-bond sales under a 1989 law the government is using to extend probes of banks’ roles in the credit crisis, Bloomberg News reported yesterday. U.S. attorneys in San Francisco have been examining Wells Fargo, the nation’s largest mortgage lender, for more than a year as authorities are investigating whether the firm violated the Financial Institution Reform and Recovery Act (FIRREA). The law carries a 10-year statute of limitations and allows the government to sue for fraud affecting a federally insured financial institution. President Barack Obama set up a task force last year that’s making use of the law, which stems from the savings-and-loan crisis of the 1980s, while examining mortgage-bond underwriting that fueled investor losses and prompted unprecedented government bailouts of banks in 2008. The task force, comprising state and federal agencies, is focusing on about eight banks. Bank of America Corp., Zurich-based Credit Suisse Group AG, and New York-based JPMorgan Chase & Co. and Citigroup Inc. also are among firms facing FIRREA investigations.
