Wells Fargo & Co. yesterday lost an appeal made to the U.S. Court of Appeals in Washington, D.C. that aimed to bar the government from suing it for “reckless” lending and leaving a federal insurance program to pick up the tab, the Wall Street Journal reported today. The U.S. government in October 2012 sued Wells Fargo, seeking “hundreds of millions of dollars” in damages on behalf of the Federal Housing Administration, a government agency that doesn’t make loans but insures those made by lenders that meet its standards. That complaint alleged nearly a decade of misconduct dating back to May 2001 and contended that Wells engaged in the “regular practice of reckless origination and underwriting” of government-backed loans. Wells in turn had said it acted in good faith and denied the allegations. While several other big banks have settled with the FHA, Wells Fargo has argued that it should not be sued on this matter as it is protected by a previous settlement. The bank — along with four other large banks — had struck a deal in March 2012 with federal agencies and 49 state attorneys general agreeing to settle certain foreclosure processing abuses.
