Branch Banking & Trust Company will pay the federal government $83 million as part of a settlement relating to its lending practices for mortgages insured by the Federal Housing Administration, the Justice Department said yesterday, according to Morningconsult.com reported. The Winston-Salem, N.C.-based BB&T didn’t follow rules for FHA-insured mortgages prescribed by the Department of Housing and Urban Development from 2006 through 2014, according to the Justice Department. The bank doubled its loan volume during that period but did not comply with HUD rules on underwriting and quality control, the Justice Department said. Despite that failure to comply, BB&T still sought FHA insurance for the mortgages and pursued payment from that insurance if the loans defaulted, DOJ said.
Wells Fargo & Co., reeling from weeks of pummeling over fraudulent customer accounts, was sanctioned by the Justice Department over improperly repossessing cars owned by members of the military, Bloomberg News reported today. Federal authorities are punishing the San Francisco-based lender for as many as 413 alleged violations of the Servicemembers Civil Relief Act, according to a statement yesterday from the Justice Department, which said that the bank agreed to pay more than $4 million to compensate borrowers involved in unlawful repossessions spread over seven years. The bank’s regulator, the Office of the Comptroller of the Currency, also fined the company $20 million for a decade of transgressions, the agency said. “Wells Fargo Bank unlawfully repossessed hundreds of servicemembers’ cars without the proper process, and the bank will now rightfully pay for its violations,” Bill Baer, the Justice Department’s No. 3 official, said in a statement. Wells Fargo, which doesn’t admit or deny the allegations, is accused of engaging in “a pattern of unlawful repossessions” from 2008 to 2015 in the DOJ settlement, which still needs approval in federal court in Los Angeles. In most cases, firms must obtain court orders before seizing vehicles from soldiers, sailors, airmen and Marines who are delinquent on their loans.
Federal Reserve Chairwoman Janet Yellen promised lawmakers the central bank will scrutinize all big banks in the wake of Wells Fargo & Co.’s phony account scandal, the latest sign that fallout from the firm’s missteps could affect the entire industry, the Wall Street Journal reported today. During a contentious hearing on bank regulation before the House Financial Services Committee, Yellen faced questions from both parties about whether the Fed has adequately addressed the risks posed by the largest U.S. banks. Several Democrats said the Wells Fargo scandal was an indication that big banks are too big to manage and should be broken up. Rep. Sean Duffy (R-Wis.), without citing Wells Fargo, questioned whether the Fed has failed to end the problem of taxpayer bailouts for big banks. Read more.(Subscription required.)
The House Financial Services Committee will hold a hearing today at 10 a.m. ET titled “Holding Wall Street Accountable: Investigating Wells Fargo’s Opening of Unauthorized Customer Accounts.” John G. Stumpf, Wells Fargo chairman and CEO is the only witness scheduled to testify. For more information, please click here.
In related news, the California treasurer took the unusual step yesterday of suspending many of its ties with Wells Fargo as it continues to reel from the scandal over the creation of as many as two million unauthorized bank and credit card accounts, the New York Times reported today. The state treasurer, John Chiang, said that he was suspending Wells Fargo’s “most highly profitable business relationships” with the state for at least a year, including the lucrative business of underwriting certain California municipal bonds. On Tuesday alone, he said, he had pulled Wells Fargo off two large municipal bond deals. Chiang said that he was also suspending making any additional investments in Wells Fargo securities and would suspend the bank’s work as a broker-dealer hired to buy investments on the treasurer’s behalf. Read more.
The Consumer Financial Protection Bureau (CFPB) is fining the parent company of TitleMax, a title loan lender, $9 million for luring consumers into costly loan renewals with misleading information about terms and costs, The Hill reported today. The agency said yesterday that the company, which offers loans in exchange for a customer’s car title, also used debt collection tactics that illegally exposed information about debts to borrowers’ employers, friends and family. “TMX Finance lured consumers into more expensive loans with information that hid the true costs of the deal,” CFPB Director Richard Cordray said in a statement. "They then followed up with intrusive visits to homes and workplaces that put consumers’ personal information at risk.” The CFPB said it found store employees, as part of their sales pitch for a 30-day loan, were offering consumers a “monthly option” for making loan payments and giving out a “Voluntary Payback Guide” that showed how to repay the loan with smaller payments over a longer time period. However, the guide and sales pitch neglected to explain the true cost of the loan if the consumer renewed it multiple times.
Nearly 3.5 million Americans were able to advance above the poverty line last year, according to census data released this month, the New York Times reported today. “It all came together at the same time,” said Diane Swonk, an independent business economist in Chicago. “Lots of employment and wages gains, particularly in the lowest-paying end of the jobs spectrum, combined with minimum-wage increases that started to hit some very large population areas.” Overall, 2.9 million more jobs were created from 2014 to 2015, helping millions of unemployed people cross over into the ranks of regular wage earners. Many part-time workers increased the number of hours on the job. Wages, adjusted for inflation, climbed.
Nearly 16 years after entering the NBA, and nearly eight years after playing his final game, Darius Miles is declaring for bankruptcy, YahooSports.com reported yesterday. The 34-year old made nearly $62 million in his star-crossed NBA career, but his off-court debts appear to have overwhelmed him. Miles listed $460,385 in assets and $1.57 million in liabilities.
Duke University basketball legend Christian Laettner has reached a repayment deal that his lawyer said should bring a decade of financial troubles to a close, the Wall Street Journal reported today. The repayment deal reached by Laettner with investors in a North Carolina tobacco warehouse redevelopment project — including former teammates Johnnie Dawkins and Scottie Pippen — will enable him stay out of bankruptcy. Investors had tried to force him into chapter 7 liquidation earlier this year. In court papers filed on Monday, lawyers for Laettner said he had reached a deal on how to divide roughly $10 million in proceeds from Durham, N.C.,’s West Village project among investors including former Duke University teammate Dawkins and former 1992 Olympic “Dream Team” teammate Pippen.
