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« "The American Sky Will Be Dark With Drones" | Main | Jim Grant: "Cyprus Fired A Warning Shot Across The Globe" »
Monday
Apr012013

Feds Sue Wells Fargo For Massive Mortgage Fraud

By Matt Taibbi

Rolling Stone

Yet Another Bailed Out Bank Sued For Massive Mortgage Fraud

Earlier this year, Charlie Munger, who is billionaire Warren Buffett's right hand at Berkshire Hathaway and a sort of self-proclaimed mad oracle of Wall Street, made some interesting comments. He bashed people who buy gold, delivering an all-time amazing quote:

Gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939 but civilized people don't buy gold – they invest in productive businesses.

Munger, if you might remember, is the same gazillionaire dickhead who two years ago ripped people experiencing post-crash economic hard times, saying they should "suck it in and cope" and that anyone who wants to complain about the Wall Street bailouts should realize they were "absolutely required to save your civilization" (Munger thinks a lot about "civilization"). He added that even if you didn't like them, "you shouldn't be bitching about a little bailout. You should have been thinking it should have been bigger."

Some of those bailouts we shouldn't have complained about, of course, were directed at one of Munger's favorite companies – banking giant Wells Fargo, in which Munger and Buffett are heavily invested. Wells Fargo got as much as $36 billion in federal aid after the crash and got a massive push from the government to help it buy up the dying crash-era megabank Wachovia for $12.7 billion, a shotgun wedding that created the second-biggest bank in America. Wells Fargo not only got $25 billion in TARP funds just before it bought Wachovia, it got a special tax break from then-Treasury Secretary Hank Paulson, which some reports say was worth as much as $25 billion to WF at that time.

This is all just background for the latest news: Wells Fargo is being sued by the State for vast fraud in the mortgage markets.  The U.S. Attorney in the Southern District of New York, Preet Bharara (watch his CNBC interview with Jim Cramer), yesterday brought a case against Wells Fargo seeking "hundreds of millions of dollars" in damages for what it says is a decade of fraudulent behavior, in which Wells Fargo fraudulently certified more than 100,000 mortgages as being eligible for federal mortgage insurance.

Basically, Wells Fargo screwed the FHA and HUD by mass-approving loans without regard for whether they were defective or not.

From the L.A. Times:

When Wells Fargo discovered problems with the loans, it failed to notify HUD, which administers the FHA program, as required, the suit said. The action alleges more than 10 years of misconduct.

"The extremely poor quality of Wells Fargo's loans was a function of management's nearly singular focus on increasing the volume of FHA originations – and the bank's profits – rather than on the quality of the loans being originated," Bharara's office said in a statement.

The action by the U.S. Attorney in New York comes on the heels of another suit against JPMorgan brought last week by Eric Schneiderman in Obama's Mortgage Fraud Task Force. That action alleges similar mortgage-related scumbaggery by Bear Stearns, which Chase acquired in another government-brokered, market-concentrating shotgun wedding in early 2008.

So in just a week, we've seen two pretty big actions brought against the Coke and the Pepsi of the American commercial banking world. We'll see how they pan out, but it's interesting, if nothing else.

So just to recap Munger's comments: gold is not an investment for civilized people, it's for panicked Jews fleeing the Holocaust. Civilized people, according to Munger, instead invest in productive businesses like Wells Fargo, which according to this new suit spent a decade committing mass fraud and dumping tens of thousands of dicey loans onto the lap of the taxpayer. If we think about it in retrospect, Wells Fargo then got rewarded for years of bad behavior by receiving tens of billions more in bailout money, which it used to buy a dominating market share – artificially inflating its share price for the next generation, to the benefit of wrinkly old greedheads like Charlie Munger. And if you don't like it, you should suck it in and cope.

I wonder what Munger thinks about his investment now.  Is it still civilized?

 

The famous 'suck it' video.

Warren Buffett's partner, Chalie Munger has a message for anyone who might want to compain about the bailouts.

 

Did Buffett Sell A Million Shares Of Moody's Based On Inside Information?

"I Want To Apologize In Advance That I Don't Have Enough Subpoenas For All Of You"

 

 

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Reader Comments (21)

Chris Whalen: 'Jamie Dimon's Bear Hug Turns Into Festival Of Fraud'

http://dailybail.com/home/chris-whalen-jamie-dimon-not-so-brilliant-after-all.html

This covers last week's lawsuit.
Oct 11, 2012 at 4:20 AM | Registered CommenterDailyBail
Goldman Buys Back Buffett's $5 Billion Preferred Shares

http://dailybail.com/home/goldman-to-buy-buffetts-5-billion-preferred-shares.html
Oct 11, 2012 at 4:40 AM | Registered CommenterDailyBail
Ken Lewis Paid `Crazy Price' For Merrill Lynch, Buffett Says

http://dailybail.com/home/ken-lewis-paid-crazy-price-for-merrill-lynch-buffett-says.html
Oct 11, 2012 at 4:48 AM | Registered CommenterDailyBail
Did Warren Buffett & Berkshire Sell A Million Shares Of Moody's Based On Inside Information?

http://dailybail.com/home/did-warren-buffett-berkshire-sell-a-million-shares-of-moodys.html
Oct 11, 2012 at 5:00 AM | Registered CommenterDailyBail
Another civil suit, filed just before the election, that will be settled for pennies on the dollar--paid from monies stolen through other frauds--after the election.

Yawn.
Oct 11, 2012 at 10:52 AM | Unregistered CommenterCheyenne
I think if Preet were Attorney General we would have seen criminal prosecutions, mostly because he's a prosecutor while eric holder and everyone else at DOJ are, well, defense attorneys.

His interview with Cramer is worth watching.

http://dailybail.com/home/i-just-want-to-apologize-in-advance-that-i-dont-have-enough.html
Oct 11, 2012 at 11:36 AM | Unregistered CommenterDailyBail
Seriously DB? Holder is a corrupt thug it has nothing to do with him being a defense attorney

Financial Fraud Conviction Scorecard:

Bush: 1300+, Clinton: 1000+, Obama: 0.0 (+/-)

Five Senior Goldman Sachs Execs Gave $130K To 'Obama Victory Fund' WHILE Eric Holder Was Deciding Whether To File Criminal Charges

http://dailybail.com/home/convicted-bush-1300-clinton-1000-obama-00.html

The Bailed out Buffoon is another insider Crony being the largest investor in Moody's who rated the toxic crap he made money that way as well as Wells, Goldman, etc. most important thing to note in all this is ZERO CRIMINAL PROSECUTIONS and the statue of limitiation's is up with obama's term they certainly got their money's worth out of that paid off pig of a president!

http://www.noquarterusa.net/blog/4939/baracks-wall-street-problem-is-now-americas/

http://www.thedailybeast.com/newsweek/2012/05/06/why-can-t-obama-bring-wall-street-to-justice.html

Obama’s Failure to Reform Wall Street: SEC No Evil Recommended

http://www.senseoncents.com/2012/09/obamas-failure-to-reform-wall-street-sec-no-evil/
Oct 11, 2012 at 12:03 PM | Unregistered CommenterLadyLiberty
LC

My point was that Holder filled the DOJ with defense attorneys instead of prosecutors. That might seem unimportant to you, but it sends a message to the career prosecutors all throughout the DOJ.
Oct 11, 2012 at 12:17 PM | Registered CommenterDailyBail
Got ya DB I see your point but visitors might not. To think welfare queen warren buffoon was given the presidential medal it just makes me sick to my stomach! This is a must read on top of his billions being bailed out by taxpayers he's a liar just like his president. Largest stock holder in Moody's that was filled with fraud.

Warren Buffett is a Huge Disappointment

snip

Corruption at Moody’s Was Rampant and Widespread

In fact, the integrity of Moody’s credit ratings has been severely compromised since at least 2006. Incriminating emails from employees of both S&P and Moody’s have been released that say things like:

1. “Let’s hope we are all wealthy and retired by the time this house of cards falters.”


http://www.investingdaily.com/10959/warren-buffett-is-a-huge-disappointment

But who does obama's SEC go after? The only ratings agency not paid by Wall St.

SEC Sues the One Rating Firm Not on Wall Street’s Take

http://www.bloomberg.com/news/2012-09-30/sec-sues-the-one-rating-firm-not-on-wall-street-s-take.html


Buffett’s Betrayal (95 Billion saved by the taxpayers)

http://blogs.reuters.com/rolfe-winkler/2009/08/04/buffetts-betrayal/
Oct 11, 2012 at 12:46 PM | Unregistered CommenterLiberatedCitizen
Good Buffett links, expecially the Reuters piece by Rolfe Winkler. Always enjoy seeing that one.
Oct 11, 2012 at 12:52 PM | Registered CommenterDailyBail
Alright Mr. Munger, I'll shut the fuck up now. Oops. Your welcome. Now I'll shut the fuck up.
Oct 11, 2012 at 10:15 PM | Unregistered CommenterSKINFLINT
Strange, I always thought fraud was a felony. I guess once the numbers get big enough, its not. I figure 10k fine and a promise not to do it again will suffice. Isn't that the equivalent of a kickback?
Oct 15, 2012 at 10:30 PM | Unregistered Commenterrobertsgt40
Is there anything worse than an old grouchy sumnabitch with a nice tie and pay less shoes? He probably owns a piece of that shoe store and so feels obligated to wear them despite the fact that his feet hurt.
Oct 15, 2012 at 11:34 PM | Unregistered CommenterSKINFLINT
Hmmm

So once again another smaller bank is being attacked by the government. There are so few national banks left. In very short order there will only be 6 banks controlling pretty much all the money. Like the 6 media giants that control everything we see,hear and read. And like WallStreet which is completely controlled by a handfull of companies. So in essence we have about 30 men that control just about everything in America. And about 100 that are running the world. And look at what a great job they are doing! All the money from all the labor from the entire world is flowing to them. And all the work, the pain, the suffering and now death is flowing back to the rest of us. Just how long do they think they can continue to play the 4 horsemen? History shows that the odds of them surviving in control much longer are slim to none. Time will tell..........
Oct 16, 2012 at 8:04 AM | Unregistered CommenterDDearborn
Last I checked "fraud" was a 'crime'. When you're dealing in millions it's a felony. Interestingly, the prosecutors always tend to file these goofy little civil action which result in fines (maybe).

Were it me I would file criminal charges against the bank in a jury trial environment. Once convicted of criminal wrong doing the entire asset package known as 'the bank' could be seized by the government under the civil asset seizure laws. Thus rather than fines in the millions (a write-off for the bank) all assets totaling 1.375 TRILLION in June of 2012 would be recovered.

This might send a message.
Oct 16, 2012 at 8:37 AM | Unregistered CommenterRick Costello
So my loan came with fed insurance, the bank gets paid by the gov when I can not pay. That same bank got to package my loan and sell and resell that package of loans until no one knows who has the papers. Then that bank finances the closure of industry and the transfer of jobs to China, my job also. After all this the bank gets my house as a bonus. Capitalism without the Union is slavery.
Oct 16, 2012 at 11:55 AM | Unregistered Commenterwhiteyward
Question?

A friend of mine owned a new home which was financed through Wells Fargo. After about 8 years, the couple split forcing my friend to shoulder the mortgage for a few more years, until it became too much. She decided to do a short sale with Wells Fargo and signed all the necessary documents. The home was put up for sale and a couple who had the money fell in love with the home. They made an offer which was very reasonable and conducive to RE in that locale. After months of aggravation and up getting the royal run around, (which seemed intentional on wells part), The prospective buyers had to walk away as the offer had expired.

The home was taken off the market when the offer was made and months later it still is listed as off the market and the property is still legally listed in my friends name.


Now for the rub, I know a young couple couple with 2 children who might want to make an offer on this home. Is there any way that Wells (short sale) can be circumvented, and the original owner (current title holder) be able to make the sale without Wells?

It would seem that Wells is not interested in holding up their end of the bargain and by eliminating Wells, 2 families could benefit.
==========================================
Update: They are just going to let the home go into default. Wells refused 2 short sales because the current owner kept up to date on the payments... imagine that. Even two lawyers and real estate agents were astounded by the stunt Wells pulled.
Jan 28, 2013 at 5:34 PM | Unregistered Commenterjohn
Sadly, that's a familiar refrain. Thx for the update.
Jan 30, 2013 at 2:33 PM | Registered CommenterDailyBail
Isn't that Buffet's cash cow? Someone ought to foreclose on his none cherry coke telling drinking ass.
Jan 30, 2013 at 3:53 PM | Unregistered CommenterSKINFLINT
the low life fucking pieces of shit at wells fargo stoled lied & falsified documents that destroyed every part of my life they all NEED TO DIE!!!!!!!!!!!!!!!!
Oct 6, 2013 at 10:45 PM | Unregistered Commenterglenn feltes

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