DOJ Takes on Wells Fargo

Wells Fargo Target Of Justice Department Probe; Agency Alleges Discriminatory Lending

Posted: 7/26/11 09:00 PM ET THE HUFFINGTON POST

WASHINGTON — The Department of Justice is preparing a lawsuit against Wells Fargo, the nation’s largest home mortgage lender, for allegedly preying upon African American borrowers during the housing bubble and steering them into high-cost subprime loans, according to three people with direct knowledge of the probe.

The company, the fourth-largest U.S. bank by assets, is currently embroiled in pre-lawsuit negotiations with the Justice Department in hopes it will settle the accusations and avoid a public lawsuit, these people said.

The allegations mirror those in public actions taken by the Federal Reserve and a separate lawsuit filed by the city of Baltimore.

Last week, the Fed said that perhaps more than 10,000 borrowers were inappropriately steered into subprime mortgage loans or had their loan documents falsified by bank personnel. Wells Fargo agreed to pay $85 million to settle the civil charges. It did not admit wrongdoing.

In its ongoing case against Baltimore, Wells Fargo stands accused of using those same practices, but deploying them against black borrowers in majority-black neighborhoods, an act commonly known as “reverse redlining.” The city alleges that the bank targeted black borrowers, knowing they’d ultimately default on their loans, but did not fear shouldering the cost because Wells sold those loans to investors. Wells Fargo denies the allegations.

“We have a very strong commitment to serving all customers along the credit spectrum, and we do so without bias,” said Vickee Adams, a spokeswoman for Wells Fargo. “That’s the type of responsible lending that we practice.” Adams declined to comment on the Justice probe.

The previously-undisclosed Justice probe, which is being led by the Civil Rights division’s Fair Lending Unit, lends credence to the city’s lawsuit, sources told The Huffington Post. The official overseeing the office, Assistant Attorney General Thomas E. Perez, previously served as secretary of Maryland’s Department of Labor, Licensing and Regulation, a consumer protection agency that regulates mortgage and foreclosure terms and houses the state’s financial regulator.

Taken together, the various investigations paint a picture of a lender that profited by knowingly targeting less-sophisticated borrowers, in particular preying upon those communities that traditionally lacked access to a full range of consumer credit products.

They also add up to significant blows to the bank’s once-pristine reputation. Widely seen as the most innocent of the biggest mortgage lenders, Wells Fargo executives were spared the humiliation of having to answer critical questions in public from the Financial Crisis Inquiry Commission, and unlike its competitors, the bank’s pre-crisis activities were never the subject of the commission’s hearings.

But over the past year, that reputation has begun to crumble.

Wells Fargo has fought lawsuits from Baltimore and the city of Memphis alleging that the bank preyed upon black borrowers; settled claims it illegally steered credit-worthy borrowers into subprime loans and misled investors about the risks of mortgage-backed securities it sold; and fought investigations and regulatory actions stemming from revelations that it employed so-called “robo-signers,” the agents directed by lenders to process foreclosure filings en masse without examining the underlying paperwork.

The bank, along with four other companies, is also the subject of confidential audits by the Department of Housing and Urban Development that accuse the lender of defrauding taxpayers in its handling of foreclosures on homes purchased with government-backed loans, HuffPost reported in May.

Wells Fargo is in the middle of negotiations to settle state and federal allegations that it mistreated borrowers and in some cases illegally foreclosed on them. It could cost the bank billions of dollars.

The Justice probe signals that the agency, after battling claims that it’s been too easy on major mortgage firms in the wake of the financial crisis, may be toughening its approach. Its fair lending unit has about 60 open matters, Perez said in a June 1 speech. It currently has more than 15 ongoing investigations involving allegations of discriminatory lending.

A Justice Department spokeswoman declined to comment on the Wells Fargo investigation.

In an April 5 report to Congress, Perez’s unit said that some of these investigations would lead to lawsuits or settlements this year.

“We’re a majority African American community, and there are people in this city who take great offense when institutions take advantage of a community’s historical lack of access to credit, and in some cases lack of sophistication, by putting them in loans they can’t afford,” said George Nilson, Baltimore’s city solicitor. “It’s offensive behavior and we shouldn’t tolerate it.”

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Obama Endorses the Repeal of DOMA

Obama backs bill to repeal Defense of Marriage Act

By , Published: July 19 The Washington Post

The Obama administration announced Tuesday that it will support a congressional effort to repeal a federal law that defines marriage as a legal union between a man and woman.

White House spokesman Jay Carney denounced the 1996 Defense of Marriage Act (DOMA), saying the administration will back a bill introduced this year by Sen. Dianne Feinstein (D-Calif.) to remove the law from the books.

Feinstein’s bill, called the Respect for Marriage Act, would “uphold the principle that the federal government should not deny gay and lesbian couples” the same rights as others, according to Carney.

The Senate is scheduled to hold an initial hearing on Feinstein’s proposal on Wednesday.

“The policy was wrong then and it is wrong today, and I believe it should be repealed,” Feinstein said Tuesday morning during remarks at the National Press Club.

Obama’s decision came five months after his administration instructed U.S. Attorney General Eric H. Holder Jr. to stop defending DOMA and represents a continuing evolution in Obama’s views on same-sex marriage. In February,Holder said parts of DOMA were unconstitutional because of “classifications based on sexual orientation.”

The issue has become politically dicey for Obama as he and his Republican rivals ramp up for the 2012 campaign season. The president was booed last month during an appearance in New York, when he told a gay audience that “traditionally, marriage has been decided by the states.” Forty-one states currently ban same-sex marriage.

Opponents of gay marriage have decried the Justice Department’s refusal to defend the law as an unjustified political move.

Daniel Blomberg, an attorney for the conservative Alliance Defense Fund, denounced the administration’s decision.

“Our perspective is that it’s not only incorrect, but deeply disappointing, to have a politician claim support for marriage between one man and one woman on the campaign trail, then actively undermine that once in office,” said Blomberg, whose organization will testify in support of DOMA during Wednesday’s Senate hearing. “We are confident Congress will make the right decision here.”

Human Rights Campaign President Joe Solmonese hailed Obama’s decision to back the congressional push.

“We thank the President for his support of the Respect of Marriage Act,” Solmonese said in a statement. “By supporting this legislation, the President continues to demonstrate his commitment to ending federal discrimination against tens of thousands of lawfully married same-sex couples.”

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Watch the Senate Judiciary Hearing on DOMA live: http://judiciary.senate.gov/hearings/hearing.cfm?id=3d9031b47812de2592c3baeba620f0e6

A Step Backward

‘Don’t Ask, Don’t Tell’ To Remain In Place, 9th Circuit Court Rules

Dadt Repeal Court Ruling
By SHAYA TAYEFE MOHAJER   07/16/11 01:50 AM ET   AP

LOS ANGELES — A federal appeals court late Friday ordered the military to temporarily continue its “don’t ask, don’t tell” policy for openly gay service members, responding to a request from the Obama administration.

In its three-page decision, the U.S. 9th Circuit Court of Appeals said the ruling was based on new information provided by the federal government, including a declaration from Major General Steven A. Hummer, who is leading the effort to repeal the policy.

The court said it was upholding an earlier ruling to keep the policy in place “in order to provide this court with an opportunity to consider fully the issues presented in the light of these previously undisclosed facts.”

Despite the delay in dismantling the controversial policy, the ruling bars the federal government from investigating, penalizing or discharging anyone pursuant to “don’t ask, don’t tell.”

The court of appeals had halted “don’t ask, don’t tell” July 6 but the Department of Justice filed an emergency motion Thursday saying ending the policy now would pre-empt the orderly process for rolling it back, per a law signed by President Barack Obama in December.

Friday’s ruling was supported by Servicemembers United, an organization of gay and lesbian troops and veterans, but the group’s executive director Alexander Nicholson voiced frustration over the slow process of dismantling “don’t ask, don’t tell.”

“The situation with finally ending this outdated and discriminatory federal policy has become absolutely ridiculous,” said Nicholson. “It is simply not right to put the men and women of our armed forces through this circus any longer.”

The ruling didn’t elaborate on Hummer’s declaration. The Department of Justice said in a statement that it asked the court to reconsider its order “to avoid short-circuiting the repeal process established by Congress during the final stages of the implementation of the repeal.”

It said senior military leaders are expected to make their decision on certifying repeal within the next few weeks. In the meantime, the Justice Department said “it remains the policy of the Department of Defense not to ask service members or applicants about their sexual orientation, to treat all members with dignity and respect, and to ensure maintenance of good order and discipline.”

The Justice Department noted that the Defense Department has discharged only one service member since Congress voted to repeal the policy, and that was done at the request of the service member.

Last year’s ruling by the appeals court stemmed from a lawsuit filed by the Log Cabin Republicans against the Department of Justice.

The gay rights group persuaded U.S. District Court Judge Virginia Phillips to impose a worldwide injunction halting the ban last October, but the appeals court granted the government a stay, saying it wanted to give the military time to implement such a historical change.

The Log Cabin Republicans asked the court Friday to deny the motion, saying “an on-again, off-again status of the District Court’s injunction benefits no-one and plays havoc with the constitutional rights of American service members.”

The plaintiff said while only one service member has been discharged since the congressional vote, three others have been approved for discharge by the secretary of the Air Force but the processing of those actions have been “stopped in their tracks” by the court’s order. Granting the stay the government wants would allow it to act on those discharges and also allow it to put recent applicants from gay enlistees in limbo, the group said.

Justice Department attorneys said in their motion Thursday the grounds for keeping the stay in place are even stronger today than they were when this court initially entered the stay, and that disrupting the process set out by Congress would impose “significant immediate harms on the government.”

The chiefs of the military services submitted their recommendations on the repeal to Defense Secretary Leon Panetta last week. As soon as the Pentagon certifies that repealing the ban will have no effect on military readiness, the military has 60 days to implement the repeal, which could happen by September.

Lt. Col. Paul Hackett, a lawyer in the Marine Corps Reserve, said military officials are ready for the change and there is no need for a delay.

“We’re already taking steps to implement it,” he said. “Politicians do what politicians do for whatever their political need is. It’s an election year, so somebody is obviously taken that into consideration. I suspect that’s what driving this.”

Friday’s order lays out a schedule for anticipated objections and motions from both sides: the Log Cabin Republicans have until 5 p.m. Thursday to file opposition to today’s motion, and the federal government has until 5 p.m. the next day to file a reply supporting it.

The court also asks the federal government to explain by close of business Monday why the information on implementation of the Repeal Act wasn’t provided sooner.

Don’t Ask or Tell Too Soon

Don’t Ask, Don’t Tell: Obama Administration Asks 9th Circuit Court Of Appeals To Reconsider Order

Dont Ask Dont Tell

07/14/11 10:44 PM ET   AP

SAN FRANCISCO — The federal government asked the U.S. 9th Circuit Court of Appeals on Thursday to reconsider its order last week demanding an immediate halt to the enforcement of the ban on openly gay troops in the military.

The Obama administration filed the emergency motion in response to the appeals court’s decision last week to lift its stay of a lower court’s ruling last year that found the ban, known as “don’t ask, don’t tell,” unconstitutional.

Department of Justice lawyers said in the motion that ending the ban now would pre-empt the “orderly process” for rolling back the 17-year-old policy as outlined in the law passed and signed by the president in December.

“Congress made quite clear that it believed the terms of the transition were critical to the credibility and success of this historic policy change, and to ensure continued military effectiveness,” according to a statement from the Justice Department.

“Any court-ordered action forced upon the military services so close to the completion of this repeal policy pre-empts the deliberate process established by Congress and the President to ensure an orderly and successful transition of this significant policy change,” the department said.

Last year’s ruling stems from a lawsuit filed by the Log Cabin Republicans against the Department of Justice.

The gay rights group persuaded a lower court judge to declare the ban unconstitutional after a trial that put the Obama administration in the position of defending a policy it opposes.

“It is sad and disappointing that the government continues to try to prevent openly gay and lesbian Americans from serving in our armed forces,” Log Cabin Republicans attorney Dan Woods said.

“It is particularly disappointing because the President has stated that Don’t Ask, Don’t Tell “weakens” our national security and signed the repeal bill with great fanfare and yet today’s filing with the Ninth Circuit is a last-ditch effort to maintain this unconstitutional policy, Woods added.

The Justice Department asked the 9th Circuit to issue a decision by the end of the day Friday.