[ by Howard Haykin ]

Wells Says Earlier Settlement Cleared Bank of Some Liability.

Wells Fargo went to court to fight a financial crisis federal lawsuit filed earlier this month, on the grounds that it violates the terms of an earlier settlement between the Justice Department and the bank.  The new lawsuit, filed 10/9/12 by the U.S. Attorney's office in Manhattan, seeks for damages and penalties from Wells for its more than 10 years of alleged misconduct related to government-insured Federal Housing Administration loans.  

Yet, Wells says an earlier consent judgment already "wiped the slate clean" for the bank in terms of certain conduct related to its FHA portfolio.  In a February settlement, Wells Fargo and 4 other top banks agreed to $25 billion in penalties and relief to homeowners to resolve allegations about shoddy mortgage servicing practices.  That settlement also addressed certain claims involving the bank's annual certifications about its FHA compliance, Wells Fargo said.

The new U.S. lawsuit includes allegations unrelated to the certification. The earlier settlement also did not cover all issues at the individual loan level, so any resolution might hinge on determining whether Wells Fargo submitted specific loans for government insurance even if it knew the loans failed to qualify.

A spokeswoman for the Manhattan U.S. Attorney's office did not immediately respond to an emailed request for comment, while lawyers for Wells Fargo say the government is trying to "impose additional liability for the same conduct for which Wells Fargo obtained permanent peace through the very large settlement." 

Trying to Hold Banks Accountable for Financial Crisis. In this latest round of federal lawsuits, various U.S. authorities are seeking to make Wall Street pay for its role in triggering the financial crisis more than 4 years ago.  Wells Fargo and other banks are fighting back more often, as wave after wave of lawsuits "come crashing over the seawall."  This has prompted Wells and others to argue they are being asked to repeatedly pay for the same conduct.

For further information, go to:  [Reuters, 11/1/12].