Post Number: 1214
|Posted on Saturday, August 02, 2003 - 02:58 am: ||
Fed may review Wells Fargo lending as merger pends
Thursday July 31, 3:40 pm ET
By Jonathan Stempel
NEW YORK, July 31 (Reuters) - Washington state regulators have asked the Federal Reserve to review Wells Fargo & Co.'s (NYSE:WFC - News) lending practices, as it considers the No. 4 U.S. bank's planned $591 million purchase of Pacific Northwest Bancorp. (NasdaqNM:PNWB - News)
The request might delay San Francisco-based Wells Fargo's plans to finish buying the Seattle-based bank by Sept. 30.
Wells Fargo has been a target of various consumer groups that say it engages in predatory lending; the imposition of high interest rates or fees on customers with checkered credit histories. Earlier this year, California suspended its mortgage lending license, saying it overcharged borrowers.
In a July 23 letter to the Fed's San Francisco office, a copy of which Reuters obtained, Helen Howell, director of Washington's Department of Financial Institutions, said her office intends to approve the merger.
Nevertheless, she expressed concern about "persistent public reports that Wells Fargo ... may be engaging in consumer lending practices that ought to require greater scrutiny and compliance from both federal and state regulators."
She urged the Fed to "seriously address the concerns that have been raised." These, she said, also include allegations that Wells Fargo underreports or ignores required data reporting under the Home Mortgage Disclosure Act. Howell's request was earlier reported by the Seattle Times.
Janis Smith, a Wells Fargo spokeswoman, said the Pacific Northwest purchase "continues on schedule." She added: "We're glad to research customer issues presented to us by any credible consumer organization."
The Association of Community Organizations for Reform Now, or ACORN, has been a persistent critic of Wells Fargo's lending practices, and wants the Fed to hold public hearings.
"Companies engaged in predatory lending should not be rewarded with merger approvals," said spokesman David Swanson. "With the concerns raised by ACORN, Washington regulators and local legislators, the Fed will be hard pressed not to pay attention."
Wells Fargo lost its California mortgage license in May after the state said the bank began charging interest on mortgages too early. U.S. District Judge Garland Burrell later found that federal regulations, which permit how Wells Fargo charges interest, should have taken precedence.
Pacific Northwest has $3.1 billion of assets, and 53 branch offices in Washington and five in Portland, Oregon. Wells Fargo about $370 billion of assets.
Wells Fargo shares traded late Thursday on the New York Stock Exchange (News - Websites) at $50.74, down 59 cents. Pacific Northwest shares traded on the Nasdaq at $34.86, down 1 cent.