By Aruna Viswanatha
WASHINGTON, Nov 1 (Reuters) - Wells Fargo has gone to court
to challenge a financial-crisis lawsuit recently brought against
it by the Justice Department, saying a prior multi-bank $25
billion mortgage settlement already cleared it of some
liability.
The fourth-largest U.S. bank asked a federal judge in
Washington on Thursday to rule that the U.S. violated the terms
of the earlier settlement by filing its recent case in New York.
The U.S. Attorney's office in Manhattan sued Wells Fargo on
Oct. 9 seeking damages and penalties for more than 10 years of
alleged misconduct related to government-insured Federal Housing
Administration loans.
But an earlier consent judgment already "wiped the slate
clean" for the bank in terms of certain conduct related to its
FHA portfolio, Wells Fargo said in its Thursday court filing.
In February, Wells Fargo and four 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.
Comparing the new allegations with the earlier settlement
"demonstrates without any doubt that the United States is
attempting to impose additional liability for the same conduct
for which Wells Fargo obtained permanent peace through the very
large settlement", the bank 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.
In the filing, lawyers for Wells Fargo said they had
conferred with government attorneys, who said they would oppose
the motion.
FIGHTING BACK
As U.S. authorities seek to make Wall Street pay for its
role in triggering the financial crisis more than four years
ago, Wells Fargo and other banks are starting to fight back more
often, arguing they are being asked to repeatedly pay for the
same conduct.
When Manhattan U.S. Attorney Preet Bharara accused Bank of
America last week of causing taxpayers more than $1 billion in
losses by selling toxic mortgage loans to Fannie Mae and Freddie
Mac, the bank said that at some point it could not "be expected
to compensate every entity that claims losses that actually were
caused by the economic downturn."
Also last week, Democratic Congressman Barney Frank defended
JPMorgan Chase & Co and said the government was wrong to go
after it for the alleged misdeeds of Bear Stearns, which the
largest U.S. bank acquired at the government's urging.
New York Attorney General Eric Schneiderman sued the bank
last month over mortgage-backed securities packaged and sold by
Bear Stearns.
Through its action on Thursday, Wells Fargo said it is
seeking an order barring the government from pursuing certain
claims included in the new lawsuit.
The bank said it is also seeking other relief to "compensate
Wells Fargo for the injuries suffered as a result of the
repetitive litigation" from the new U.S. lawsuit.
Follow us on Twitter @ReutersLegal | Like us on Facebook