Uncle Sam was there to help Wells Fargo & Co. with bailout money when the financial crisis hit, but now the lender is paying the price for its role in the recession. The U.S. government has filed a lawsuit against Wells Fargo in Manhattan federal court under the Federal False Claims Act. The suit is accusing Wells Fargo of “reckless” lending, deceiving the Federal Housing Administration (FHA) and leaving the government to foot the bill.
The lender’s alleged wrongdoing dates back to May 2001. The lawsuit accuses Wells Fargo of having a "regular practice of reckless origination and underwriting" government-backed loans, and of claiming more than 100,000 loans met FHA guidelines, when in truth, more than half of them did not.