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Banking, finance, and taxes

Wells Fargo (WFC) Gets Sued For Not Lending

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By Douglas A. McIntyre Updated Published

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Wells Fargo (WFC) and a lot of other American banks got in trouble by being more liberal than they should have been in their loan practices. Financial firms made to many risky mortgage loans, too many LBO loans, and too many loans to owners of commercial real estate.

Wells Fargo is now being taken to court for not offering someone who wanted money enough money.

According to Reuters, “In a federal lawsuit filed in Chicago on Wednesday that seeks class-action status, homeowner Michael Hickman accused the bank of using “dubious” computer models that systematically undervalue homes, depriving customers of credit.” Put another way, the banks does not have the right to set limits on home equity loans based on its own judgment of their values.

The legal principle behind the suit must be a perverse one. The notion would have to be that Mr. Hickman believed that he should be able to unilaterally set the value of his house and use that value to get him access to more capital from Wells Fargo. The trouble is what if he is wrong and the bank has to write off the loan?

Douglas A. McIntyre

Contact [email protected] for any questions or corrections.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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