Receiving Wide Coverage ...
Another hit: Wells Fargo has agreed to pay $50 million to settle a class-action lawsuit in which it was accused of overcharging homeowners for appraisals ordered after the borrowers defaulted on their mortgages. The plaintiffs allege they were charged $95 to $120 for a service that cost the bank $50 or less. Under the proposed settlement, Wells will mail checks, averaging $120 each, to more than 250,000 customers whose home loans were serviced by the bank between 2005 and 2010.
Wells Fargo's longtime auditor, KPMG, has been caught up in the bank's phony accounts scandal. Sen. Elizabeth Warren, D-Mass., and three other senators sent a letter to the auditor last week, saying its failure to uncover Wells' sales practices that led to the scandal "raises questions about the quality of your audits." But whether the firm should have found problems "highlights a longstanding and troubling issue for investors: the role of auditors in catching frauds and the types of scams they are — and aren't — supposed to spot," the Wall Street Journal commented. "Under audit rules, auditors are required to watch for potential fraud and conduct a variety of checks to try to unearth it. But they aren't expected to catch every fraud, or even to actively look for every fraud."
Wall Street Journal
Investing: For the first time in 10 years, some of Silicon Valley's top venture capital firms are making an investment in an American bank. Battery Ventures, Andreessen Horowitz, and Ribbit Capital said they are investing $28 million in CRB Group, the holding company for Cross River Bank, a Teaneck, N.J.-based community bank with one branch and $543 million in assets. What's the attraction? "The little-known bank has quietly risen to national prominence in tech circles," the Journal reports. "Since its founding in 2008, it has partnered with some of the highest-profile financial technology startups offering online loans and payments."
Villains: Bank-bashing remains a popular theme in political advertising, with both Democrats and Republicans running anti-bank television commercials in nearly three dozen congressional campaigns around the country. Candidates in 34 Senate and House races in 25 states have used the words "Wall Street" or "banks" to try to denigrate their opponents, according to a media analysis.
First NBC reports: Embattled New Orleans-based First NBC Bank reported net income of $9.7 million for the period ended September 30, down from $12.3 million in the year-earlier period.
No funds for you: Clients of Bank of America's Merrill Lynch brokerage unit will no longer be able to buy mutual funds in retirement accounts that charge commissions. The move follows Merrill's decision last month to stop offering commission-based IRAs to comply with new fiduciary rules. Rather, Merrill will only offer IRAs that charge a fee based on a percentage of assets.
Round one: Goldman Sachs, Wells Fargo and high-speed trader DRW Holdings are investing $16 million in Droit Financial Technologies, which has developed software that automates compliance in the derivatives market. The investment, Droit's first fundraising, will be used to accelerate marketing of its software.
"It's rare that people think, 'We'll build another Bank of America.' But my hope is that Cross River will be a giant bank." – Scott Tobin, general partner at Battery Ventures, which is investing in Cross River Bank.